The Inspector's Report Is Now a Legal Document
California codified the F1 thesis. The rest of us still treat the report as a checkbox.
Years ago I scoped a main plumbing line on a multifamily property I was evaluating. The inspector had already been through. Report came back clean. Numbers worked.
We pushed a camera down the line. Ten feet past the building, there was a crack.
Caught before close, the repair was thirty to fifty thousand dollars. Caught after close, the same crack becomes evacuation, sewage backup, displacement, health hazard, lawsuit. Five hundred thousand and up, fast.
The inspector did his job. He walked the building. He looked at what he could see. The thing that mattered was ten feet outside the foundation, underground, where no walkthrough ever goes.
Here is what is changing under us right now. As of April 22 of this year, California sellers of any 3+ unit property with balconies, decks, walkways, or elevated exterior elements have to disclose the most recent inspection report at sale. The state stopped trusting that buyers and sellers would handle it. They put it in writing.
Read that twice. Legislators wrote into law the thing that buyers should have been doing on their own. Not because the law caught up with best practice. Because too many people kept handing over six-figure checks based on a report that was, in the eyes of the people doing the inspecting, never meant to carry that weight.
A clean inspection report tells you what was visible the day someone walked through. It does not tell you what was behind closed doors. It does not tell you what was painted over the week before. It does not tell you what is ten feet outside the foundation. It tells you the person walking did not see a problem in the rooms they were shown.
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Here is the small piece you can act on. Before your next close, get three things in writing from your inspector. The exact scope they covered. The systems they did not access. The specific recommendations they would make if they were the buyer. If you cannot get all three on paper, you do not have an inspection report. You have a permission slip.
The plumbing scope on that deal cost a few thousand dollars. Without it, the answer was going to be paid by either the seller in a price cut, or the buyer in a catastrophe. There was no third option.
I am not anti-inspector. The good ones are worth every dollar. The point is that the report is a starting line, not a finish line. The state of California just agreed.
Next week I want to tell you about the time the answer was not in the inspection report at all — it was in a utility bill nobody had read for twenty months.
—Jon
P.S. — The $100K Blind Spot is the 9-system check I run before I buy any building — it’s how the six-figure surprise shows up while you can still walk away, not after you’ve signed. Live now, $29 founding rate, first 100 buyers → https://blueeyedcapital.com/eyes-open/blind-spot/