If you fall behind in your mortgage payments, your lender may order monthly property inspections to ensure that its interest in the property is protected. This is different than the home inspection that was completed when you purchased the property. Keep reading to learn the difference between a home inspection connected with the purchase of a property and property inspections that are completed in connection with a foreclosure.
(To learn more about foreclosure, including timelines, state foreclosure laws, and foreclosure alternatives, visit Nolo's Foreclosure topic area.)
Home Inspections for Home Purchases
A home inspection is often performed in connection with the purchase of a property. This type of inspection normally includes a review of the condition of the:
- heating system
- air conditioning system
- water heater
- interior plumbing
- electrical system
- foundation, and
Many home inspectors also offer additional services such as testing for mold, radon, and water quality, as well as perform energy audits.
Following the home inspection, the inspector prepares and delivers a written report of findings to the prospective purchaser who then uses the report to make a decision about whether or not to purchase the property.
The cost of a home inspection is ordinarily several hundred dollars.
(To learn more, visit our Home Disclosures, Inspections & Appraisals topic area.)
Property Inspections for Mortgage Loans in Default
A property inspection, on the other hand, is generally performed in connection with a foreclosure. (To learn about foreclosure in your state, check our Summary of State Foreclosure Laws.)
Mortgage contracts generally provide the lender with the right to take necessary steps to protect its interest in the property if you default on your loan. This means that if you are late on your mortgage payments, your loan contract most likely allows the loan servicer to hire someone to conduct property inspections.
What Is the Purpose of a Property Inspection?
Inspections are generally ordered automatically once the loan goes into default so the lender can find out whether or not the property is occupied and being appropriately maintained. Properties that are in foreclosure, especially if unoccupied, can often suffer damage from things such as:
- vandals or thieves
- improper winterization, and
- storm damage.
Performing routine inspections allows the lender and loan servicer to keep tabs on the property.
Manner and Cost of Property Inspections
The property inspection will generally be drive-by in nature. (A home inspection is much more in-depth than this type of property inspection.)
The amount charged for each inspection is typically minimal, costing around $10 or $15. The charges for the inspections are then added to the total mortgage debt. While this may not appear to be a significant amount, inspections are usually performed monthly or more often, so the charges can add up quickly. (Though some courts have found that repeated inspections are not necessary when the loan servicer is in contact with the homeowner, knows the property is occupied, and has no reason to be concerned about the condition of the property.)
(To learn about the different types of charges that may be assessed to your account and how they affect the balance of your mortgage debt, see our article What Fees Can the Lender Charge If I’m Late on Mortgage Payments?)