Legislation Makes Requirements for Home Inspection Reports

Wisconsin REALTORS® Association Page 1 Legal Update, May 2021

The purchase of a home is typically the single largest investment a

person makes. As a result, buyers purchasing a home want to understand

the conditions relating to the home. Neither real estate licensees nor legal

counsel are the experts when it comes to understanding the condition of

the property. The expertise as to the condition of the property belongs to

the home inspector.

For obvious reasons, there is a great deal of emphasis placed on the

home inspector’s report.

The Home Inspection

What is a home inspection?

The home inspection is where a home inspector, who is registered in the

state of Wisconsin by the Department of Safety and Professional Services,

examines the readily accessible observable systems and components

of improvements to residential properties. The home inspector’s report

is the written opinion of the home inspector regarding the condition of

any improvements, as well as mechanical and structural components of

residential property that contains no more than four dwelling units.

What is required during a home inspection?

It is important to ﬁrst understand what a home inspector must do, is not

obligated to do and can never do when it comes to the inspection and its

related report.

A home inspector must observe and describe:

1. FOUNDATIONS: type and condition of foundation.

2. COLUMNS: type and condition of columns.

3. FLOORING SYSTEMS: type and condition of ﬂooring systems.

4. ROOFS: roof coverings, including type, roof drainage systems,

ﬂashings, skylights, chimneys, roof penetrations, and signs of

leaks or abnormal condensation on building components. The

home inspector must describe the methods used to observe the

roof.

5. EXTERIORS: wall claddings, including type; ﬂashings and trim;

entryway doors and at least one window per side of a dwelling

unit; garage door operators, including whether any garage

door operator automatically reverses or stops when meeting

reasonable resistance during closing; decks, balconies, stoops,

steps and porches including railings; eaves, soﬃts, and fascias;

and grading, drainage, driveways, patios, walkways, and retaining

walls that abut the dwelling unit. A home inspector shall operate

all entryway doors, garage doors, and at least one window per side

of a dwelling unit.

6. PLUMBING SYSTEMS: interior water supply and distribution

system, including piping materials, supports, ﬁxtures, faucets,

functional ﬂow and drainage, leaks and cross connections; interior

drain, waste and vent system, including traps, drain, waste,

and vent piping, piping supports and leaks; hot water systems,

including water heating equipment, normal operating controls,

automatic safety controls, and the exterior surfaces of chimneys,

ﬂues, and vents; fuel storage and distribution systems, including

interior fuel storage equipment, supply piping, venting, supports

and leaks; and sump pumps. A home inspector shall operate all

plumbing ﬁxtures, including their faucets and accessible exterior

faucets attached to the dwelling unit.

7. ELECTRICAL SYSTEMS: service entrance conductors; service

equipment, grounding equipment, main over current device;

main and distribution panels, including their location; amperage

MAY 2021, 21.05

Legislation Makes Requirements

for Home Inspection Reports

IN THIS ISSUE

The Home Inspection

New Legislation

 REALTOR

Practice Tip

The new legislation requires pre-registration education for

new home inspectors. Before the law change, to become a

Wisconsin-registered home inspector, there was no education

required before taking the necessary exams. However, the law

now requires those who wish to become a Wisconsin-registered

home inspector to complete 40 hours of education before taking

the examinations.

Wisconsin REALTORS® Association Page 2 Legal Update, May 2021

and voltage ratings of the service, including whether service

is overhead or underground; branch circuit conductors, their

over current devices, and the compatibility of their ampacities

and voltages, including any aluminum branch circuit wiring; the

operation of a representative number of installed lighting ﬁxtures,

switches and receptacles located inside the house, garage and

any exterior walls; the polarity and grounding of all receptacles

within 6 feet of interior plumbing ﬁxtures, in the garage or carport,

and on the exterior of inspected structures; the operation of

ground fault circuit interrupters; and the functionality of the power

sources for smoke detectors.

8. INTERIORS: walls, ceilings and ﬂoors; steps, stairways, balconies

and railings; counters and all sink base cabinets; a random

sample of doors and windows; separation walls, ceilings, and

doors between a dwelling unit and an attached garage or another

dwelling unit; and signs of water penetration into the building

or signs of abnormal or harmful condensation on building

components.

9. HEATING SYSTEMS: the condition of all of the following within a

permanently installed heating system: heating equipment and

distribution systems; normal operating controls and energy

source; automatic safety controls; exterior surfaces of chimneys,

ﬂues and vents; solid fuel heating devices; and the presence of an

installed heat source in each room. A home inspector shall operate

the heating systems using normal operating controls and open

readily accessible access panels provided by the manufacturer or

installer for routine homeowner maintenance.

10. CENTRAL AIR CONDITIONING: the condition of the cooling and air

handling equipment, including type and energy source; normal

operating controls; and the presence of an installed cooling

source in each room. A home inspector shall operate the central air

conditioning systems, using normal operating controls, and open

readily accessible access panels provided by the manufacturer or

installer for routine homeowner maintenance.

11. INSULATION AND VENTILATION: the presence or absence

of insulation in unﬁnished spaces; ventilation of attics and

foundation areas; and the condition of kitchen, bathroom, and

laundry venting systems.

A home inspector may, but is not obligated to observe and describe:

1. ROOFS: walk on the rooﬁng; observe attached accessories,

including, but not limited to, solar systems, antennae, and

lightning arrestors; and observe internal gutter and downspout

systems and related underground drainage piping.

2. EXTERIORS: observe storm windows, storm doors, screening,

shutters, awnings, and similar seasonal accessories; observe

locks, latches or other security devices or systems; observe

intercom systems; fences or privacy walls; observe insulation or

vapor barriers in exterior walls; observe safety glazing; observe

garage door operator remote control transmitters; observe

geological or soil conditions; observe recreational facilities;

observe outbuildings other than garages and carports; and

observe trees, shrubs and other vegetation.

3. PLUMBING SYSTEMS: state the eﬀectiveness of anti-siphon

devices; determine whether the water supply and waste disposal

systems are public or private; operate automatic safety controls or

sump pumps equipped with internal or water dependent switches;

operate any valve except water closet ﬂush valves, ﬁxture faucets

and hose faucets; observe water conditioning systems, ﬁre and

lawn sprinkler systems, on-site water supply quantity and quality,

on-site disposal systems, foundation drainage systems, or spas;

observe the interior of ﬂues, chimneys and vents, or solar water

heating systems; observe exterior plumbing components such as

water mains or swimming pools; determine water temperature; and

determine the proper sizing, design or use of plumbing materials.

4. ELECTRICAL SYSTEMS: insert any tool, probe or testing device

inside the panels; test or operate any over current device except

ground fault circuit interrupters; dismantle any electrical device or

control other than to remove the covers of the main and: auxiliary

distribution panels; observe low voltage systems, telephones,

security systems, cable TV, intercoms, or other ancillary wiring

that is not a part of the primary electrical distribution systems;

and measure amperage, voltage, or impedance.

5. INTERIORS: observe paint, wallpaper, and other cosmetic ﬁnish

treatments on the interior walls, ceilings and ﬂoors; observe

carpeting; observe draperies, blinds or other window treatments;

observe household appliances; and observe recreational facilities

or another dwelling unit.

6. HEATING SYSTEMS: operate heating systems when weather

conditions or other circumstances may cause equipment damage;

operate automatic safety controls; ignite or extinguish fuel ﬁres;

observe the interior of ﬂues, ﬁreplace insert ﬂue connectors,

humidiﬁers, electronic air ﬁlters, or the uniformity or adequacy of

heat supply to the various rooms; and observe a heat exchanger

unless it is readily observable and normally accessible to an

occupant of a dwelling unit.

7. CENTRAL AIR CONDITIONING: operate cooling systems when

weather conditions or other circumstances may cause equipment

damage; observe non-central air conditioners; observe the

uniformity or adequacy of cool-air supply to the various rooms;

operate electronic air ﬁlters; observe the pressure of the system

coolant or determine the presence of leakage; and test the

electrical current drawn by the unit.

8. INSULATION AND VENTILATION: concealed insulation; and venting

equipment that is integrated with household appliances.

A home inspector is never permitted to in writing or verbally report on:

1. The market value or marketability of a property.

2. Whether a property should or should not be purchased.

New Legislation

Before this new legislation

A few years ago, the WRA embarked on a path to help better align the

terminology used in the real estate transaction by sellers (“defect” in

the Real Estate Condition Report) and by buyers and sellers (“defect” in

the oﬀer to purchase), to the terminology used by the home inspector in

the home inspection report. In this legislative endeavor the WRA worked

with the Wisconsin Association of Home Inspectors (WAHI) to modify the

home inspector terminology used in the report. Before this legislation was

passed, the home inspector statute used the phrase “material adverse

fact.” Therefore, as of July 1, 2018, when a home inspector called something

a defect in the inspection report, the condition had to meet the deﬁnition

Wisconsin REALTORS® Association Page 3 Legal Update, May 2021

contained in the home inspector statute of Wis. Stat. § 440.97(2m).

Further, this legislation provided that while the item had to meet the

deﬁnition of defect in the home inspector statute if the home inspector

called an item a defect in the report, the law did not require home

inspectors to use the word defect. The WRA was cautiously optimistic

this consistency change in terminology was going to resolve the constant

complaint that the home inspector’s failure to use the word defect in the

report was creating serious challenges in the transaction. Thus, the WRA

along with WAHI knew there was a high probability that legislation may be

needed in the future to address the overall issue of the use of the word

defect in the report.

After a couple of years, it quickly became apparent that the law needed

to be changed because home inspectors were inconsistently using the

word defect in their report because the law did not require them to do

so. Therefore, some used the word defect in some of their reports and

not in others, some used diﬀerent phrases to describe defects such as,

“major issues,” “major concerns,” “signiﬁcant issues,” and “potential

safety and health issues,” further creating consumer inconsistencies as

to what terms home inspectors were using to describe a defect. During

the last session in 2019-2020, the WRA pursued legislation to address

the inconsistencies. However, due to COVID-19, the legislation failed to

meet the ﬁnal step of passing the senate ﬂoor because the pandemic shut

down the Legislature.

The new legislation

Once the new 2021-2022 legislation session began, the WRA once

again had the legislation introduced. After getting through committee

hearings and ﬂoor dates, all with unanimous votes, Gov. Evers signed

2021 Wis. Act 17 into law with the report requirements becoming eﬀective

June 1, 2021.

Therefore, as of June 1, 2021, all home inspection reports will

contain certain and consistent information, creating an expectation of

consistency for all involved in the real estate transaction.

Home inspectors were required to identify defects during

the home inspection before the new legislation.

Home inspectors have been legally required to identify conditions that

are defects during the home inspection; this legislation does not modify

that requirement. See Wis. Stat. § 440.975. Further, the law included a

deﬁnition of defect in the home inspector statute.

This legislation DID NOT expand the home inspector

deﬁnition of defect.

The new law did modify the deﬁnition of defect in the home inspector

statute to statutorily clarify that defect is what the home inspector

determines based on their judgment at the time of the inspection. This

modiﬁcation reduced concerns that buyers perceive home inspectors

are guaranteeing there will not be any defects in the future. Further, this

change ensures that the buyer understands that the home inspector is

identifying conditions as of the day of the inspection and not making any

warranties as to the future condition of the property.

How was the home inspector defect deﬁnition modiﬁed?

Therefore, under the new legislation, the home inspector deﬁnition of

“Defect” means a condition of any component of an improvement that a

home inspector determines, on the basis of the home inspector’s judgment

on the day of an 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 expected normal life of

the component of the improvement. See Wis. Stat. § 440.97 (2m).

This legislation DID NOT change the home inspection

process or the inspector’s evaluation.

Again, while the legislation modiﬁes the deﬁnition of defect to clarify

defects are conditions based on the inspector’s judgement as of the

day of the inspection, the legislation does not expand what the home

inspector must identify as defects.

This new legislation does not change what defects are to be identiﬁed

by the home inspector. This legislation simply requires a home inspector

who identiﬁes a defect during the inspection as currently required by law,

to label that item as a defect in the inspection report.

Home inspectors now must refer to a defect as a “defect” in

the report.

Prior to the law change and after the law change, home inspectors

must identify conditions during the inspection that meet the statutory

Wisconsin REALTORS® Association Page 4 Legal Update, May 2021

deﬁnition of defect. However, the new law requires the home inspector to

label those items as defects in the report.

When the buyer makes their oﬀer contingent on a home inspection, the

oﬀer is conditioned on a Wisconsin-registered home inspector performing

a home inspection “which discloses no Defects.” After the inspection, the

buyer’s home inspector must provide a written report to them.

Before the law change, sellers and their legal counsel often claim the

condition is not a defect because the home inspector did not use the word

“defect” to describe the condition the buyer is citing as a defect per the

oﬀer to purchase terms. Without consistency, confusion and disputes will

continue for consumers on both sides of the transaction.

Additionally, to address concerns voiced by home inspectors as to

liability, section 11 of nonstatutory provisions states the Legislature was

not intending to modify home inspector liability by requiring the home

inspector to use the term defect as deﬁned in the statute.

Does this law change how the parties negotiate?

No, the legislation DOES NOT change negotiation rights between

buyers and sellers.

Neither the home inspector nor this legislation determines how the

buyer and seller choose to negotiate the terms of the oﬀer based upon

the inspection report. The buyer may receive the home inspection and

still decide to do nothing, oﬀer an amendment, or provide a Notice of

Defects. Again, nothing in this legislation changes how the parties choose

to negotiate once the report is received.

In addition, this legislation DOES NOT guarantee agreement between

buyers and sellers. This legislation is not a cure all. Buyers and sellers

may still disagree as to what is or is not a defect even if the home

inspector calls the item a defect in the report. Whether any item listed is

actually a defect as deﬁned in the oﬀer is determined on a case-by-case

basis. If the parties cannot agree whether an item is a defect as deﬁned

in the oﬀer, then the parties should be directed to their respective

attorneys for advice.

Is the WB oﬀer to purchase and home inspector deﬁnition of

defect the exact same?

No. According to lines 445-447 of the WB-11 Residential Oﬀer to

Purchase, “Defect” means a condition that would have a signiﬁcant

adverse eﬀect on the value of the Property; that would signiﬁcantly impair

the health or safety of future occupants of the Property; or that if not

repaired, removed or replaced would signiﬁcantly shorten or adversely

aﬀect the expected normal life of the premises.

Wis. Stat. § 440.97(2m) of the home inspector statute deﬁnes

“defect” as a condition of any component of an improvement that a home

inspector determines, on the basis of the home inspector’s judgment on

the day of an 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 expected normal life of

the component of the improvement.

Home inspectors are not appraisers and cannot comment on the

value of the property or its component. In fact, if a home inspector were

to comment on value, one could argue it is outside the scope of their

license. Therefore, the two deﬁnitions cannot match. In addition, it is

quite possible that while a home inspector does not label something

a defect in the report, the buyer claims it as a defect as deﬁned in the

oﬀer to purchase because the buyer claims the condition would have

a signiﬁcant adverse eﬀect on the value of the property. Again, this

legislation is aimed to help reduce arguments between parties as to what

is a defect; but cannot eliminate all claims and challenges that could be

made by the buyer and seller.

What if this legislation results in home inspectors labeling

everything as a defect?

Under this bill and current law today, a home inspector could list

everything as a defect. If a home inspector decided to list every item in

the report as a defect even though it did not meet the statutory deﬁnition,

it could result in:

1. a complaint ﬁled at the Department of Safety and Professional

Services challenging the competency of the home inspector’s

practice.

2. the inspector being known as having provided an inspection

report having no beneﬁt to the buyer, since the buyer is hiring the

home inspector to assist them in discerning the condition of the

property.

Is there one uniform summary page?

No. Other than labeling items as defects, when applicable, and the

incorporation of the summary page and its minimum statutorily required

language, there is not a uniform form by which the inspector must

document the inspection. While Wisconsin real estate licensees who must

use state-approved WB forms ﬁnd this lack of consistency occasionally

frustrating, home inspectors are not required to use a speciﬁc approved

form. This legislation intentionally stayed away from being too prescriptive

to allow home inspectors the ability to set themselves apart in their

business models.

However, as noted, the new law requires every home inspection report

 REALTOR

Practice Tip

The legislation DID NOT change the oﬀer to purchase. As

deﬁned on lines 445-447 of the WB-11 Residential Oﬀer

to Purchase, “Defect” means a condition that would have a

signiﬁcant adverse eﬀect on the value of the Property; that would

signiﬁcantly impair the health or safety of future occupants of

the Property; or that if not repaired, removed or replaced would

signiﬁcantly shorten or adversely aﬀect the expected normal life

of the premises.

 REALTOR

Practice Tip

The new law DOES NOT increase the liability of home

inspectors. Home inspectors have been and are continued to be

required to identify conditions that meet the statutory deﬁnition

of defect during the inspection. The mere fact a home inspector

is now required to label those items defects, does not increase

liability.

 REALTOR

Practice Tip

Home inspectors are required to identify defects during the

inspection. The cost to repair the item is irrelevant. Neither the

home inspector nor this legislation determines how the buyer and

seller choose to negotiate the terms of the oﬀer based upon the

inspection report.

EDITORIAL STAFF

Author

Cori Lamont

Production

Emily Zampardi

ASSOCIATION MANAGEMENT

Chairman

Mary Duﬀ

President & CEO

Michael Theo, CAE

CONTACT INFORMATION

Wisconsin REALTORS® Association

4801 Forest Run Road, Suite 201

Madison, WI 53704

608-241-2047

800-279-1972

LEGAL HOTLINE

Ph: 608-242-2296

Fax: 608-242-2279

Web: www.wra.org

The information contained herein is believed accurate

as of May 1, 2021. The information is of a general

nature and should not be considered by any member

or subscriber as advice on a particular fact situation.

Members should contact the WRA Legal Hotline with

speciﬁc questions or for current developments.

Reproduction, use or inclusion of this material in other

publications, products, services or websites is not

permitted without prior written permission from the

WRA or its Legal Department.

This Legal Update and other Updates beginning

with 94.01 are available to members online at

www.wra.org/LegalUpdates.

A Legal Update subscription is included with

member dues. Members are alerted via email

when a new issue is available online.

The nonmember subscription rate for the Legal

Update is $75. A subscription includes 12

monthly issues.

Contact the Wisconsin REALTORS® Association

to subscribe:

4801 Forest Run Road,

Madison, WI 53704-7337

608-241-2047

800-279-1972

www.wra.org

Wisconsin REALTORS® Association Page 5 Legal Update, May 2021

as of June 1, 2021, to include a summary page.

The summary page could in theory be more than

one single page depending on the amount of

information needing to be included by the home

inspector. The summary page could include more

than what is required by law depending on the

style of the home inspector.

What must every summary page

include?

At minimum, as of June 1, 2021, every home

inspector report will include a summary page

with the following:

• Property address

• Home inspector’s name

• Date of the home inspection

• Name(s) of the individual(s) who prepared

the report

• Date the report was prepared or revised

• References to the page, heading or item

number in the detailed account for further

information

• List of conditions including at least all of

the following:

• List of conditions, labeled as defects,

that are observed under par. (cm) to

be defects, as deﬁned in s. 440.97

(2m).

• Items not labeled as defects:

• Listing of components needing

repair

• Components needing further

evaluation

• Items to monitor

• Maintenance items

• Certain notices/statements including:

• NOTE: This summary page is

provided for convenience and is not

a substitute for reading the entire

report and should not be relied upon

as the complete list for the client’s

reference.

• For the purposes of the report,

“defect,” as deﬁned in section

440.97 (2m), Wis. Stats., means

a condition of any component

of an improvement that a home

inspector determines, on the basis

of the home inspector’s judgment

on the day of an 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 expected

normal life of the component of

the improvement. The contract of

sale may deﬁne “defect” to also

include a condition that would have

a signiﬁcant adverse eﬀect on the

value of the property, but such a

condition may not be labeled a

defect in the report unless it meets

the deﬁnition in section 440.97

(2m), Wis. Stats.

• NOTE: A home inspector may

not report on the market value

or marketability of a property or

whether a property should or should

not be purchased.

 REALTOR

Practice Tip

There are many WRA resources about

the home inspection, home inspector

responsibilities and the Inspection

Contingency in the oﬀer to purchase at

www.wra.org/Resources/Transactional/

Home_Inspections_Resources.

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