Why Do I Need a Termite Bond?
It is understandable that buyers are probably not thinking “Do I need a Termite Bond?” as they visit homes looking for the ideal property for their needs. However, it is advisable (especially in places like the south where termites are a major problem) to always have a termite inspection performed by a qualified professional.
While they are typically required by the lender, technically here in Georgia, a Termite Bond is not required to sell a property. It is smart however for buyers to obtain a new or assume an existing bond.
What is a Termite Bond?
A Termite Bond is a contract between a homeowner and pest control company, effective after an inspection has been accomplished and any treatment performed. Termite bonds are a type of insurance. If you need termite treatment, the bond may act as an insurance policy. Depending on the terms of the termite bond, the insurance policy may include reimbursing the home owner for the cost of repairs for termite damage, termite treatment and re-treatment of the property.
Treatments for termite recurrence are free for the life of the bond. An annual inspection is typically included and many companies also provide damage compensation (they pay for repairs/replacement) if the termites do any damage.
The seller indicates on the sellers disclosure whether they have a transferable bond or not so there should not be any confusion on whether or not one already exists. As a buyer, you are spending a lot of money for the home, why not have the peace of mind knowing your home is termite free? With termites, if you do not pay for protection now, you could end up paying a whole lot more later!
What Is Included in a Termite Bond?
Termite bonds are often offered as part of a comprehensive plan. This regularly consists of an agreement to create a chemical termite barrier, do quarterly or annual inspections for termite infestation and damage and a termite bond. In these cases, the cost of the termite bond includes the annual inspection. It often covers the preventative treatment as well.
Home owners can keep their own log of termite inspections in addition to those kept by the pest control company. Go too long without inspection, and the bond may not be valid because they have not done enough inspections to know exactly when termite infestations occurred and damage began.
What Is Not Included in a Termite Bond?
A termite bond is an agreement to inspect and repair a home from termites. Therefore, termite bonds do not cover all types of insects that could damage your home. For example, a termite bond does not cover damage by carpenter ants or beetles.
Termite bonds should list the species covered by the contract. Some bonds do not cover Formosan termites, which are much more damaging than common eastern subterranean termites. Drywood termites are another species often excluded by termite bonds unless you pay more for their inclusion.
Termite bonds do not cover property damage caused by the conditions that facilitated the termite bond. For example, if your home had water leak and moisture trapped in the insulation that facilitated the growth of a termite colony, the pest control company is obligated to kill the termites but not control the mold growing in the insulation or repair the water leak.
How Much Does a Termite Bond Cost?
The cost of a termite bond, like any type of insurance, varies based on coverage. The cost of the bond is greater if it covers more species of termites or other wood destroying insects. The bond price is also higher if it includes a guarantee to pay for damages in addition to pest treatment. The ideal termite bond contract is a full repair warranty.
The price of the termite bond is directly correlated to the risk of the homeowner filing a claim. If you live somewhere that termites are a common problem, you will pay more than someone whose risk is lower, as well as in humid climates. You will probably pay more if the home is on the waterfront, due to the higher availability of water and thus bugs.
Likewise, if you live in a wood house, you will pay more than someone whose greatest risk is the wood frame and cabinetry. The cost of the bond is tied to the cost of repairing damage, so you pay more for a large home or a property with multiple buildings.
Termite bonds are usually annual agreements, and the cost goes up slowly over time. If you cannot afford the termite bond, it can be cancelled. However, a new termite bond is an entirely new contract and typically costs more. The new termite bond is a new contract, typically renewed annually.
When Do You Need a Termite Bond?
Termite bonds may be offered when a home is inspected, whether before sale, after sale or when you are having the property remodeled. Bonds can be offered when you have the home inspected for termite activity.
In many jurisdictions, home buyers must obtain a termite letter or wood infestation letter, though new homes are exempt. This is a requirement for FHA and VA loans. If the loan requires a termite letter, the letter must be dated within sixty days of closing and all buyers must sign the bottom to clear it.
Termite inspections are the buyer’s responsibility and expense. Termite inspections are only a requirement if the home is in an area known for termite activity or an initial inspection finds signs of termite activity. Sellers usually do not have to provide a termite letter (depends on the state). However, sellers are obligated to tell potential buyers if the home has suffered termite damage, as well as any other pest infestations.
If anything is found by the inspector, the home seller has to address the issue. If termite treatment is selected, it has to be completed before closing. The FHA requires homes be treated via methods approved by the International Residential Code and International Code Council. However, the buyer and seller can agree to reduce the selling price of the home or provide money to cover treatment.
If I Have Homeowners Insurance, Do I Need a Termite Bond?
In most cases, homeowners insurance does not cover termite damage. This is because termite damage takes years to occur, and regular inspections are able to prevent it. In contrast, homeowners insurance covers sudden and unexpected events like house fires and unexpected floods.
Termite coverage is akin to flood insurance for homes in a flood plain. If the property is at moderate to high risk, you need insurance specifically for that risk. That means a termite bond with a pest control company or termite damage rider with a homeowners insurance policy.
Only the termite bond, with its periodic building inspections by experts, minimizes the potential damage to your home. A termite bond often results in a discount for termite treatment should it be necessary, versus having to pay several thousand dollars out of pocket when termite damage is discovered and treatment required.
Are Termite Bonds Transferable?
A termite bond is a contract, and not all contracts are transferable. If you are researching vendors for pest control services and a termite bond, ask if the termite bond is transferred when you sell your home.
Another facet of the termite bond is the pest control company itself. Few termite bonds are transferable from one pest control company to another, though some pest control companies will let you transfer the contract from them to another service provider. The termite bond usually is not transferable if the pest control company named on the bond has gone out of business. It may not be transferable if the pest control firm does not honor transferred agreements with other companies.
There may be fees associated with transferring a termite bond. And when transferring to a new service provider, a new home inspection (with associated fees) is required.
What are Termites?
Termites are small burrowing insects that feed on wood (the cellulose). There are over 2,000 species but they can generally be grouped into four categories: Dampwood, Drywood, Subterranean, and Formosan.
- Dampwood Termites are found where there is a high moisture content like in forests or near ponds. They are typically not found in homes.
- Drywood Termites do just that, they attack dry wood. Wood above the soil level is susceptible to infestations, such as attic framing. Sealing all structure cracks will help keep these pests out.
- Subterranean termites live in large colonies and build mud tubes to attack wood and protect themselves from open air. With up to 2 million members per colony, they are the most destructive species.
- Formosan Termites are the most aggressive subterranean species and can collapse a building if left untreated long enough. Difficult to control, prevention is the key with these wood lovers.
Tips to Help Avoid Termite Infestations
- Get a Termite Bond and have regular inspections
- Move all untreated wood products away from the house and avoid wood-to-ground contact
- Eliminate water leaks and fix any cracks/holes in the foundation
- Keep gutters/downspouts clear of debris and avoid rainwater buildup wherever possible
- Basement, crawl space, and attic should be well ventilated and dry
- Avoid wood mulch and keep all vegetation away from the foundation
- Treat exposed wood and/or paint where appropriate
- Screen your vents…termites can fly
Termite Fun Facts
- Termites look a little like ants but are most closely related to the cockroach
- The termite is the most destructive insect in North America
- Termites cause billions of dollars of damage annually in the U.S.
- The queen can live up to 30 years, laying hundreds of eggs each day
- Termite nests can be 20 feet high and hold well over a million insects
- The colony eats 24 hours a day, every day
Can you answer the question…Do I need a termite bond? Only you know how risk averse you are and whether you want to spend the money. However, it may be well worth it just to have the piece of mind knowing your home is protected.
Additional Termite Resources
Termite Types and How to Deal with Them via Orkin
How to Control Termites by University of Kentucky
Getting Rid of Termites at WikiHow