Jon, the clearance is to the outside of the chimney proper--not the flue lining. A "chase" is essentially a housing for something else such as a factory chimney, cables, pipes, etc. If over 4 stories, it is considered a "shaft", which must be fire rated construction.

Spalling of a flue can be caused by many things. I suggest you take Dale Feb's course so you can distinguish btw them and how to report them. If you comment on the flue condition then you should be doing a full Level II inspection or at least recommending one.

The clearances to combustibles are clearly stated in the building codes so I would direct you there for starters.

HTH,
Bob

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Keep the fire in the fireplace.