If you do this, you must mark the outlets "no equipment ground". Be mindful of the fact that you don't have to do anything beyond disconnecting the ground from the neutral wire.

If you go above and beyond the call of duty, you don't have to install GFI in all the positions to have GFI protection, only the first one in the circuit. You can also install a GFI or AFI circuit breaker on that circuit.

Even if you do install a GFI in every box, you still should not use anything with a ground plug in that outlet because there is no ground there. There is nothing inherently wrong with ungrounded outlets if they are used with devices with "two prong" plugs.

I doubt that every device they use has a two prong plug. Even dumb things that ought to be able to be two prong like my laptop come with three prong plugs (and when traveling, especially abroad, I often plug it in with an adapter into 2 prong circuits and it hasn't shocked me yet).

To make the plugs usable with 3 plug appliances, do they need to rewire?

Yes

"Even if you do install a GFI in every box, you still should not use anything with a ground plug in that outlet because there is no ground there."
I strongly disagree. There is no such suggestion in any code nor from any recognized expert. There is no inherent danger in using the three prong plugs in such receptacles. The GFCI affords some of the protections of grounded receptacles/plugs plus the GFCI adds some protections that grounded conductors do not offer.
The bad advice which I protest would offer little alternative to removing the grounding prong from the plug which then results in all grounding function being lost when and if it is subsequently plugged into a truly grounded receptacle.
Using a GFCI with ungrounded receptacles DOES mean that a surge protector at that receptacle will be ineffective.

Code is quite explicit. Either a two wire circuit must be upgraded with a three wire cable. Or GFCIs must be put either into receptacles or in the circuit breaker for that circuit. ionized has accurately described a label that must exist on each receptacle if using the GFCI solution.

Does not matter what did not happen to you in the past. If 10,000 people were not shocked, the existing wiring is still extremely dangerous.

Significant junk science is created by "it did not yet happen" reasoning. That previous owner demonstrated same.

Be concerned for everything electrical (especially in bathrooms) because that previous owner demonstrated contempt for human life.

Back to your original question, using neutrals for grounding at receptacles is potentially very dangerous. If that exists, get it corrected immediately.
The "inspector" menthioned could have been a "home inspector". An appalling large percentage of those know little about residential wiring and create all sorts of problems with the reports they issue. I have been a fireman and often the media will report that a fire investigation shows that a fire was caused by an "electrical shortage". No such term exists in the trade. It is used by those who have no clue but wish to appear knowledgeable.
My idea is that an electrical shortage will eventually occur if one fails to pay the bill.

"Code is quite explicit. Either a two wire circuit must be upgraded with a three wire cable. Or GFCIs must be put either into receptacles or in the circuit breaker for that circuit."

More "information" that is not quite right. Residential premises where the electrical system is in good condition and complies with the code in effect at the time it was constructed are not required by the NEC to make any changes simply because the NEC is revised. If certain other electrical upgrades are being made, changes to the existing may be required. Often electrical inspectors sort of create their own code and require things that the code does not. This is illegal but protesting often creates hostility that translates into long-term problems for the electrician. Authority does not like to be challenged.

Code compliance requirements for older homes is based on both code and the current situation. If a two prong outlet works and it met the original code when built there is no need to upgrade it. Many folks do upgrade, but you are not required to just because it is based on old code requirements. However, if this is a home purchase you may want to factor the upgrade into the purchase price and/or get an allowance for what you think is necessary.

The other situation is when you have a home remodel project, which almost always includes electrical changes. Many city permit inspectors will require you to upgrade all electrical in proximity to the remodel area to current code. This is often the case in a kitchen remodel, since current code has quite a few relatively new requirements.

Bruce

You can also replace the ungrounded 3 prong receptacles with new 2 prong receptacles. I would not do it out of convenience and avoiding the use of 2 to 3 prong adapters. The use of GFCI receptacles or breakers is the way to go unless you have a bunch of money and want to rewire the house.

In most jurisdictions in Ontario older non conforming to current code construction material and mechanical systems may be grandfathered in. However that doesn't mean an insurance provider will cover you. Most won't touch a new policy if the house has 60 amp and or ungrounded wiring. The big thing is also woodburning stoves, some won't cover for fire even if brand new, they just won't take the risk.

Cloud Swift your son might want to check with his insurance provider to ensure he can get fire insurance with the old wiring currently in place.

As Yogi Bera once said about insurance " if ya need it ya don't have it and if ya have it ya don't need it".

Using a GFCI with ungrounded receptacles DOES mean that a surge protector at that receptacle will be ineffective.
Less effective. Most surge protectors have a MOV across the LINE-NEUTRAL as well as a protector to GROUND.

It would be silly if it didn't. The device doesn't see the ground usually.

> Residential premises where the electrical system is in good condition
> and complies with the code in effect at the time it was constructed
> are not required by the NEC to make any changes simply because
> the NEC is revised.

Nobody said NEC changes required wiring changes. Nothing posted justified that conclusion.

Had all two prong receptacles been left unchanged, then wiring was perfectly safe. Problem is that someone threatened human life by installing three prong receptacles on a two wire circuit. And connected its safety ground prong to the neutral wire. That is two serious safety violations of the NEC.

If three prong receptacles are used, then interior cables must be upgraded to three wire OR that GFCI recommendation (with labels) is required. No way around those rules that completely apply once a three prong receptacle replaces a two prong.

An inductive surge suppressor will work on an ungrounded circuit.

An easy solution for what? It provides no ground, prohibits the use of 3-prong plugs. Out of frustration, many people will tear out the third prong from the plug on the cord and thus render the item less safe in every use.
The GFCI is the much safer solution.

In addition to what bus_driver raised, I have severe doubts that this is even legal. While it might appease some bozo home inspection contractor, it's hardly either a listed or otherwise allowable fix for a missing ground.

It is also noted that the poster here is, in fact, the principal of the company selling these little pieces of junk. It violates the rules of this forum to make surreptitious SPAM posts like this and has been reported.

i have a few ungrounded runs in my house. i have replaced a few, but i find a very good compromise is the following:

1) replace all ungrounded outlets with GFCI (apply the no ground sticker)
2) add whole-house surge protection

as far as i can tell, this solution protects the user and the equipment. it is also a reasonable change for a home seller to make.

good luck.