The Inspector Advisory Committee (IAC) met on July 12th in Austin. This was the first meeting that the IAC has had in person in some time, and it was good to be face to face again. There were a few items on the agenda this go around that entailed some lengthy discussion. The IAC discussed comments received on the proposed rule to require an inspector to obtain permission in writing from a client prior to obtaining a referral fee, or other valuable consideration, for referring services that are not settlement services. A client’s permission is currently required, and the new proposed rule adds that the permission obtained must be in writing. This was done just for clarification purposes. Keep in mind that this is only in regard to what is considered “non-settlement services.” It is still a rule, and RESPA violation, to accept a referral fee for referring services for a settlement service. What defines a settlement service is spelled out in the rule itself.
The newly proposed Standards of Practice and Standard Report Form 7-6 were also discussed. There was a substantial amount of public feedback that was provided this time around. This is likely in large part due to the new online public comment tool on the TREC website. Most of the feedback was insightful and constructive, coming from inspectors and real estate licensees alike. The feedback was discussed, some non-substantive modifications were made in response, and the rules and form amendments will be forwarded to the Commission for final approval next month. I want to thank everyone who took the time to go through the proposals and provided quality feedback that helps ensure that these Standards assist us as inspectors and protect consumers alike.
Another item up for discussion was walk-through inspections. A growing number of inspectors are performing, or being asked to perform, “walk-through” inspections on properties. With the high demand for properties in today’s market and the incredible competition for houses, some are trying to gain every advantage that they can. Some inspectors offer to do a short consultation by walking through the house and not providing a report (sometimes before an offer is made on the property). The IAC noted the importance of getting the message out that such walk-throughs conducted by a licensed inspector must be done in accordance with the Inspector License Act and TREC rules. As such, any time a licensed inspector consults on the general condition of a property that is a part of or subject to a sales transaction (or potential sales transaction) for a prospective buyer or seller of real property, the Standards of Practice apply. Additionally, the inspector is required to provide a report on the Standard Report Form. Inspectors that perform these types of inspections without following the Standards of Practice could be subject to disciplinary action by TREC. The IAC noted the importance of getting this message out to the Inspector community, so I wanted to share the details of this conversation with readers. Stay tuned for further discussion and articles by TREC regarding this important topic.
The next meeting of the Inspector Advisory Committee will be in person, and via teleconference, on October 11th at 10 am.