Selling a House With Termite Damage in Sacramento CA: The Section 1 Clearance Explained

In most Sacramento home sales, the termite report shows up a week or two into escrow. The buyer's agent orders it, a licensed inspector crawls under the house and up into the attic, and a few days later everyone gets a multi-page form with a diagram of your house and a list of findings. If that list includes "Section 1" items, you will suddenly be asked to decide who pays to fix damage you may not have known was there.

Termites are not unusual here. UC Integrated Pest Management notes that subterranean termites are found in nearly every region of California, and that the western drywood termite — the state's second most important termite pest — ranges through the Central Valley. Add the dry rot that shows up wherever water has sat against wood, and a completely clean report on an older Sacramento house is far from guaranteed.

This guide explains what the report actually is, what Section 1 and Section 2 mean, when a clearance is required to close, who usually ends up paying, what California requires you to give the buyer, and how the choice between listing and selling for cash changes when the house has real damage.

What a California Termite Report Actually Is

What everyone calls a "termite report" is formally a Wood Destroying Pests and Organisms inspection report, governed by Business and Professions Code Section 8516. It covers more than termites. Inspectors report wood-boring beetles and fungus damage too, which is what most people mean when they say dry rot.

The statute is specific about what the report must contain. Among other things:

• A diagram of the structure showing roughly where any infested or infected areas are, and the wood members involved — siding, studs, rafters, floor joists, fascia, subfloor, sheathing, trim.
• The parts of the house inspected: substructure, foundation walls, porches, patios and steps, vents, attic spaces, eaves and exposed framing.
• Areas that were inaccessible and not inspected, with a recommendation for further inspection where practical. A finished garage wall or a stored-full crawlspace often ends up here.
• Recommendations for corrective work, and if you ask for one, a separate price for each recommendation.

The company has 10 business days from the start of the inspection to deliver the written report to whoever ordered it and to the property owner. Every report must also carry a printed notice that reports from different companies should list the same findings, that their recommendations may vary, and that you have the right to a second opinion. On a large repair bid, use that right.

One detail sellers miss: the company must also file the address of every property it inspects with the Structural Pest Control Board — which, as it happens, is headquartered here in Sacramento. That record matters later in this guide.

Section 1 vs. Section 2: The Line That Decides the Bill

California requires the report to separate findings into two groups, and nearly every escrow negotiation turns on which group a problem is in.

Section 1 — infestation or infection that is evident

Live termites, termite damage, beetle damage and fungus damage that the inspector can see. UC IPM describes the typical clues: earthen shelter tubes (often called mud tubes) running up a foundation wall are the most common sign of subterranean termites, while drywood termites push out small six-sided fecal pellets that collect on surfaces below the wood they are in. Rotted window trim, a soft subfloor around a toilet, or a decayed deck ledger all land here too.

Section 2 — conditions likely to lead to infestation

Things that have not caused damage yet but invite it: earth touching wood, excess moisture, wood debris in the crawlspace, faulty grade levels, roof leaks, poor ventilation. Section 8516 is explicit that these conditions may not be described as actual defects or active infestations, and may not be required as a precondition to issuing a certification. That is why lenders and purchase contracts usually focus on Section 1.

Older Sacramento houses on raised foundations with a crawlspace tend to collect Section 2 items — a damp corner under the bathroom, stored lumber against a pier, a clogged vent. They are worth fixing, but they rarely block a sale on their own. Section 1 items are the ones that cost real money and hold up closings.

When a Clearance Is Actually Required

No California statute requires a termite inspection on every home sale. The requirement comes from the deal itself, in two ways:

• The purchase contract makes it a condition. Many buyers' offers ask for an inspection and for Section 1 work to be completed before close.
• The buyer's lender requires it. Some loan programs and lenders will not fund until the visible Section 1 items are corrected and certified. Your buyer's lender decides that, not you.

Once the corrective work is done, the pest company issues a notice of work completed and, where it can, a certification under Business and Professions Code Section 8519. That certification is the document most agents and escrow officers call the "termite clearance." If an inspector could not reach part of the house, the certification will not cover it, and a buyer may ask you to open the area for a supplemental inspection.

A few practical notes on timing. Fumigation for widespread drywood termites — what UC IPM calls whole-structure fumigation, or "tenting" — means the house has to be emptied of people and pets while the treatment runs, and the job has to be scheduled around the company's calendar. Subterranean treatments are usually soil applications or bait systems, and bait systems can take months to finish their work. If your closing date is tight, ask early how long the recommended treatment and repairs will take.

Who Pays for the Section 1 Work

It is negotiable. The purchase contract says who pays for the inspection and who pays for corrective work, and nothing in the law fixes that split. Buyers often ask the seller to cover the Section 1 items, since those are the ones a lender cares about. The usual ways it gets resolved:

• The seller pays for the work outright, often through escrow so the pest company is paid at closing.
• The seller gives a credit and the buyer handles the work after closing — if the buyer's lender allows it.
• The price is renegotiated and the house is sold with the work undone, which usually means the buyer is paying cash or using a loan that does not require the clearance.

The trap is a large bid that arrives mid-escrow. Damage hidden inside a wall or under a floor often turns into a supplemental report and a bigger number once the wood is opened up, and the buyer has every reason to ask for more. Getting your own inspection before you list removes that surprise and gives you a report to put in front of buyers on your terms.

What You Have to Hand the Buyer

Civil Code Section 1099 adds a delivery rule. When a pest report or certification is a condition of the contract or of the buyer's financing, the seller or the seller's agent must deliver a copy of the report to the buyer as soon as practical before title transfers. If you have received a notice of work completed or a certification, that goes to the buyer too.

Separately, your general duty to disclose known material facts does not go away because the sale is as-is, which our guide to selling a house as-is in Sacramento covers in more detail. If you know about an infestation, past treatment or damage, say so.

Do not count on an old report staying buried. Because every inspection and completed job is filed with the Structural Pest Control Board, the Board's online search shows whether an inspection or completion was filed for an address in the last two years, and anyone can request copies. A buyer's agent who finds a report you did not mention has a strong argument that you knew.

Termite damage often travels with other condition problems. If a past owner patched a damaged wall or replaced framing without a permit, our guide on selling a house with unpermitted work explains how that side of the disclosure works. If the house is a rental, a buyer will want the tenant situation sorted as well — our page for Sacramento landlords selling a rental covers it.

Listing vs. Selling for Cash With Termite Damage

For a house with a short Section 1 list — some fascia, a little trim, a spot treatment — listing and paying for the work through escrow is usually the right answer. The work is routine and buyers expect it. The choice gets closer when the damage is structural, when the bid keeps growing as walls are opened, when the house is vacant or inherited and nobody wants to manage contractors, or when you are on a deadline.

We will not pretend a cash offer matches full retail. It does not. What it removes is the uncertainty in the left-hand column: the size of the final bid, the clearance deadline, and the renegotiation that follows when the inspector finds more than anyone expected. Our breakdown of cash buyer vs. realtor in Sacramento runs the full numbers on both routes, how it works lays out the steps of a direct sale, and our Rancho Cordova project shows what taking on a house's problems after closing looks like. We buy throughout the metro, from Carmichael to Elk Grove, and you can see the whole range of situations on our sell your house as-is page.

If the house came to you through an estate, our guide to selling an inherited house in Sacramento covers the probate side. A long-vacant house is exactly where termite and dry rot damage tends to grow unnoticed.

California Resources

• Structural Pest Control Board — check for past inspections: pestboard.ca.gov — search an address for reports filed in the last two years and request copies
• Business and Professions Code 8516 — what the pest report must contain: leginfo.legislature.ca.gov
• Civil Code 1099 — delivering the pest report to the buyer: leginfo.legislature.ca.gov
• UC IPM — Subterranean and other termites: ipm.ucanr.edu
• UC IPM — Drywood termites: ipm.ucanr.edu

Frequently Asked Questions

Does California require a termite inspection to sell a house?

Not on every sale. No California statute makes a termite inspection a condition of selling a house. It becomes required when the purchase contract makes it a condition or the buyer's lender requires it to fund the loan, and in that case Civil Code Section 1099 requires the seller to deliver a copy of the structural pest control report to the buyer as soon as practical before title transfers. Many financed sales include one, so expect the question to come up.

What is the difference between Section 1 and Section 2 on a termite report?

Section 1 lists infestation or infection that is evident now — live termites, termite damage, or fungus damage (often called dry rot). Section 2 lists conditions likely to lead to infestation, such as earth-to-wood contact, excess moisture, cellulose debris or poor ventilation. Business and Professions Code Section 8516 says Section 2 conditions may not be described as actual defects or required to be fixed before a certification is issued, which is why escrow clearances usually turn on the Section 1 items.

Can a buyer find out about an old termite report on my house?

Yes. Every licensed pest company must file the address of each property it inspects with the California Structural Pest Control Board within 10 business days. The Board's online property search shows whether an inspection or completed work was filed for an address within the last two years, and anyone can request copies of those reports. Assume a buyer can see a recent report and disclose what you know.

Will you buy a Sacramento house with termite damage or dry rot?

Yes. We buy houses across Sacramento, Placer and Yolo counties as-is, including houses with open Section 1 items, active infestations and old damage. There is no lender in our purchase, so no clearance is required to close, and the repair cost is priced into one offer up front. You still provide the normal California disclosures, including any pest report you already have. More questions? Our FAQ page covers timelines, fees and property condition.