The Termite Report in a Los Angeles Home Sale: Section 1, Section 2, and Who Pays

What Is a Termite Report in a California Home Sale?

In California, a Wood Destroying Organisms report (called a WDO report or pest report) is an inspection by a licensed Structural Pest Control Board inspector that examines a home's wood structure for termites, dry rot, fungus, and wood-boring beetles. While not required by California state law, the WDO report appears in nearly every financed sale in Los Angeles, and many cash deals too. Under the standard California Residential Purchase Agreement, the seller pays for the inspection and any Section 1 clearance work. Section 1 covers active infestation or existing damage; Section 2 covers conditions that could lead to future infestation and is negotiable.

By Paul Blair | June 19, 2026

Selling a home in Los Angeles almost always involves a pest inspection. It's not mandatory under California law, but in practice the WDO report shows up in virtually every financed transaction, and the findings can shift your timeline, your net proceeds, and your negotiating position.

If you're preparing to list, here's what you need to understand before the inspector arrives.

What the WDO Report Covers

A licensed California Structural Pest Control Board inspector examines every accessible area of the home: attic, crawl space, foundation perimeter, exterior wood framing, eaves, window frames, door frames, decks, pergolas, and any wood-to-soil contact. They're looking for:

• Active termite infestations (drywood or subterranean)
• Dry rot and wood-decay fungus
• Wood-boring beetles
• Prior damage from any of the above, even if not currently active

The inspector produces a written report that divides all findings into two categories.

Section 1 covers active infestation or damage happening right now. A live termite colony. Fungus actively breaking down a floor joist. A window sill where dry rot has reached the framing. Section 1 findings require treatment and written clearance before most lenders will fund the loan.

Section 2 covers conditions that aren't infested yet but create risk. A wood fence post in direct contact with soil. Wood framing closer to grade than code allows. Inadequate ventilation creating moisture buildup. Section 2 items are disclosed but aren't typically a requirement for loan funding.

That distinction matters because Section 1 creates an obligation, and Section 2 creates a negotiation.

Who Pays?

Under the standard California Residential Purchase Agreement (CAR Form RPA), the seller pays for the inspection report and any Section 1 clearance work. That's been the custom in this market for decades, and buyers expect it.

Section 2 items are negotiable. The buyer can request them. The seller can agree, decline, or offer a credit. In a competitive market, sellers routinely offer nothing beyond Section 1 clearance. In a slower or more balanced market, buyers push for Section 2 work or a credit toward it.

Here's what to budget:

• Inspection cost in Los Angeles: roughly $125 to $250, depending on property size
• Section 1 spot treatment: $500 to $1,500 for a localized infestation
• Full fumigation (tenting): $1,800 to $3,500 for a standard-size home, higher for larger properties
• Dry rot repairs: highly variable, often $1,500 to $15,000 or more depending on location and severity

On a 1950s or 1960s estate in the Hollywood Hills or a Laurel Canyon home with original wood siding, $5,000 to $10,000 in combined treatment and repairs isn't uncommon. Budget for it before you price the home.

For a full picture of what reduces your net proceeds at close, see What LA Sellers Pay at Closing: Your 2026 Net Sheet.

When Lenders Require It

Even though California law doesn't mandate a WDO inspection, lenders often do:

VA loans always require a pest inspection and Section 1 clearance in California. If the buyer is using VA financing and there are active Section 1 findings, they must be resolved before close. No exceptions.

FHA loans require a WDO report when the FHA appraiser flags any visible sign of pest damage during their property visit. In older LA homes, that's a realistic outcome.

Conventional and jumbo loans don't automatically require pest reports, but most buyers request them in any case. On a $3 million estate, a buyer's agent will almost always include a pest inspection contingency.

The Pre-Listing Inspection Question

Some sellers order a pest inspection before the home goes on the market. There are good reasons to do this.

If you have a 1940s craftsman in Los Feliz, a canyon bungalow above Sunset, or a hillside home with wood shingle siding, it's better to know what's there before a buyer's inspector finds it at day 12 of escrow, when the buyer has already removed their loan contingency and has maximum leverage to renegotiate.

A pre-listing inspection lets you:

• Treat known Section 1 issues before listing, so there's nothing to discover mid-escrow
• Price the property with accurate information
• Reduce the chance of a late surprise forcing a credit or price reduction

The trade-off is disclosure. If you order a report, you've seen it, which creates an obligation to disclose its findings to every prospective buyer, including Section 2 items. Most sellers who go through this process are glad they did. But it's worth talking through with your agent before you order, especially if you're uncertain about the property's condition.

Fumigation in Los Angeles

Drywood termites are common in older wood-frame construction throughout the Hills, canyon neighborhoods, and coastal communities. When an infestation is widespread enough that spot treatment won't reach every colony, the inspector may recommend full fumigation.

Fumigation means sealing the entire home under a tent of tarps, pumping in sulfuryl fluoride gas, and waiting 24 to 72 hours. The household must vacate completely: people, pets, houseplants, and any food that isn't in sealed containers or the refrigerator. The process from tent setup to clearance typically runs two to four days.

After treatment, the licensed inspector issues a Section 1 clearance letter. That letter is what escrow needs before the lender funds.

If you're selling a larger estate, an ADU, or a home with a detached guest house, fumigation costs scale with total square footage. Budget accordingly.

What Sellers Miss

You have to disclose what you know, regardless of whether you ordered a report. If you're aware of termite damage, dry rot, or fungus in the home, that's a material fact that belongs in your Transfer Disclosure Statement (TDS) and Seller Property Questionnaire (SPQ). Sellers who stay quiet about known issues face legal exposure. See Selling a House With Unpermitted Work in Los Angeles for context on how California's disclosure obligation works broadly.

Section 2 items stay in the buyer's hands. Once a report exists, a buyer's agent will use Section 2 items in negotiation. That's not necessarily a problem, but expect those conversations.

Reports have a shelf life. Most lenders want a pest clearance letter issued within 30 to 90 days of the close of escrow. If your escrow runs long, or if you ordered a pre-listing inspection several months before going on the market, you may need a reinspection.

Treatment takes time. Fumigation takes two to four days on-site, plus scheduling lead time. If Section 1 work isn't completed and cleared before the lender's funding deadline, escrow stalls. Build that into your timeline, especially if you're selling in the spring and summer peak season when pest companies are busy.

For a complete picture of what else sellers must complete before escrow can close in Los Angeles, including retrofit requirements and the mandatory 9A report, see What Los Angeles Home Sellers Must Do Before Escrow Can Close.

How It Affects Your Negotiation

Pest inspection results come up in two phases of escrow: during the buyer's investigation period and at the contingency removal stage.

During the investigation period (typically 17 days under the standard RPA, often negotiated shorter in competitive LA neighborhoods), the buyer reviews all inspection results and submits any repair requests. Section 1 items are generally expected from the seller, so there's usually not much fight there. The negotiation happens around Section 2.

If you've already cleared Section 1 before the buyer's inspector arrives, you've removed one significant source of escrow friction. That's a real advantage in competitive situations where you're fielding multiple offers.

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The pest inspection is one of those parts of the LA sale process that catches first-time sellers off guard. The cost is predictable, the process is well-established, and experienced sellers build it into their pre-listing budget without much drama.

If you're getting ready to sell and want to know what typically shows up on pest reports for homes in your specific neighborhood, I'm happy to talk through it. I can also help you think through whether a pre-listing inspection makes sense given your home's age and construction.

Get your home's current market value or reach out directly.

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Frequently Asked Questions

Is a termite inspection required to sell a home in Los Angeles?

California state law does not require a pest inspection to sell a home. But in practice, most lenders require one, VA-backed purchases always require it, and buyers almost always request it in their offer. Under the standard California Residential Purchase Agreement, the seller is expected to order the inspection and pay for Section 1 clearance.

Who pays for the termite inspection and Section 1 repairs in a California home sale?

Under the standard California purchase agreement, the seller pays for both the initial WDO inspection and any Section 1 clearance work, which covers active infestations and existing damage. Section 2 items (conditions that could lead to future infestation) are negotiable: the buyer can request them, and the seller can agree, decline, or offer a credit.

What is a Section 1 clearance in California?

Section 1 clearance means a licensed Structural Pest Control Board inspector has verified that all active infestations, infections, and ongoing damage identified in the original inspection have been treated. Escrow typically cannot close, and most lenders will not fund, until the seller delivers the Section 1 clearance letter.

How much do termite repairs cost in Los Angeles?

A localized spot treatment runs $500 to $1,500. Full fumigation for widespread drywood termites costs $1,800 to $3,500 for a standard home, higher for larger properties. Dry rot repairs depend entirely on severity and location, from a few hundred dollars for minor framing to $10,000 or more for damage that has spread into structural members.

Should I get a pest inspection before listing my home in Los Angeles?

For older homes, especially wood-frame construction in the Hills, canyon neighborhoods, or coastal communities, a pre-listing inspection is worth considering. It lets you address Section 1 issues on your schedule rather than scrambling mid-escrow under buyer pressure. The trade-off is disclosure: once you've ordered a report, you're obligated to share its findings with prospective buyers, including Section 2 conditions. Talk it through with your agent before you order.

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About Paul Blair

Paul Blair is the founder and broker of Grey Square, a virtual real estate brokerage representing buyers and sellers across Dallas and Los Angeles. With 22 years in the business and more than $200 million in closed transactions, Paul works the full range of the market, from luxury homes in the Park Cities and Preston Hollow to estates in the Hollywood Hills and across the Westside. Connect with Paul and the Grey Square team at greysq.com. TX TREC #9011505 · CA DRE #01792671.