When we think of mold, it conjures up bad connotations – scary images of neglect, expensive remediation and possible litigation, and with good reason as we will discuss. However, mold (fungi) is not always so chilling; there is also its beneficial, useful side. For example, you probably already knew that mold (Penicillium-a genus of ascomycetous fungi) is instrumental in the development of antibiotics, but did you know that Penicillium is also used to treat (that white powdery stuff) the casings of salami to prevent spoilage during the curing process? Neither did I before viewing an article on the Discovery Channel. Mold is also instrumental in the formation of different types of cheese such as Gorgonzola and Roquefort “m-m-m-m,” AND it is an integral part of the fermentation of beer. So you see, now, mold isn’t so bad, is it?
YES IT IS! Enough of the warm and fuzzy (pardon the pun), let us get to the forbidding, cursed “Black Mold (Stachybotrys chart arum shown above).” There is no beneficial or useful side to this toxic menace. On the contrary, it has been the subject of numerous, controversial lawsuits and blamed for endless maladies to human health, to include the determination made by the Centers for Disease Control (CDC) of the cluster of 27 child-deaths in Cleveland, Ohio in the early 1990’s. This is bad stuff, which is why real estate professionals, owners, developers, lenders and borrowers need to pay attention to the huge part toxic mold can potentially play on their liability exposures (property damage and/or personal injury).
There are four critical requirements for mold growth – available mold spores, available mold food, proper temperatures and significant moisture – all of which are ever-present, especially indoors with an unattended leak and contact with material of high cellulose and low nitrogen content (fiberboard, gypsum board [drywall], paper, dust and lint). Once inside, and given the proper conditions, black mold can get a foothold in a structure in as little as 24 hours.
Since the situation in Ohio, there has been a drive pushing mold issues to the forefront and court decisions have placed the burden squarely on not only property owners, but also on insurance companies to shoulder the cost of multi-million dollar settlements. Here are just a few examples:
- Television celebrity (and Budweiser spokesman – ironic, huh?) Ed McMahon agreed to a settlement of$7.2 million after suing his insurance carrier.
- Twelve immigrant families in Alameda County, CA were awarded $1.3 million after suing their landlord.
- A Texas couple received $4 million against their insurance carrier. This is the infamous case from Dripping Springs (appropriate location), Texas, where the homeowners filed a “breach of good faith” claim against their insurer, Farmers Insurance Group, and were initially awarded $32 million! An appellate court later reduced the award to $4 million and the homeowners settled out of court for an undisclosed amount. After receiving their settlement, the homeowners eventually bulldozed the contaminated home. This is an interesting case, and it certainly sent a shock-wave across the insurance industry and ultimately contributed to insurers either drastically limiting or explicitly excluding mold-related claims from their policy forms.
Although most lawsuits spotlight either the building contractor for not allowing enough time for the interior woodwork or cellulose material to dry before sealing, or the architect for negligent structural or mechanical designs, it is not uncommon to have up to 100 individuals or entities drawn in as defendants in a mold-related claim, TO INCLUDE real estate professionals. Rather than risk involvement in an expensive lawsuit, pay a little extra attention to its prevention (“an ounce of it is worth a pound of cure”) and here some steps to follow:
- Have any and all leaks repaired immediately!
- A damp, musty smell means a potential problem – look for evidence!
- Keep humidity below 60%!
- Open exhaust vents or windows in the moist rooms (bathrooms and kitchens)!
- Drain landscaping AWAY from foundations!
- If you detect mold, CLEAN IT UP! IMMEDIATELY!
Mold has been around as a troublemaker for a long, long time. If you doubt it, check out Leviticus Chapter 14, Verses 33-57 in the Old Testament. And, it just could be the source of King Tut’s Curse.