If you’re buying a new home or performing renovations and construction, you’ve likely heard three very similar phrases: “home inspection,” “building inspection,” and “property inspection.” While you may sometimes hear these used interchangeably, they actually refer to very different types of inspections, all of which may be relevant to your home.
A home inspection is generally performed by someone whom you hire before you purchase a property. That person is typically an engineer or contractor, often (and ideally) someone with substantial experience in some aspect of the housing industry in your state. The purpose of the inspection is to determine whether the property has any defects or even small repair issues about which you should be aware, for purposes of going through with the sale or negotiating the price, before closing the deal.
Sometimes, sellers may intentionally withhold information from you as a buyer, in an attempt to convince you to pay top dollar for the property. Other times, sellers may genuinely be unaware of the existence of serious defects. For example, imagine that the structural support of the porch was being corroded by a serious termite infestation. Or imagine that the pipes were leaking in the basement. Or that the heating system of the swimming pool, which the current owner never uses, is broken. These sorts of problems could be tremendously costly for you to fix, and would serious impair the property’s value and usability. A general home inspection--and in some case, specialized inspections to cover areas outside your primary inspector's expertise--is essential to ensure that you know exactly what you are buying.
Building inspections typically occur after you have purchased a piece of property and have performed some sort of renovation, addition, or construction. Building inspectors also typically have experience as engineers or contractors, but they are ordinarily employed by the state, city, or municipality.
The building inspector's goal is to ensure that whatever changes you made to the physical structure of the home are safe, and comport with applicable zoning requirements. For example, if you constructed an unpermitted industrial kitchen on a residential parcel of land, a building inspector might write a citation and report your conduct.
Your architect or contractor will likely be the person who coordinates with the local government to schedule and hold such inspections once construction is complete. In major cities, there is typically a centralized division of the local government that handles such inspections. In New York, for example, that is the Department of Buildings or in Chicago, it’s the Division of Inspections.
You might sometimes hear the term "property inspection" sometimes loosely used to mean any type of home inspection. However, the term usually refers to a type of inspection performed in connection with the foreclosure of residential property.
Mortgage contracts generally provide the lender with the right to take necessary steps to protect its interest in the property if you default on your loan. This means that if you are late on your mortgage payments, your loan contract most likely allows the loan servicer to hire someone to conduct property inspections.
Inspections are generally ordered automatically once the loan goes into default so the lender can find out whether or not the property is occupied and being appropriately maintained. Properties that are in foreclosure, especially if unoccupied, can often suffer damage related to weather conditions, vandalism, or other unforeseen accidents. Performing routine inspections allows the lender and loan servicer to keep tabs on the property. Any charges for the inspections are then added to the total mortgage debt.
To learn about the different types of charges that may be assessed to your account and how they affect the balance of your mortgage debt, see What Fees Can the Lender Charge If I’m Late on Mortgage Payments?
Thus, while you may hear the terms “home inspection,” “building inspection,” and “property inspection,” you should know that they are not interchangeable. Though they all relate to real estate, their meanings are very different.
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