The Wisconsin Association of Home Inspectors, Inc. (WAHI) has a long history of working with the WRA on legislative issues that impact real estate transactions and home inspections – two very entwined industries. To effectively work through the changes brought forth by 2021 Wis. Act 17, commonly referred to as the “Home Inspector Bill,” the WRA and WAHI are partnering to help each other’s members have an understanding from the other group’s point of view.

New definition of defect

On March 28 this year, a new definition of defect pertaining to home inspections became law. The new definition is as follows:

A condition of any component of an improvement that a home inspector determines, on the basis of the home inspector’s judgement on the day of the inspection, would significantly impair the health or safety of occupants of a property or that, if not repaired, removed or replaced, would significantly shorten or adversely affect the normal life of the component of the improvement.

The new definition above differs from the definition in the WB-11 Residential Offer to Purchase form. The definition in the offer references “a significant adverse effect on the value of the property.” What that distinction means is that some conditions found may not be a defect according to the inspector’s definition but may meet that of the offer’s definition.

An old roof is a potentially good example of the discrepancy between the home inspector definition of defect and the offer’s definition of defect. For example, an inspector may find that a roof, while not leaking at the time of the inspection, is old and is nearing “the end of its useful life,” and the home inspector may note such in the report. However, because the condition of the roof may not apply to the home inspector definition of defect, the home inspector does not label the roof as a defect. However, the condition of the roof could meet the definition of defect in the offer to purchase if the roof, at the end of its useful life, significantly affects the value to the property, allowing the client to discuss the roof with their REALTOR^® as an item for negotiation in an amendment or possibly objecting to it in a Notice of Defects under the Inspection Contingency.

Required identification and classification of defects

Starting June 1, 2021, home inspectors will be required to classify a condition in a home as a defect if it aligns with the aforementioned new home inspector definition of defect.  

I anticipate that you, as a REALTOR^®, will see a variety of conditions deemed a defect from one inspector to another. Generally speaking, home inspectors will be performing and reporting on their findings in the same manner they always have. It is the placement of found items on the summary page that may be different. The same inspector who seldom, or never, used the classification of defect now will, when the condition meets the definition. WAHI’s message to its members has been to report the facts as you see them on the day of the inspection. 

Another category on the summary page to consider is “Needs Further Evaluation.” A condition reported by the inspector in need of further evaluation may elevate to a defect based on the findings of the specialist brought in. An inspector may see an orange flame in a furnace indicating something is wrong, but to what extent? Home inspectors are generalists, much like that of a general practitioner for your health care; we are looking for indications that something might be wrong, but it is the “specialist” who determines how wrong. 

Required summary page

2021 Act 17 also includes that a summary page be included in every inspection report as of June 1, 2021. This summary will certainly prove to be a useful tool for all parties involved, but it is not intended to be a substitute for the entire report. All clients will be strongly encouraged to read the entire report and to not rely solely on the summary page rankings before discussing any negotiations with their REALTOR^®.

The new law calls for prescribed headings on the summary page. The headings are: 

• Defects
• Items Needing Repair
• Items Needing Further Evaluation
• Items to Monitor 
• Maintenance Items

An inspector may include additional headings if they choose. 

To further aid the client and other parties involved, each item included on the summary page must have a “link” to take the reader to the area of the report that will provide further detail, such as a section heading, section number or page number, for example. The “links” will help all parties involved navigate through the report more efficiently. 

The summary page also includes three required statements:

1. That the summary is not a substitute for the full report.
2. Explanation of how the definition of defect for the purpose of the inspection alone differs with the definition of defect in the offer to purchase. 
3. A home inspector cannot comment on the value of the home or the marketability or whether the client should purchase the home.

Education and communication

2021 Wis. Act 17 also requires incoming inspectors to obtain 40 hours of pre-registration education. This will improve the knowledge and confidence of new inspectors and result in raising the quality of the home inspection industry in Wisconsin overall. 

As the new law is implemented by all inspectors, communication will be key to ensure the transition goes smoothly for all. There may be bumps in the road — talk through those “bumps” to ensure a better understanding for all. 

A real estate transaction is a team effort. REALTORS^® and inspectors alike want to make sure their clients are making an informed decision on what is typically considered to be the biggest purchase of their life. The WRA and WAHI are committed to work together to make sure that the changes brought about by the new law keep the client’s best interest at the forefront of the transaction.

Ric Thompson is the owner of Ace Home Inspections in Fond du Lac, offering home and property inspections in the Fox Valley area. Ric has over 20 years of experience in construction and was a successful REALTOR^® for six years.

As the current president of the WAHI, Ric has a unique combination of being a multi-million dollar producer as a REALTOR^® and 20 years in residential construction. This experience has allowed Ric to run a successful inspection business including over 1,000 inspections since September 2016. In addition, Ric also serves as the president of the Fox Valley Chapter of WAHI.