Last Updated: March 2026 | Legal & Real Estate Audit by The PCC Research Team
If you are buying or selling a home in California, the phrase “Section 1 Clearance” will inevitably come up during escrow. Because termites cause billions of dollars in structural damage across the state, mortgage lenders require proof that the home is structurally sound before they approve a loan.
To get this proof, a licensed inspector must generate a formal Wood Destroying Pests and Organisms (WDO) Inspection Report. This document categorizes the condition of the home into “Section 1” and “Section 2” findings. Understanding the difference—and knowing who pays for what—is critical to closing the deal without losing thousands of dollars.
Section 1 vs. Section 2: What is the Difference?
Under the regulations of the California Structural Pest Control Board (SPCB), an inspector must classify their findings into two distinct legal categories on the WDO report:
| Section 1 Findings (Active Threat) | Section 2 Findings (Preventative) |
|---|---|
| Refers to areas with active infestations or active infections that are currently causing damage to the property. | Refers to areas with conditions that are likely to lead to an infestation or infection in the future, but no active bugs or rot are currently present. |
| Examples: Live Drywood termites found in the attic, Subterranean mud tubes on the foundation, active dry-rot fungus destroying a patio beam. | Examples: A plumbing leak under the sink, earth-to-wood contact on the exterior siding, or faulty grading causing water to pool against the foundation. |
| The Lender Rule: Almost all mortgage lenders (especially VA and FHA loans) require Section 1 items to be completely treated and repaired before they will clear the loan for escrow. | The Lender Rule: Usually considered “buyer’s maintenance.” Lenders rarely require Section 2 items to be fixed to close escrow. |
In California, many pest control companies perform both the inspection *and* the structural wood repair. This creates a massive conflict of interest. An unscrupulous inspector may classify minor cosmetic damage as a severe “Section 1” structural failure just to generate a $5,000 repair contract for their carpentry division. Always consider getting your inspection from an “Inspection-Only” company, and hire a separate general contractor for the repairs.
How Do I Get the “Clearance”?
A “Clearance” is not a separate inspection; it is a legally binding document generated by the pest control company stating that the property is now free of active infestation in the areas originally cited.
- The WDO Report is Generated: The inspector files the initial report detailing the Section 1 damage (e.g., “Termites in the eaves”).
- The Treatment & Repair: The seller (or buyer) hires a company to tent the house and replace the damaged wood.
- The Notice of Work Completed: Once the work is finished, the pest control company files a Notice of Work Completed and Not Completed with the state. This document serves as the official “Section 1 Clearance” that you hand to your escrow officer to satisfy the lender.
Who Pays for Section 1 Repairs? (Buyer vs. Seller)
California law does not mandate who pays for termite repairs—it is entirely negotiable between the buyer and the seller during the escrow process. However, standard real estate customs dictate the following:
In a “Buyer’s Market”
The Seller usually pays for all Section 1 termite treatments and wood repairs to ensure the house is move-in ready and the buyer’s loan gets approved without friction.
In a “Seller’s Market”
Sellers will often list the home “As-Is.” The buyer is responsible for paying for the WDO inspection during their contingency period. If Section 1 damage is found, the buyer must either accept the cost of future repairs, attempt to negotiate a credit/price reduction, or walk away from the deal.
Need a WDO Inspection for Escrow?
Escrow deadlines are tight. Do not risk your closing date by waiting until the last minute. Find a licensed California Branch 3 Structural Pest Control operator to generate your official report and provide a clearance today.
Call For WDO Inspection: (866) 204-1751Frequently Asked Questions
Q: How long is a termite clearance good for in California?
A: By law, a WDO inspection report and its corresponding clearance are valid for four (4) months from the date of the initial inspection.
Q: Can I do the Section 1 wood repairs myself to save money?
A: Technically, yes, a homeowner can perform their own repairs. However, the pest control company must return to re-inspect the work before they will legally sign off on the Clearance. If your carpentry is not up to code, they will refuse to issue the clearance, delaying your escrow.
Q: Does Section 1 include Dry Rot and Fungus?
A: Yes. The WDO report covers all “Wood Destroying Organisms.” Active dry-rot fungus destroying a patio beam is classified as a Section 1 item and must be repaired to get a clearance, even if there are no bugs present.