Material Defects Defined for Home Inspectors

by Nick Gromicko and Kate Tarasenko
 
 
From time to time, we receive requests from members asking us to write an article on a specific topic.  Member Pete Campbell recently asked us to produce an article on how to identify material defects, and this generated much behind-the-scenes discussion. 
 
According to InterNACHI's Standards of Practice for Performing a General Home Inspection, inspectors are required to identify and report material defects of the visible and accessible structure, systems and components of a residential property.  At the outset, it's worth noting that some inspectors are confused by the meaning of "material."  In this use, "material" is an adjective that refers to something of significant importance, rather than a tangible part of the home. 
 
The dictionary defines the adjective "material" as "relevant and consequential," and it is this definition that applies to Residential Standard 1.2:
 
1.2.  A material defect is a specific issue with a system or component of a residential property that may have a significant, adverse impact on the value of the property, or that poses an unreasonable risk to people.  The fact that a system or component is near, at or beyond the end of its normal useful life is not, in itself, a material defect. 
 
Most InterNACHI inspectors can instinctively determine what qualifies as a material defect.  We can show all types of photos of defects in general (which we have, courtesy of Marcel Cyr, who diligently collects and archives inspection photos submitted by our members, much to our appreciation), and these may or may not be illuminating for the individual inspector.  However, more than any particular photos, we've found the discussion itself illuminating.
 
We want to clarify some points when it comes to the question of identifying and reporting material defects:
 
  1. In your reports, don't categorize items specifically as "defects" and "material defects." 

  2. You are required to report only "material defects," but many (if not most) inspectors over-report, calling out lesser problems, such as a gutter with rusted seams.  But specifically categorizing the individual problems as "material" versus "non-material" may confuse the client and open the door to unnecessarily greater liability, especially if you're wrong about their actual nature.

  3. While an inspector may limit him/herself to reporting only material defects based on InterNACHI's SOP, s/he is not prohibited from reporting non-material defects. 

    A good rule of thumb that many inspectors follow is to report those accessible and observed items that may fall outside the SOP that they'd want to know about if they were the client, like those rusted gutter seams.  Over-reporting is a personal decision driven by economics, time, customer service, and a host of other parameters, and these may change depending on the property itself.

  4. Don't confuse your duty with the definition.

    A material defect must be reported based on what is observed by the inspector.  Those not observed or discovered cannot be reported, even though they may adversely impact the value of the property or pose an unreasonable risk to people.  Think of faulty wiring or plumbing behind walls that is not evidenced by anything accessible outside the walls that the inspector observed and evaluated. 

  5. A material defect is a defect which is both observed and deemed material in nature by the individual inspector.  

    It is the inspector's own experience and judgment that enable him/her to make the ultimate decision to call out a defect as material, which is why there is no specific photo or lengthy checklist that can teach or tell the inspector what constitutes one (although we've made an effort for purposes of this article). 

  6. Bearing in mind #4, InterNACHI's Standards of Practice provides a baseline for the structure, systems and components that should be inspected, regardless of the nature of any defects observed in them. 

    An inspector could be found liable for failing to inspect and call out problems with such items, as long as they were accessible.  (And if they weren't accessible, this fact should be noted in the report.)  A good example is balusters on a deck or staircase that are more than 4 inches apart, which presents a safety hazard.  On the other hand, the absence of insulation in the attic is not considered a material defect because it poses neither a safety risk nor a realistic threat to a real estate deal (because it's relatively easy and quick to remedy), but inspectors are nevertheless required to report this under the SOP (see 3.9.D.).

  7. While inspectors are expected to present their unbiased assessment of a property irrespective of the details of a pending real estate transaction, s/he is being hired to inspect a property and render an expert opinion. 

    Much like a doctor or lawyer, it is the inspector's opinion-for-hire that naturally bears on the deal. 

    As noted in the SOP's Limitations, Exclusions & Exceptions (2.0), "[a]n inspection does not determine the market value of the property or its marketability" (2.1.V.), or its insurability (2.1.VI.) or the advisability or inadvisability of its purchase (2.1.VII.), but it's an unquestionable reality that the inspector's training and subsequent opinions are brought to bear on matters that have financial consequences. 

    A home-buying client who receives a report listing all the things that need attention in a house without any context as to their cost or seriousness is like a taking a vehicle in for a pre-purchase inspection and receiving a list of items in random order that ranges from a timing belt (whose replacement won't be needed for another 20,000 miles) to an oil change (that's 5,000 miles overdue).  Some problems are predictable, and while inspectors are not obligated to provide details on what could happen should a repair go unaddressed (see 1.1.I and 1.1.II.), a report of defects without any context can be an overwhelming and daunting document upon which a client will be relying for long-term financial decisions.  Inspectors must tread a fine line between providing a worthwhile service and staying within the SOP (and client agreement) such that their liability is as limited as possible.  Using brief but relevant narratives is key, in addition to including an end-of-report summary that alerts the client to urgent issues.

  8. A material defect is one which is both observed and deemed by the inspector to pose a safety risk or jeopardize a real estate transaction—some material defects do one and not the other, but many do both

    We've presented some photos below that may challenge your assumptions.
 
With these points in mind, here are just some examples of defects from actual home inspections conducted by InterNACHI inspectors, who run across such issues every day.  Thanks to all of you for taking the time to share your documented horrors, bewilderment and just plain bemusement!
 
The Roof
 
Courtesy of Peter Russell

 

This house has great curb appeal, right?
 
 

Courtesy of Peter Russell

                                                            Material Defect? 
[ ]  Adversely affects the value of the property 
[ ]  Poses an unreasonable risk to people 
[ ]  Both
[ ]  Neither
 
It wasn't until member Peter Russell walked the roof that he discovered that a curious attempt was made to replace the visible sloping face of the roof while neglecting the all-important top surface, whose shingles are beyond the end of their service life.  Although the age of a system or component relative to its service life has no technical bearing on whether it constitutes a material defect, it is reasonable to assume that this roof will allow rainwater to penetrate the deteriorated surface and underlayment.  Moisture will also likely enter through the lip of the new shingles.  A prospective home buyer would understandably walk away from this house until its entire roof was re-shingled properly.  An unfinished roof like this could be deemed a material defect because it adversely impacts the value of the house. 
 
 

Courtesy of Marcel Cyr

 
                                                             Material Defect? 
[ ]  Adversely affects the value of the property 
[ ]  Poses an unreasonable risk to people 
[ ]  Both
[ ]  Neither
 
Marcel Cyr's photo above shows an unfaced roof edge with a dozen layers of shingles on top.  Many homeowners attempt DIY roof projects without understanding the need to strip worn shingles before adding new ones.  The raw, out-of-plumb wooden supports are exposed to the elements, and the multiple plys add excess weight to the roof structure, which could prove to be dangerous.  It is also likely that there is no protective underlayment, the absence of which will allow moisture to eventually enter the interior and damage other structural members.
  
The Exterior
 
 
Courtesy of Mike Auger 
 
                                                            Material Defect? 
[ ]  Adversely affects the value of the property 
[ ]  Poses an unreasonable risk to people 
[ ]  Both
[ ]  Neither
 
InterNACHI member Mike Auger inspected this home whose exterior has seen better days.  In addition to its aesthetic offensiveness, its shingles are so decayed that they've exposed the supporting structure underneath, which will continue to allow wind and water, as well as pests, easy access to the interior, leading to further degradation of the home's systems. 
 
 

Courtesy of Bob Elliott

 
                                                            Material Defect? 
[ ]  Adversely affects the value of the property 
[ ]  Poses an unreasonable risk to people 
[ ]  Both
[ ]  Neither
 
The photo above, supplied by member Bob Elliott, shows a deteriorated architectural feature made of parge coating on the brick face of this building.  It's visibly detaching from the structure, as well as cracking into pieces.  It will continue to deteriorate, crack, break off and fall onto unsuspecting passersby below, potentially causing injury and creating a serious liability issue for the owner.  This may or may not be a deal-breaker for a buyer, as the ultimate decision in the transaction is determined by his/her risk-tolerance.
 
The Foundation
 

Courtesy of David Valley

 
                                                            Material Defect? 
[ ]  Adversely affects the value of the property 
[ ]  Poses an unreasonable risk to people 
[ ]  Both
[ ]  Neither
 
Member David Valley supplied this photo of a bowed basement wall, which shows evidence of repairs, including cement applied over cracks and metal bracing installed for vertical support.  Horizontal cracking or sweeping of masonry walls is a potentially serious problem. 
 
The actual source of problems with foundation walls can be difficult to diagnose because it could be the result of other issues, such as studs, columns or beams that have deteriorated for some reason and can no longer support the design load.  This can create a domino effect of weakening of the individual components of the foundation system. 
 
Visible defects at foundations can be categorized as:
  • architectural, which are primarily cosmetic, resulting from minor separation of components;
  • functional, which can cause windows and doors to stick and floors to slope; and
  • structural, which can threaten the stability of the building.
Repairs to functional and structural problems can be complicated and expensive.  Inspectors should defer further evaluation of such visible defects to a structural engineer, who is trained to diagnose and provide recommendations to remedy such issues.
 
Attached and Ancillary Structures 
 
 

Courtesy of David Macy

 
                                                            Material Defect? 
[ ]  Adversely affects the value of the property 
[ ]  Poses an unreasonable risk to people 
[ ]  Both
[ ]  Neither
 
The deck pictured above shows several telltale signs of water damage and is improperly attached to the home.  It's only a matter of time before it fails.  Although it appears to be installed only a few feet above ground level, it can still cause serious injury and is unsafe for occupation.  Thanks to member David Macy for providing this photo.
 
 

Courtesy of Brian Smith

 
                                                            Material Defect? 
[ ]  Adversely affects the value of the property 
[ ]  Poses an unreasonable risk to people 
[ ]  Both
[ ]  Neither
 
Although this issue may be relatively easy to address, these exterior back stairs, photographed by Brian Smith, are clearly unstable and unsafe.  Furthermore, the hose bib jutting out through the deteriorated masonry reveals wet structural members, as well as a large and hospitable entrance for undesirable critters looking for a warm place to start a family.
 
 

Photo courtesy of David Valley


                                                            Material Defect? 
[ ]  Adversely affects the value of the property 
[ ]  Poses an unreasonable risk to people 
[ ]  Both
[ ]  Neither
 
This garage structure is leaning, and the manual-lift garage door may be stuck open.  A building can sometimes suddenly collapse without much notice, and this garage may not be entered safely until the problems with its foundation and stressed and weakened supports are addressed.  Thanks to member David Valley for providing this photo.
  
Interior Structure
 

Courtesy of Frank Carrio

 
                                                            Material Defect? 
[ ]  Adversely affects the value of the property 
[ ]  Poses an unreasonable risk to people 
[ ]  Both
[ ]  Neither
Frank Carrio discovered that the flooring of this new-construction home was significantly unlevel.  While inspectors aren't necessarily required to look for such anomalies, a few clues, such as having one's natural stride interrupted, can alert him or her to break out the measuring devices to confirm the issue.  Especially if the home is still under the builder's warranty, a problem as widespread as uneven flooring can prove to be a deal-breaker.
 

Courtesy of John Shishilla

 
                                                            Material Defect? 
[ ]  Adversely affects the value of the property 
[ ]  Poses an unreasonable risk to people 
[ ]  Both
[ ]  Neither
This door is clearly out of plumb and, in addition to presenting problems with sticking and a lack of privacy (and increased or unwanted air flow), it serves as a symptom of greater structural issues that need to be further investigated and possibly deferred to a structural engineer.  In older homes, such as this one, it may or may not be feasible to fix such issues, but they could significantly affect the home's sale price.  Thanks to member John Shishilla for this photo.
 
Electrical
 
The electrical inspection begins with the exterior. 
 
                                                            Material Defect? 
[ ]  Adversely affects the value of the property 
[ ]  Poses an unreasonable risk to people 
[ ]  Both
[ ]  Neither 
 

Courtesy of Chuck Evans

 
This bare wiring at the service entrance is a serious hazard that can lead to a house fire.  Many older homes' utility connections suffer from similar deterioration.  It may be up to the utility company to upgrade the connection.  Regardless of whose responsibility this type of repair is, the inspector should be sure to call it out.  Thanks to member Chuck Evans for this photo.
 
 

Courtesy of John Evans


                                                            Material Defect? 
[ ]  Adversely affects the value of the property 
[ ]  Poses an unreasonable risk to people 
[ ]  Both
[ ]  Neither
Member John Evans discovered several defects with this main panelboard, including rusted breaker switches and a lack of labeling.  The rust may indicate previous moisture intrusion.  If the power goes out and a breaker needs to be re-set, this faulty electrical component can lead to a short, a shock, or an electrical fire, which can spread quickly throughout the house.
 
HVAC
 

Courtesy of Marcel Gratton

 
                                                            Material Defect? 
[ ]  Adversely affects the value of the property 
[ ]  Poses an unreasonable risk to people 
[ ]  Both
[ ]  Neither
Marcel Gratton's photo above shows a blocked and rusted vent that will not allow warm air through the register and into this room.  While this damper may not be expensive in and of itself to replace, it could signal further problems down the line with the furnace and its age and maintenance, which the inspector should investigate as fully as possible.
 
 

Courtesy of Michael Bazzo

 
                                                            Material Defect? 
[ ]  Adversely affects the value of the property 
[ ]  Poses an unreasonable risk to people 
[ ]  Both
[ ]  Neither
Member Michael Bazzo discovered this gas shut-off valve located inside the fireplace hearth.  Its rusted condition is secondary to the literally explosive danger it poses when the fireplace is in use.
 
Plumbing
 

Courtesy of Robert Spermo

 
                                                            Material Defect? 
[ ]  Adversely affects the value of the property 
[ ]  Poses an unreasonable risk to people 
[ ]  Both
[ ]  Neither
 
The temperature-/pressure-relief valve on this water heater, photographed by member Robert Spermo, has been modified using an extension of copper tubing to accommodate the tight space.  However, the extra pipe mitigates the TPR valve's ability to accurately gauge the pressure and temperature of the water, which may lead to a leaking or even burst water heater or, as a worst-case scenario, a ruptured gas line, which can lead to a fatal house explosion.
 
 

Courtesy of Patrick Bolliger

 
                                                            Material Defect? 
[ ]  Adversely affects the value of the property 
[ ]  Poses an unreasonable risk to people 
[ ]  Both
[ ]  Neither
 
This outdated electrical receptacle is located too close to a water source and is not GFCI-protected, as required.  It's a problem by itself and also signals that the entire electrical system may be outdated.  While an older system is not necessarily dangerous, it may be, and it also may not provide the needs of a family by way of an adequate number of receptacles per room and wall space,as well as the required GFCIs in the kitchen and other bathrooms, and a safe and accessible panelboard.  Thanks to Patrick Bolliger for this photo.
 
Liability:  Protection Beyond Physical Safety
 
The photos in this article don't even scratch the surface of the routine defects that inspectors discover every week.  Material defects can result from a number of causes (and even combination of causes), including:  poor construction practices; unsafe, improper and obsolete installations; deferred maintenance and neglect; and time.  Remember that these causes can affect a home of any age.  Some of these defects are obvious, and some are not.  InterNACHI inspectors should both disclaim items that they can't fully investigate and recommend further evaluation by qualified professionals for items that they suspect or that appear to be a hazardous, material defect.  
 
Home buyers should remember that a seller's disclosure is not always a legally airtight means of recourse if a material defect is discovered after the sale; what a seller did and did not know about the home for sale may be difficult to prove in court even with a seller's disclosure.  That's why it's essential for home buyers to obtain a home inspection prior to signing on the dotted line.
 
Inspectors face a certain level of liability for failing to discover a material defect; one rule of thumb is that it's better to over-report than under-report, to err on the side of caution and exceed the SOP.   Also, using digital photos to document visible defects is a nearly fail-safe way for inspectors to augment their inspection reports that may be used for evidence at a later time. 
 
Inspectors may further wish to help their clients explore essential upgrades that will eliminate potential health and safety hazards, and giving them a copy of InterNACHI's Estimated Life Expectancy Chart can help establish a baseline for components and systems that may be of concern. 
 
First and foremost, an inspector should work safely, even if it means not inspecting an item or area, while being sure to alert his/her clients of the potential danger. 
 
 
Thanks to our InterNACHI members for sharing their photos for the benefit of the membership! 
 
 

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