Energy Bill and Existing Homes

Q: Does the House energy bill subject owners of existing homes to an energy efficiency audit before they can sell?

A: Rep. Boehner and Rush Limbaugh got this wrong. The Realtors and home builders associations say there’s no such requirement in the bill, as do we.

FULL QUESTION

Is this real?

For those of you who have real estate for sale or rent, be advised that the Cap and Trade energy bill that passed the House last Friday and will be before the Senate week after next for a vote, there are the following provisions:

Before any real estate, new or old, commercial or residential, can be sold or rented, the building must meet the new energy standards set forth in the Bill. These standards are about a general 35% increase in what is now required in building codes. It requires such things as requiring solar reflective roofs, double pane windows, energy efficient appliances and lighting, increased insulation, leak test, and on and on and on. In order to sell or rent any building, you will be required to have a certificate of efficiency issued by a federal building efficiency inspector (new division of the US Dept. of Energy). No certification, no sell or rent, simple as that.

FULL ANSWER

The author of this e-mail is not the only one to claim that the American Clean Energy and Security Act of 2009 (known as the Waxman-Markey bill) would require homeowners to bring their homes up to code and pass an inspection before they can be sold. But the claim is false.

On the June 29 broadcast of his radio program, Rush Limbaugh said that the energy bill would require "environmental experts" to do "a survey" before people can put their homes on the market:

Limbaugh, June 29: Have you heard about this, folks? When you sell your house, environmental experts have to come in and do a survey to find out if you’ve got leaky windows, if all the environmental systems are correct, if you have relatively new appliances, and until you modernize in the way they say, you can’t sell – that’s in the bill.

Limbaugh repeated the claim during a show the following day, this time quoting from a June 26 blog post from the Web site of House Minority Leader John Boehner of Ohio, cautioning: "Home Sellers Beware."

Ohio’s 8th Congressional District Blog, June 26: Having a hard time selling your home? Here’s one more hurdle to jump: all homes sales are conditioned upon an energy audit and a new energy rating assessment and energy labeling program for your home that’s outlined in the Democrats’ bill. And if you thought you could improve your property with a fresh coat of paint and some granite counters? Think again! Now your home will be subjected to a new energy rating assessment and energy labeling program that will penalize you for older windows, original fixtures, and dated appliances. So the Democrats’ bill would bring down the value of your home!

We’ve combed through the portion of the House-passed bill pertaining to residential buildings and found no point-of-sale mandates for owners of existing homes. Major trade groups representing home builders and real-estate brokers also say these claims are false.

Home Sellers Beware?

It’s true that the bill sets new national efficiency standards for new residential and commercial buildings. It calls for buildings to be 30 percent more efficient by 2012, and 50 percent more efficient beginning in 2014. It ultimately calls for buildings to be 75 percent more efficient by 2029. But those efficiency benchmarks apply only to homes constructed after the bill becomes law, not currently existing ones.

We found no requirement for energy audits or energy-efficiency inspections in the bill, either. Nor did the National Association of Home Builders, according to Calli Barker Schmidt, the organization’s director of environmental communications. "Inspections are usually required by banks and mortgage companies when a home changes hands – but if you are talking specifically about energy-efficiency checks, or an energy audit, it is not required for existing homes," she told FactCheck.org in an e-mail.

Owners of existing homes would be able to get energy audits if they wish, and if they volunteer for programs established by the bill, such as the Retrofit for Energy and Environmental Performance (REEP) program. That program would provide federal funds to states to encourage homeowners to reduce energy consumption. According to the bill, the purpose of REEP is to "facilitate the retrofitting of existing buildings across the United States to achieve maximum cost-effective energy efficiency improvements and significant improvements in water use and other environmental attributes." But facilitating energy efficiency improvements is not the same thing as requiring them.

More Misinformation

Adding to the misinformation, the Cybercast News Service (an "alternative" news site run by the conservative Media Research Center) ran an erroneous July 1 article headlined: "Democrats‘ Cap-and-Trade Bill Creates ‘Retrofit‘ Policy for Homes and Businesses." This prompted the National Association of Realtors to issue a point-counterpoint rebuttal, which the Realtors later provided to FactCheck.org. It reads in part:

CNSNews.com article, July 1, 2009: The 1,400-page cap-and-trade legislation pushed through by House Democrats contains a new federal policy that residential, commercial, and government buildings be retrofitted to increase energy efficiency, leaving it up to the states to figure out exactly how to do that.

NAR: No, section 202 does not require that buildings be retrofitted. Rather, it provides federal funding for states to offer financial incentives, such as loans or grants, for property owners to voluntarily decide to improve energy efficiency. In order to receive the funding, there are conditions on how states can spend the money, such as verification of energy improvements performed by private contractors, but that is only to ensure that taxpayer dollars are actually spent on the purpose for which it is intended (building efficiency improvements).

CNSNews.com: This means that homeowners, for example, could be required to retrofit their homes to meet federal "green" guidelines in order to sell their homes, if the cap-and-trade bill becomes law.

NAR: No, there is no point-of-sale guideline or any other requirement of any sort in the House passed bill. Nowhere does this bill create a federal requirement that a property owner would have to retrofit a property to any guideline at any time – let alone at point of sale. The bill does stipulate federal guidelines to ensure that states spend and verify that bill funding goes to financial incentives for property owners to voluntarily make improvements. An entirely separate bill would have to be drafted, introduced, passed by committees and both houses of Congress, and signed by the President into law in order for the Federal government to go beyond section 202’s financial incentives for voluntary energy improvements.

Maybe as Introduced, Not as Passed

The National Association of Realtors said that the energy bill, as introduced, may have caused some problems for sellers of existing homes.

Section 204 of the bill authorizes the Department of Energy to create a building energy labeling program to "enable and encourage knowledge about building energy performance by owners and occupants and to inform efforts to reduce energy consumption nationwide."

Section 204 (h)(3) of the bill, as introduced on May 15 (and as passed) says that a "State shall seek to ensure that labeled information be made accessible to the public in a manner so that owners, lenders, tenants, occupants, or other relevant parties can utilize it." And Section 204 (h)(4) says that a state can become eligible for federal funds to help implement the program by "adopting by statute or regulation a requirement that buildings be assessed and labeled, consistent with the labeling requirements of the program established under this section," or "adopting a plan to implement a model labeling program consistent with this section within one year of enactment of this Act, including the establishment of that program within 3 years after the date of enactment of this Act, and demonstrating continuous progress under that plan."

NAR said it objected to that section of the bill because it believes that requiring energy labels would "stigmatize and reduce the value of older properties." NAR said owners of older homes would "have to make relatively more significant upgrades in order to maintain their energy rating score and property value." Perhaps so, but even that language did not amount to an explicit requirement that old homes would have to be upgraded before sale, as claimed in the e-mail and by Limbaugh. And in any case the building labeling program was limited specifically to new construction only in a more than 300-page manager’s amendment, which was added before the House voted on the bill.

NAR says it was partly responsible for making changes to the version of the bill that passed on June 26, and it has emphasized that this version "does not create a federal energy audit requirement for real property," "exempts existing homes and buildings from any federal guidelines for new construction energy labeling," and "specifically prohibits any labeling during a sales transaction."

A Republican aide in Congress, who didn’t want to be quoted by name, blamed the confusion on Democrats making changes to the bill in the wee hours of the morning. The aide told FactCheck.org that the amendment limiting the labeling requirements to new homes only was brought before the House Rules Committee just after 3 a.m. on the day members of the House voted on the bill. Those who claimed that the bill would require energy audits and labeling for existing homes were probably unaware of the new version, the aide said, adding: "When you make changes to a bill while everyone in America is asleep, this is what happens."

–D’Angelo Gore

Update, April 26, 2010: We wrote about these claims again in April 2010, when chain e-mails popped up claiming that this bill would require homeowners to get a license before they could sell their homes.

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