Q: We recently went to settlement on the sale of our house. At that time, we were told that we would not receive the sales proceeds until we produced a termite certificate. Just what is this "certificate" and why is it so necessary?

A: The experts tell me that this is termite country. Thus, many buyers want a guarantee that the house they buy is free from termite infestation.

Often, a lender will require a valid termite certificate before making the loan proceeds available. This is especially true where the loan is under the Vetereans Administration program.

Termites (also known as white ants) feed on the cellulose in wood. In the Washington area we often find substerranean termites. These little devils hide below ground to maintain adequate moisture, but come to the surface to eat - and feed. The surface is the wood touching the damp ground. Termites create corridors in this wood, and then move freely through these passages seeking additional foods, moisture and shelter.

It is generally accepted procedure for home sellers to provide - at their expense - a certificate of termite guaranty at settlement. In fact, most standard real estate contracts contain the following language:

"TERMITE INSPECTION: At the time of settlement, seller shall pay the cost of termite inspection and provide to purchaser a written certification from a licensed exterminator that, based upon a careful visual inspection of accessible areas of the house, there is no evidence of infestation of termites and woodboring insects. If such infestation exists, seller is to exterminate. Seller at his own expense and prior to settlement shall repair any prior or current visible damage caused by termites or wood boring insects."

Whether you are a seller or a buyer, be careful with this language. While it appears to provide adequate protection (and coverage), in reality ther are a number of problem areas. Let's look at them from the seller's point of view.

Usually, when there is a real estate agent involved, the agent makes the necessary arrangements to obtain this termite certificate. Beware, however. The language obligates a seller to repair any prior or current visible damage - whether it is needed or not and regardless of cost.

I strongly recommend that sellers who use this language instruct the termite company doing the inspection (or the agent making the arrangements) to submit an extimate of repair costs before any work is actually begun. I have seen too many sellers pay sizeable termite repair bills, without having any opportunity to obtain other reports and estimates.

There are many termite companies in this area, and not all share the same reputation.

Finally, the seller may want to elimate the last sentence from the contract. Why should a seller fix prior termite damage, when it may not be necessary at all?

From the buyer's point of view, the contract language quoted above also needs some modification. First, change the word "house" to read "property". There have been situations where significant termite infestation was found in a detached garage, but no protection was provided under the contract.

Second, watch out for the language such as "based on a careful visual inspection." Often, this will not include basement crawl spaces and other inaccessible areas, which carry the greatest risk of termite infestation.

Third, insist that the termite company provide you with a warrantly of at least a year. Some companies will offer such a warrantly; others will not.

Should you continue your warrantly year after year? My own recommendation is yes, for two reasons. As we indicated earlier, this is termite country, and there is always the possibility of finding termite damage. More importantly, however, when you will not have to incur large expenses to provide your buyer with a termite certificate. It should be easily obtainable from your warrantor.

Benny L. Kass is a Washington attorney. Write him in care of the real estate section, The Washington Post, 1150 15th St. NW, Washington 20071.