City Comes Under Fire for its Residential Real Estate Inspection Program

The City’s voluntary Residential Occupancy Inspection program designed to help realtors, homeowners and buyers with the transfer of home ownership has been criticized in a recent report by the California State Auditor for a number of flaws and inconsistencies in the way the program has been managed.

While the City of Pasadena conceded to most of the recommendations in the report, Pasadena’s Interim City Manager, Steve Mermell, defended the program, agreeing to follow some, but not all, of the state’s recommendations. The state responded by standing by all its recommendations.

The Residential Occupancy Inspection Program involves the city-mandated inspection of homes as they are being sold, in order to ensure up-to-date compliance with city building codes. The process results in the issuance of a Certificate of Inspection, without which the sale cannot be completed.

At least one prominent realtor thinks things the program is in serious trouble.

“The problem is much worse than the city thinks it is,” said Todd Hays, local realtor and former president of the Pasadena-Foothills Association of Realtors.

Mermell said the State Auditor “thought we could do a little bit better and we agreed with polishing it,” noting that the inspection program is only voluntary, and not state-mandated.

“We’re making efforts to improve,” he continued. “My understanding is that we’re not obligated to. They provide the recommendations and we provided our responses.”

In a summary of the report sent to the Governor’s office, state auditor Elaine Howle wrote that Pasadena is one of three California cities that “do not fully comply with all requirements in their ordinances, policies and procedures pertaining to their residential building record (resale record) programs.”

“The three cities are not actively monitoring sales and transfers of residential properties,” she continued, “which limits their ability to ensure that inspections are performed as required. In addition, the cities do not have formal processes for addressing complaints in a consistent manner, as well as tracking the complaints they receive and how they are resolved.”

Hays agrees with the State Auditor’s report and takes issue with the city’s response that the current state of the program adequately serves the needs of home buyers, sellers, realtors.

“The current program does not promote Pasadena as a real estate-friendly city,” he said, claiming that the current system is actually causing some deals to cancel or fall apart, costing realtors, homeowners and buyers thousands of dollars and in some cases, weeks and months of their time.

While the three cities have various goals for completing inspections and issuing reports within specific time frames, Pasadena was one of two cities which failed to meet its time goals, the report added.

The report also criticized the fact that Pasadena “does not consistently follow up with property owners on the correction of violations identified during the inspections, despite having policies to do so.” The report went on to note that Pasadena “has a significant backlog of properties with unresolved violations requiring permits or reinspections.”

Not only are the inspections backlogged, said the report, but an analysis of the most common types of fees charged—ultimately determined that the three cities are likely undercharging property owners for home inspections.

Mermell stood behind the City’s program.

“This is a good way to get into a house by change of ownership and to make sure that there’s no code violations,” he said.

While the state legislature has the authority to intervene when a city refuses to comply with state-recommended policy changes, Mermell said that he didn’t think the Legislature would force changes for a voluntary program.

The Auditor’s report, the City’s responses and plans for implementing changes to the program will be discussed during a 4 p.m. meeting of the Finance-Audit Committee, to be held Monday in the Council Chambers at Pasadena City Hall, 100 North Garfield Avenue.

Here is the meeting’s planned agenda, which contains a copy of the Auditor’s report:  Click here.