Q: We are buying a house in the District and our sales contract requires that the seller provide us with a letter from a termite company indicating the house is free from infestation. What should we look for when we get this letter? Are termites a problem?

A: Termites are a real problem, and without the proper protections you can end up spending a lot of extra money.

The Washington area is prone to termites, particularly subterranean ones that hide below ground when they aren't chomping on wood. Since the late 1980s, when environmental concerns stopped the use of such previously effective chemicals as chlordane and heptachlor, termite damage has been rising.

Thus, most lenders insist on receiving a letter--a certificate--from a licensed termite inspection company indicating that the house is free of active infestation.

The standard sales contract used in this region contains the following language: "Seller warrants at the time of settlement that all dwellings and/or garage(s) within the Property (excluding fences or shrubs not abutting garage(s) or dwelling(s)) are free of visible termites and other wood-destroying insects, and free from visible insect damage. The (Purchaser)(Seller) shall furnish a written report to this effect acceptable to the lender from a pest control firm. Required extermination and repairs shall be at the Seller's expense."

In some contracts, the buyer is required to pay the cost of this inspection. However, as with everything in real estate, this is a negotiable item between buyer and seller.

Whether you are a buyer or a seller, you must carefully review the sales contract clauses dealing with termites.

First, let's look at this from the buyer's point of view. Some sales contracts refer only to an inspection of the house. If this is the case, make sure that you add "garage and accessory buildings." The house may be termite free, but the garage may be infested.

Watch out for language that requires the inspection only of "accessible" or "visible" areas. This often will not include basement crawl spaces or other inaccessible areas that carry the greatest risk of infestation. I have known too many home buyers who found termites in wooden basement floors that were covered with wall-to-wall carpet. If you discover termites after settlement, you probably do not have any right to ask your seller to make the repairs--and you may be stuck for a lot of money for the fixes.

You should demand that the termite company that makes the inspection provide you with a one-year warranty against infestation. Some companies will offer such a warranty, others will not. It also is strongly recommended that after you go to settlement, you continue the warranty on a year-to-year basis. This not only will give you peace of mind, but also could save you a lot of time and money when you sell your house.

Keep in mind, however, that this warranty is limited. It will not protect you against termite damage; it will only obligate the termite company to reinspect and re-treat the property should termites appear.

Finally, insist on obtaining a copy of the termite certificate at settlement. Many inspection companies forward the report to the broker and the lender, and omit the buyer. You should also amend the contract language so that it reads that the report is "acceptable to the lender and the purchaser."

From the seller's point of view, there are some additional considerations. First, if the termite inspection company finds damage, often that company also wants to do the repairs. Insist on obtaining at least two or three bids for any such work before authorizing the termite company to proceed.

Second, many standard contracts contain the following language: "Seller, at his own expense and prior to settlement, shall repair any prior or current visible damage caused by termites or wood-boring insects."

I generally recommend that sellers consider striking this clause when the contract is being negotiated. Why should a seller fix prior termite damage when it may not be necessary?

Kass is a Washington lawyer. For a free copy of the booklet "A Guide to Settlement on Your New Home," send a self-addressed stamped envelope to Benny L. Kass, Suite 1100, 1050 17th St. NW, Washington, D.C. 20036. Readers may also send questions to him at that address.