Types of Property Inspections
If you own property, at some point you will have to deal with your property being inspected. There are many different reasons a property must be inspected and many different types of property inspections, so it is unlikely you will experience each type of inspection on this list. Learn the pros and cons of property inspections and some of the most common inspections you may encounter as a property owner.
There are positives and negatives to having an inspector look over your property, and while it can give you peace of mind, it may also cause you to discover things about your property that you weren't prepared to deal with.
You can rest easy knowing your property is up to code.
You might find that your home appraises for more money than you thought or expected.
An inspection might uncover structural damage, termites, or other expensive issues you aren't currently prepared to fix.
An overly-conservative inspector could find or even manufacture issues where none really exist.
Even though having your property inspected can be stressful, there are some benefits that can come from it.
- Confirm That Your Property Is up to Code/No Issues: Property inspections are often done to make sure the property is safe and meets certain building codes. The best case is that your property is inspected and no main issues are found.
- Property Could Be Worth More Than You Thought: There are certain inspections which will require an appraisal to be done on your home. A third party appraiser will come to your home to inspect the interior and the exterior. They will then compare your home to similar homes in the area and come up with the price they think your home is worth. You may learn that they believe the value of your home is much higher than you originally thought.
There are certain negatives you should be aware of when your property is inspected.
- Serious Issue Could Be Found: One of the biggest fears of having your property inspected is that a major issue is found. For example, structural cracks in the foundation elevated levels of radon or a termite infestation.
- Nitpicking/Looking for Problems: Another potential negative of having your property inspected is that you could get an inspector who is just looking to find something wrong with your property to justify the expense of being hired to conduct the inspection. Their report could include a punch list of items which are easily repairable, such as cracks in a driveway or air duct vents that need to be cleaned, but has the potential to scare off prospective buyers. These issues could also be used to try to negotiate the purchase price down.
Types of Property Inspections
There are many types of property inspections, including:
- City Inspections
- State Inspections
- Building Inspections
- Bank Inspections
- Insurance Inspections
- General Third Party Inspections
Certain property inspections may be conducted by the city or municipality where your property is located. These can include:
- Certificate of Occupancy: Also known as a CO. This type of inspection is to certify that the property is able to be lived in. A town may require this certification upon building a new home, upon renovating a home or upon the sale of an investment property.
- Certificate of Habitability: This type of inspection is to make sure that your property meets certain health and safety codes and is, therefore, suitable to be lived in. A town may require you to have this inspection conducted every time you re-rent a home.
- Fire Inspection: A fire inspection may also be required every time you re-rent a home. This inspection is to make sure you have the appropriate number and placement of carbon monoxide detectors and smoke detectors in your property. They are usually required near bedrooms and near an internal combustion appliance, such as a furnace or water heater. This inspection is also to make sure that these detectors are in proper working order.
In addition to inspections on a citywide level, your state may require additional inspections on your property.
- State Habitability Inspection: Some states may require certain types of properties to be inspected every few years to make sure they meet certain habitability standards. For example, in New Jersey, properties that contain at least three units must have a state inspection every 5 years. Single family and two family properties in the state are not required to have this inspection. The inspector is looking to see if the property and the individual apartments meet all current health and safety codes.
If work is being done on your property, your city or state may require additional construction inspections to be done to make sure all work is being done up to code. These can include:
- Building Inspection: If you are having work done on your property, your municipality or county may require the property to pass a building inspection. The building inspector would inspect any work that is not plumbing, electrical or fire related. They could inspect items such as framing, drywall installation, siding, roofing or a new staircase being installed. The inspector would need to finalize that all work has been done up to code.
- Plumbing Inspection: If you are having any plumbing work done on your property, your property may need to pass a plumbing inspection. This inspector could inspect rough plumbing, such as new drain lines or new water lines being run. They could also inspect finish plumbing, such as replacing a kitchen sink or bathroom vanity sink.
- Electrical Inspection: Another type of construction inspection involves electrical work. You may be required to pass an electrical inspection if you have had electric work done, such as rewiring the house or upgrading the electrical service to the home.
- Fire Inspection: A fire inspection may also be required on your property to make sure you have carbon monoxide and smoke detectors in the proper areas, as well as a fire extinguisher if necessary. The inspector may also need to verify that you used the correct fireproofing between walls or between walls and ceilings. For example, you might need thicker sheetrock in certain areas of the home, such as the garage ceiling.
If you are purchasing a home with financing, or a prospective buyer is purchasing your home with financing, the bank may require certain inspections to be done. This could include:
- Appraisal: When purchasing a property or refinancing a loan, a bank will usually require an appraisal of the property. They will hire a third party appraiser to inspect the property, both inside and out, to determine if it is worth the amount they are loaning and that there are no glaring issues.
- Environmental Site Assessment: This is not always required. It is more common in commercial properties or even in larger multi-families. It is done to determine if there are any environmental hazards at the property such as asbestos, lead, mold, radon or mercury. The Phase I inspection is usually conducted first. If any hazards are thought to exist, a more detailed Phase II inspection will be conducted.
- Walk Through Inspection: A bank may also require one of the bank's representatives to walk through the property to determine if the bank has a desire to lend on the property. This is more common when analyzing higher-end homes, multi-families, and retail or commercial spaces.
The insurance company may conduct their own set of inspections on your property. They will usually send out one of their own representatives to do an exterior walk-through of the property. They could also contract a third party inspector to do the inspection instead. Depending on the property and the insurance carrier, they might also require an internal inspection of the property.
The purpose of the inspection is to determine the liability risk and to make sure the home is insurable for the type of insurance you are buying. For example, the insurer wants to make sure you are not trying to buy homeowners insurance if the property is actually a nail salon. They also want to examine potential liability issues, such as cracked sidewalks or ceilings that are falling down. They want to make sure they are not on the hook for future false insurance claims for problems that were there before you got the policy and that there are no glaring safety issues that could lead to future insurance claims.
General Third Party Inspections
When you are going to sell a property, prospective buyers have the legal right to have inspections conducted on the property. It is up to the buyer as to how in-depth they want to inspect the property. Examples of inspections that can be conducted include:
- Home Inspection: This is a general inspection of the home. It is normally conducted by a jack of all traded inspector, not by an inspector who has a specialty in a certain area. Areas of inspection can include foundation, roof, electrical work, HVAC and heating, chimney, windows, sewer, and plumbing. The inspector will put together a report of their findings for the prospective buyer and make recommendations for further action if necessary.
- Radon Inspection: A buyer can choose to have a radon inspection done on the property. It usually involves the placement of a canister or a more advanced machine in an enclosed area, such as a basement, for a number of days to test for elevated levels of radon.
- Environmental Inspection: An environmental inspection can also be conducted on the property to test for contaminants such as asbestos. lead, mercury, mold, or leakage from oil tanks.
- Termite Inspection: An inspection can be done to check for damage to the property done by termites or other wood destroying pests.
- Specialist: The prospective buyer can choose to bring in a specialist to further inspect areas of concern that were brought up in a home inspection. This could include calling a roofing specialist for problems with the roof, a certified plumber for problems with the plumbing or sewer line or an engineer for structural issues.
- Easements: A prospective buyer can do a search to determine if there are any easements on the property. This could include things such as a shared driveway or a public sewer line that runs along the perimeter of the property.
- Permits: An additional search can be done to gather the permit and tax history of the property. A request for this information can usually be put in with the local town hall. The records will indicate all permits that have been taken out on the property, including those that have been finalized and any that are still outstanding. The yearly taxes, as well as any taxes still owed, can also be uncovered.