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Handling Termite Clearance Letters

Thinking of a "termite clearance letter" as a "snake in the grass" can be very helpful. Licensees should treat them both the same way - with respect and without picking them up.

Apparently, out of a desire to be helpful or to "keep the transaction moving," some licensees involve themselves in ordering termite letters and in delivering those letters to the appropriate parties. In doing so, those licensees are asking for trouble.

Only rarely, if at all, will a sales contract provide that the "agent" obtain a "termite clearance letter." Instead, if a contract provides for such a letter at all, it will call for either the seller or the purchaser to obtain the letter. Licensees should abide by the letter of the contract.

Let the party named in the contract make arrangements for the letter, not the agent. In that way, the licensee avoids charges that he or she did not communicate possible negative information which the letter may contain. In addition, the licensee avoids having to pay for a letter since the termite company will bill the party who ordered the letter.

"But what if my client or customer does not know whom to contact for the letter or is not available to order the letter in a timely manner?"

Of course, such situations will occasionally arise. However, they require extreme care. If the client or customer does not know whom to contact, the licensee may provide that person with a list of several companies which provide the service. Such lists should specifically state that the licensee is not recommending anyone and that the customer or client might turn to other companies for the service.

If the client is no longer a resident of the area, the licensee should obtain several estimates of the cost to supply the service. The licensee should then require that the client give written instructions to order the letter and execute an agreement that the client will hold the licensee harmless in the matter. In ordering the letter, the licensee should specify in writing the party to whom the termite firm should deliver the original letter (usually the lender or closing attorney) and who should receive any copies (usually the seller, the purchaser, and the agent).

When the termite company delivers the letter, the licensee should read it carefully and prepare to advise his or her client on its implications. For example, a clearance letter may indicate no current infestation but reveal prior uncorrected damage. The licensee should encourage the parties to acknowledge the prior infestation and damage and agree who is to be responsible for its repair before the closing occurs.

Licensees who handle termite letters without respect are asking to be "bit."

The information contained in this article is believed to be current and accurate. The GREC staff reviews the contents periodically and updates it when appropriate. If you have questions or comments about this article, you may contact us at . Last reviewed August, 2006.