As you likely know, carbon monoxide detectors are now required in California for all single family dwellings as of July 1, 2011 (apartments by January 1, 2013). Any dwelling with a gas heater or appliance, fireplace or attached garage must install a carbon monoxide alarm (First Alert). Being that these detectors are now state law due to health and safety reasons, FHA appraisers should be calling for the installation of a carbon monoxide detector if it is missing according to the the HUD Santa Ana Homeownership Center. In short, if you’re getting an FHA loan, make sure a carbon monoxide detector is properly installed.
Owners of California dwelling units, especially rentals, that have (i) a fossil fuel-burning heater, appliance or fireplace (for example, a gas stove or water heater) or (ii) an attached garage, need to be aware of a new law passed in 2010 regarding carbon monoxide devices. Under newly-enacted sections 17926, 17926.1, and 17926.2 of the Health & Safety Code (part of Senate Bill No. 183), owners of all such properties (excepting properties that are, generally-speaking, owned by or leased to the government) must install carbon monoxide alarms by the following deadlines: (1) July 1, 2011, as to single-family dwellings, or (2) January 1, 2013, as to all other dwellings. (from ThoItsLaw blog)
If you wish do to further reading, check out an overview of the California CO law requirements, search the California State Fire Marshall website for approved detectors, or the Home Safety Council website for background information. Thanks to Cynthia Sulamo, an appraiser friend, for the Home Safety Council link and post idea.
My Carbon Monoxide Alarm: On a personal note, I installed a carbon monoxide detector last week in my house and when I put in the battery and heard a testing of the alarm, let me tell you there will be no mistaking a CO issue. It says very loudly and repeatedly “CARBON MONOXIDE DETECTED” or something to that effect. I don’t want this alarm to ever go off again for safety reasons and also noise-level. I sure am thankful to speak english too since the alarm warning spoke in english only. 🙂
Good for California for requiring carbon monoxide detectors. I have not seen many in Georgia. Does the detector have to be wired into the house or can you just install one that plugs into an electrical outlet?
There are detectors that plug in to an electrical outlet and also detectors that simply require a battery. There are also dual detectors that have both smoke and CO.
It’s not the appraisers responsibility to check for CO detectors, and no where in the law claims such, so why are you claiming this? and who ever you talked to at FHA was misguided according to 4150.2 section 3-5 as follows:
3-5 CODE ENFORCEMENT FOR EXISTING PROPERTIES
Local municipalities design local housing code standards;
therefore, enforcement of such housing standards rests with the
local authority. HUD does not have the authority or the
responsibility for enforcing local housing codes…
Hi Kyle. Thank you for your comment. I appreciate your snippet of 4150.2 also. I have frequently been told from Santa Ana HOC that carbon monoxide detectors are required. This is not a local issue because it is state law in California as of July 2011. If you are located in a different state, this issue may not be the same in your area. If you are in California, have you ever called HUD to ask them about this? I have been told repeatedly that CO detectors are required directly from HUD and from many other local appraisers who have also contacted them. Moreover, I am finding my FHA lender clients asking me to verify if there are carbon monoxide detectors 100% of the time. I have quite a few conventional clients who are asking the same because this is California state law.
I’m in Washington State.
The exact response I received a while back from Santa Ana HOC was that they were “requiring whatever local code required”. Which is contrary to that snippet I previously pasted for you, which leads me to believe the rep didn’t know what he was talking about.
Being from WA I’m not 100% sure I navigated your states’ local code correctly, however I think I found the information here: http://www.leginfo.ca.gov/pub/09-10/bill/sen/sb_0151-0200/sb_183_bill_20100507_chaptered.pdf
Upon review of this document, I don’t believe “appraiser” was mentioned a single time (correct me if I’m wrong).
Thus, unless it is a client specific requirement that has expanded the scope of work for that specific appraisal assignment (I’ve received these requests as well, I get what you are saying), nothing within the state/local code specifically identifies the appraiser as the medium for verification. I am of the opinion that it is not the appraisers responsibility or liability to research the presence of CO detectors within a dwelling.
The WA state RCW is the same, it fails to state that it is the appraiser whom must take on this extra liability.
I’m sure you are familiar with the term “scope creep”, your clients (and some mine as well), are requesting additional information and placing additional liability on our shoulders and without additional compensation [usually].
According to my research, the odds of winning the WA State Lotto Jackpot were a mere 4x times greater than dying of CO poisoning.
Don’t get me wrong, I feel these are a necessary amenity because even 1 unnecessary death is 1 too many, however in the grand scheme of things, in addition to the US becoming a “nanny state” the Chinese CO Detector factory [along with the politicians most likely] certainly got their pockets lined on this didn’t they?
My Solution: None Required, people need to read and understand the law as it was written, it is the sellers or the sellers agents’ responsibility to ensure CO detectors are installed in the dwelling. Failure? Pursue them, not the appraiser.
PS.. my favorite is when I arrive at the dwelling to find the CO detectors on the kitchen counter, still in the box.. haha.. 🙂
Anyway.. thanks for your response, sorry to rehash this, it looks like it was an old post I brought back to life.
Take Care. KR.
Thanks Kyle. No worries at all. I always appreciate conversation – whether a post is older or not. These posts get quite a few hits, so it’s all good. The comments are sometimes some of the best places where exchange takes place anyway. Good info.
I hear what you are saying, but being that it is California State law and FHA has said they are required repeatedly, that’s what I’m sticking to. It is similar with water heater straps. They are required by local code, so that is something FHA requires also. I believe both would fall under the category of “safety”.
Regarding liability, I understand all about increased liability for lender work, but what are you worried about? If you disclose the location of the CO detectors and state they were not tested, it would theoretically seem like it wasn’t a big-ticket liability item. Moreover, I have had countless fees added to simply drive to a property again to verify there is a CO detector installed. I never call for frivolous inspections, but only what guidelines or clients demand. I will say after a while these fees really add up and make managing the small liability much more worth it.
Hi Ryan, Kyle is right. Appraisers are NOT code inspectors. You smug green tree huggers need to get a life! If the borrower wants to obey the law it is their own flippin business!
Thanks Sterling. Appraisers are simply stating what is there and what is not there. Obviously it is a very trivial value issue to be missing a detector, so on one hand it doesn’t make sense for appraisers to check. Yet appraisers check things like this because they are requirements in California. Moreover, the lending community right now in my area wants appraisers to verify there is a CO detector and often times smoke detectors too. California state law requires both to be present in one degree or another, so lenders are increasingly adamant about this issue. It’s not about hugging trees from the appraisal perspective or trying to be the code police, but simply being the eyes for a client that requires these items. This is really only an issue for lender appraisals – not private appraisals for divorce, estate planning, tax issues, etc… I never require a CO detector to be present for my private appraisal work. I will say you are definitely right though that appraisers are not the police. On a different but somewhat related note, it is not my job to know whether someone can legally grow pot or not at their house. I am not code enforcement or the police. I am there to value the property, which is why I do not ask for a license when I see marijuana growing. I only want to know if there is any impact to the property value (hopefully no electrical issues, moisture damage, etc…). It’s not my business to verify legality. Yet in the case of carbon monoxide detectors, it becomes my business for lender work because lenders are asking appraisers to verify. It may prove difficult to obtain financing these days without a CO detector present. That’s just how the game is working right now. Any thoughts?
My thoughts are the Kyle and Sterling are correct. For an appraiser to even pretend to looking for “code” violations is opening the proverbial can of worms.
I appraise in San Francisco CA, where there are many properties with un-permitted improvements and work that does not meet “codes”; I have never viewed my job to be a building inspector, or code inspector.
My job is to provide a credible opinion of value, whether the property is red-tagged or built with absolutely no code violations.
What’s worse about asking an appraiser to check if there is a smoke detector, carbon monoxide detector, or double strapped water heaters, is that what happens when someone dies of smoke inhalation a week after an appraisal inspection due to the smoke detector not having batteries, or simply not operating correctly? – Does the insurance company, lender, or homeowner then sue the appraiser for negligent work?
I think it’s crazy for any appraiser to even pretend that they are the guarantor of a property having an operational smoke detector, operational carbon monoxide detector, or that the water heater straps are securely fastened to the wall.
It’s always been my understanding that if a client/lender would like an appraiser to include information from a home inspection report, environmental report, or code inspection report, that the client/lender would have to provide that report (from a qualified individual/entity) for the appraiser to rely upon.
Will lender-clients start to ask appraisers to complete a home inspection, or environmental survey along with the appraisal report in the near future as well? And if they do, will you provide an opinion about these topics simply because they “asked” you too?
It’s important to know what you don’t know. I personally don’t know how to ensure all of these things are working correctly, will work correctly, or have been adequately installed; and I doubt any appraiser saying these things are present did much due diligence to ensure proper operation.
There’s a saying: Stay within your lane; building code inspections are not within an appraisers lane.
With that said, here is what I do with my reports if the client asks to verify smoke, carbon, or water heater straps:
I will take a picture of the water heater(s), take a picture of anything that looks like it might be a smoke detector or carbon monoxide detector, and also include a few sentences.
1) The water heater(s) appear to be double strapped, but adequacy has not been verified.
2) I have not tested any smoke detectors or carbon monoxide detectors and am not qualified to test these devices.
3) Inadequate water heater strapping and/or the presence of smoke detectors and carbon monoxide detectors are not material to the value opinion developed.
What I think the insurance companies should be doing (because it’s really an insurance issue), is having either the homeowner sign and certify that they are in compliance, and/or have the insurance agent verify compliance before extending insurance (if they really care).
Insurance companies are the ones benefiting from these laws through decreased losses and claims, and it’s the insurance industry that should take the lead on enforcement (if they want too). Isn’t that why we pay so much for Insurance? – This is within the insurance industries lane, and should stay there.
Sorry for the long-winded responses, but I think this a topic long overdue from being hashed out.
So, the legislation seems pretty clear that responsibility falls squarely upon the Seller when closing escrow on a 1-4 unit residential property (not on the appraiser), and specifically not on the RE agent. So if specifically not on the RE Agent, why try to pass off the responsibility to an appraiser (who receives much less compensation than the RE Agent, and spends much less time in the property than the RE Agent)?
And worse, why ask an appraiser to extend a law written for when a property closes escrow to a refinance transaction (when there is no transfer/close-of-escrow of the real estate)?
From the provided document SB 183:
Existing law requires the transferor
of real property containing a single-family dwelling to provide transferees
written notice of compliance with specified requirements for the installation
of smoke detectors. Existing law requires the seller of any real property
containing a water heater to certify in writing to a prospective purchaser
compliance with specified safety requirements related to those water heaters.
This bill would revise the disclosure forms, described above, to provide
a seller certification that the property, at the close of escrow, will be in
compliance with the requirements for smoke detectors and water heaters,
described above, and to remove these provisions from elsewhere in the
forms. The bill would also revise the disclosure forms to add a disclosure
regarding carbon monoxide devices and a statement specifying that
installation of a listed appliance, device, or amenity is not a precondition
to sale or transfer.
Happy to hear any counter-perspectives.
Be kind out there everyone!
Thank you Steve. I appreciate your perspective and I can’t disagree with you about the role appraisers play. In fact, I think your point that our role is to value is really key because sometimes when something is not permitted we act like that is the trump card for value. I cringe when I hear appraisers say things like, “No permit = no value” too, though this can be a very sticky conversation. I have entire posts about that stuff. What is the market willing to pay for it? That’s key for us to ask (and not always easy to support).
Yet knowing an adequate amount about code is very important for anyone in the valuation space because it can sometimes be meaningful for value, help us identify work that was not done correctly or work that was not permitted, influence whether we call something a bedroom or not, recognize something that could be dangerous…. So at some point while we are not inspectors, there is a basic body of knowledge we must possess in order to be proficient in what we do. Am I right?
I think how you handle these issues in your reports is a good idea and your language is worth using for any onlookers who are concerned.
This won’t make some colleagues happy, but the reality is professions change all the time. Right now in the appraisal space we’re seeing lenders ask appraisers to look at stuff like this whereas that didn’t happen in the past. Whether we like it or not, that’s the climate. There is a place for resisting scope creep too and we should do that. I guess appraisers have to ask if this is a battle worth fighting or not.
With that said, I don’t do any lender work these days personally, but if I were to do it again I would have no issue identifying these very basic elements. Nobody is asking us to analyze structural integrity or verify code (hopefully not). Reporting whether a smoke alarm or carbon monoxide alarm is present is pretty basic stuff. Looking out for strapped water heaters is too. For private work (all my work) I do not mention these things. But for lenders? It’s part of the game and it’s really a small deal in my mind, so I don’t doing the dance for these basic items.
One other thing is there is a place for identifying blatant safety issues. In my mind it’s why it’s important to know enough about code about water heaters. When do they need to be raised? Do the rules change inside vs in the garage? I’m sure many colleagues know the answers to these questions, but I’m guessing some don’t either. Being the eyes of a client on site can help me speak into issues that might come up during the loan process as well as identify blatant safety issues.
I speak every week in real estate offices and I often have a slide that talks about water heaters. Is this exactly my lane? No. But I better know enough about this very basic element in order to recognize safety issues. Should appraisers have to know this? I think that’s up for debate. It’s not really a value issue per se, though correcting some problems can be big money at times. I do feel the tension in all of this though and I don’t like how nitty gritty it is because it takes attention off value. But at some point if we’re going through homes I’m okay too with being tasked with using my knowledge to identify some very basic elements for the intended user of the report (if that’s what they need). Of course some lenders ask appraisers about fracking and other silly issues we have no business commenting on. Or the famous, was it built in a professional workmanlike manner? I’d suggest an appraiser is not the right person to ask.
Now if a lender is asking an appraiser to verify detectors are in working order, I have a real problem with that. If I did lender work again I would NOT test any of these alarms and I would be very clear that I simply noticed the location of these items. Thus it comes back to identifying items but crafting the right language.
Thanks again for scratching out thoughts. I appreciate your candor too. We are probably on opposite ends here. I guess I’m just not that offended over this, but I do clearly recognize the slippery slope. For me it’s just not a hill to die on and understanding more about this helps me be a better appraiser and communicator for the real estate community too. That’s been my experience.
I welcome any further discussion.
Hi Ryan,
Perhaps you have been out of the lender work for too long to realize that lenders are *now* asking appraisers to verify smoke detectors, carbon monoxide detectors, and water heaters are up to “code”; yes, using that exact verbiage.
As per you point here: “Should appraisers have to know this? I think that’s up for debate. It’s not really a value issue per se, though correcting some problems can be big money at times.” – I agree that if an issue will have a material effect on the value, then yes, we need to analyze and reconcile this with the value; however, that’s not what we’re talking about with regards to smoke detectors and carbon monoxide detectors. Specifically the legislation points out that it’s the Sellers responsibility, and therefore, no buyer will have to absorb the cost (by legislation).
The only reason I can rationalize that a lender will ask an appraiser to “verify” that a property is to “code” is if they are trying to pass-off liability; what other reason would they being asking for this?
Back to my point about staying in your lane: the insurance industry is one of the largest industries in the world (if not the largest), and there professionals that go to school for much longer and more rigorously than appraisers to become experts in completing what’s called loss-control reports on real property. One can obtain an ARM (Accredited Risk Manager) designation from The Institutes.
https://www.theinstitutes.org/guide/designations/associate-risk-management-armtm
Loss control and mitigating insurance risk is no joke, and takes on a lot more liability than an appraiser.
It’s no joke ensuring people’s safety and identifying hazards and risks to life and limb, and should always be left to the professionals. – Stepping outside of an appraisers lane and moving into a Accredited Risk Managers (ARM’s) lane is not something any appraiser should be doing (IMHO).
I am not, and will never be, a guarantor of life-safety as an appraiser, and I don’t believe it’s prudent to be viewing this as nonchalantly as you seem to be.
There is nothing more important than life-safety within real estate, and we all (appraisers) should know enough to stay out of it.
Hi Steve, I clearly did not understand your initial comment correctly or maybe it was not clear. I would be hard-pressed to say whether something meets code in my reports and I would not word things in a way to absorb the liability. If you re-read my comment, I don’t believe I said appraisers should verify code, but I certainly talked about the importance of knowing about this stuff. If I did misspeak, I’ll chalk it up to writing back at 5am, but I don’t believe I ever said what you are thinking.
Your critique of nonchalance is totally inaccurate and unfounded. I get what you are saying now. With that said, I do still think it’s okay to take photos of these items and make general comments about their presence if that’s what a client wants. This type of descriptiveness is something lender clients began to really request after 2011 when CO alarms became law in California. So while it bothers me that appraisers are asked things like this sometimes, I get it because it seems to be a response to the law changing. In this regard appraisers do have to adapt and evolve, and what we include in our reports won’t always be the same. There are certainly lines to draw though and at times we will absolutely have to say NO. If this is what you perceive as nonchalant, then we’ll have to agree to disagree. I view this as being pragmatic and understanding that things won’t stay the same. Again, if it’s just taking photos and making comments, that type of descriptiveness is no biggie. But if it’s verifying code, I have a big issue with that. Those are two different things.
Hi Ryan,
I didn’t state that you said we should speak to the codes, i’m pointing out that the scope creep has gotten to the point that *now* lenders are asking us to verify that it is up to “code”.
Many appraisers are actually complying with this request, and not explaining that it’s outside their lane. This should be part of the insurance agents job in determining the insurability of the property, and/or the lender should be ordering a home-inspection report, and/or insurance loss-control report if they are concerned with life-safety issues.
We can’t wear all the ‘hats’ (especially when not trained or qualified) just because it happens to be convenient for the lender/client.
Hi Ryan,
One quick question for you that out of curiosity:
Why do you think lenders are specifically asking appraisers to verify potential life-safety code violations when they do not have a materiel effect on value?
Steve, insurance issues are likely the culprit. Same thing with The Cost Approach in many cases.
Ryan,
Glad we agree on this; insurance. Clearly not our lane, and not a good can-of-worms to open up.
Take a look at the courses offered at The Institutes and you’ll start to understand what i’m talking about. Loss-control and life-safety issues within Real Estate is a much deeper and complex issue than any appraiser can wrap their heads around, and really should be left to the professionals.
https://www.theinstitutes.org/guide/designations/associate-risk-management-armtm
Hope you have a great weekend!
Yeah, this is where we better be very clear about what we are and are not doing. Having good statements is important.