Termite Bond Explained

A termite bond is a contractual agreement between a property owner and a licensed pest control company that defines the terms under which termite protection, monitoring, and treatment services are provided over a specified period. These agreements vary significantly in what they cover, how they are renewed, and what remedies they provide when termite activity or damage is discovered. Understanding the structure of a termite bond is essential before purchasing or renewing one, because the scope of coverage — not just the annual fee — determines whether the agreement delivers meaningful protection.

Definition and scope

A termite bond is a type of service contract, not an insurance policy. The distinction matters: insurance policies are regulated by state insurance commissioners and carry statutory obligations, whereas termite bonds are regulated as pest control service agreements under each state's structural pest control licensing statutes. In most states, the licensing authority for termite service companies falls under an agriculture or consumer protection department — for example, the California Department of Pesticide Regulation enforces licensing under California Food and Agricultural Code sections 11700 et seq., while Texas regulates pest control businesses through the Texas Department of Agriculture under the Texas Structural Pest Control Act.

Termite bonds are typically renewed on an annual basis and attach to the property address rather than the individual customer. This characteristic makes them relevant in real estate transactions, where a transferable bond can be documented in a wood-destroying organism report or referenced during a termite inspection.

Two primary types of termite bonds exist in the US market:

Treatment bonds (Type 1): Cover the cost of re-treatment if termites are found, but do not cover repair of structural damage caused by termite activity.
Repair bonds (Type 2, also called "damage bonds" or "repair and retreat bonds"): Cover both re-treatment and the cost of repairing documented termite damage up to a stated dollar cap.

The coverage cap on a repair bond can range from $250,000 down to as low as $1,000 depending on the provider and agreement terms — reading the cap figure in the contract document is the only reliable way to determine actual coverage scope.

How it works

The lifecycle of a termite bond follows a structured sequence:

Initial inspection: A licensed termite inspector evaluates the property for active infestation, prior damage, and conducive conditions. This inspection is typically required before a bond is issued. See termite damage assessment for details on what that evaluation covers.
Initial treatment (if required): If active termites or conducive conditions are found, treatment is performed before the bond is issued. Treatment method may be specified in the contract — liquid termiticide applications under subterranean termite control are the most common, but bait station systems are frequently included.
Annual renewal inspection: The bonding company performs a re-inspection — typically annually — to verify the property remains free of active infestation. Annual renewal fees vary by region and property size.
Re-treatment clause: If termites are discovered during the bond period, the company is contractually obligated to retreat at no additional charge (under a treatment bond) or to retreat and repair damage (under a repair bond).
Damage documentation: For repair claims, the property owner must typically report damage within a defined notice window and permit the company to verify the infestation before independent repair contractors are authorized.

The EPA oversees the registration of termiticide products used in these treatments under the Federal Insecticide, Fungicide, and Rodenticide Act (FIFRA), meaning only EPA-registered products may be legally applied. Product details and label requirements are maintained at the EPA's Office of Pesticide Programs.

Common scenarios

Real estate transfer: When a home with an active bond is sold, the bond can frequently be transferred to the new owner, sometimes for a transfer fee of $100 to $300. Lenders — particularly those issuing FHA and VA loans — often require evidence of a valid termite inspection and may require a bond as a condition of closing. The real estate termite inspection requirements page covers lender-specific documentation in more detail.

New construction: Builders in high-risk zones — particularly the Southeast, Gulf Coast, and Hawaii, where Formosan and subterranean termite pressure is highest — commonly establish bonds at the pre-construction stage. Termite pre-construction treatment is often a prerequisite before a bond is issued on a new structure.

Post-infestation protection: After a confirmed infestation is treated, property owners frequently enter bond agreements to maintain ongoing monitoring. A termite monitoring program integrated with a bond contract creates a documented inspection history that can be valuable for insurance and resale purposes.

High-risk geographic zones: Properties in USDA Termite Infestation Probability Zones 1 and 2 — which cover most of the South, Southwest, and coastal regions — face elevated risk levels that make the ongoing monitoring component of a bond contract more operationally significant. Zone classifications are published by the USDA Forest Service.

Decision boundaries

Choosing between a treatment-only bond and a repair bond depends on two primary factors: the structural value at risk and the age/condition of the property.

Treatment bond is appropriate when:
- The property has limited wood-to-soil contact and low structural risk
- The annual premium difference between treatment-only and repair coverage is substantial
- The property owner accepts financial responsibility for damage remediation

Repair bond is appropriate when:
- The property is in a Zone 1 or Zone 2 termite pressure area
- The structure contains significant original wood framing (pre-1980 construction is a common threshold)
- A lender or buyer requires documented repair coverage

Comparing bond contracts against standard termite control service contracts is important because some companies sell annual service agreements that resemble bonds without providing re-treatment guarantees. The absence of a re-treatment clause in writing is a meaningful red flag — termite control red flags and scams covers contract warning signs in more detail. Licensing verification through the relevant state authority, listed in the termite control service licensing requirements reference, confirms whether a company is authorized to issue enforceable bond contracts in a given state.

References

📜 2 regulatory citations referenced · 🔍 Monitored by ANA Regulatory Watch · View update log