Beware of Termites in an Encapsulated Crawlspace

Cutting to the chase: If you are buying a house that includes an encapsulated crawlspace, it is especially important that it is covered by a termite bond and that bond should not lapse.

Want to know why? Let’s start with a story. “John” went under contract to purchase a home in May with a closing date in June. The market was nuts, so one of his concessions was to allow the seller to remain in the home until August. Being a savvy buyer John paid for a termite inspection and made sure the property was covered by a termite bond at the time of closing. However, he failed to ask when the contract expired.

Unfortunately, the termite contract expired while the seller was still in the home. Rather then inform John of the need to renew, the seller simply tossed the renewal notice in the trash, leaving the home unprotected. Unbeknownst to everyone involved, termites were inhabiting the crawlspace, but they were hidden at the time of the inspection in May.

In the intervening months between the initial inspection and an attempt by John to acquire a new termite bond, the termites revealed themselves. Even though the house framing was not yet affected, insuring a house with a known infestation and an encapsulated crawlspace proved much more complicated than just paying for a treatment. To explain this, we must first understand the construction of an encapsulated crawlspace and how it creates an especially hospitable environment for termites.

Encapsulation

In an effort to keep the area “dry” and prevent fungal growth, an encapsulated crawlspace is sealed from outside air. There are no vents, the access door is tightly sealed when closed and insulation is not placed beneath the floor. Instead, foamboard insulation is adhered to the interior side of the foundation walls and a vapor barrier (6+ mil plastic sheeting with seams sealed) runs continuously from wall to wall and up the supporting piers.

While these features lower the humidity, they also create an almost perfect environment for subterranean termites to hide. In fact, the only place to detect a mud tube - the tale tell signs of termites in our area - is in what is known as the “inspection gap.” This gap is the very short distance on the foundation wall between the top of the foamboard insulation and the wood framing of the home. When John’s home was initially inspected, termites were most likely present, but they were hiding behind the insulation - they had not yet crossed the inspection gap.

To treat John’s home for termites and cover it under a new contract, the contractor he spoke with required that the insulation and vapor barrier be removed which is a very expensive method of remediation. Another contractor I have since spoke with indicated the affected area could be “spot treated” and, at a much lower cost, the contractor would rely on bait stations to initiate a new bond. In any case, had the original termite bond been renewed, the termites would have still been discovered, but the cost of remediation might have been borne by the contractor.

Bottom Line

In NC, all homes should be continuously insured against termite damage. This is even more true when the home has an encapsulated crawlspace. The property should be covered without interruption by a termite bond and the buyer should understand the terms of that bond with respect to the cost of remediation. If you have a property that is not covered by a bond, but also not showing signs of infestation, it should be rather simple to find a contractor that will begin a new bond.

To be clear, there are many advantages to an encapsulated crawlspace. When installed correctly and maintained, it can minimize the detrimental effects of moisture on wood structures. But as with all new technologies, there are tradeoffs.