To begin with, it might be helpful to examine some facts. It is fairly common knowledge that mold has been around since the beginning of time. (Pamela J. Davis, “Molds, Toxic Molds, and Indoor Air Quality,” CRB Note. Vol.8, No. 1, p.1). Mold flourishes in environments conducive to its growth, like areas where there is continued exposure to moisture and materials with porous surfaces. It can be toxic or non-toxic, but it seems the majority of molds found are the non-toxic variety.

The incidence of toxic forms found in homes appears to be more rare. (Taken from Questions and Answers on Stachybotrys Chartarum and Other Molds, www.cdc.gov). One of the toxic varieties is called Stachybotrys chartarum (also known as Stachybotrys atra or black mold). For some helpful questions and answers on mold, see the sidebar from the Centers for Disease Control (CDC) included with this article. It is generally known that some people have greater sensitivities to the more common varieties of mold, and symptoms might include runny nose, eye irritation, sneezing, sore throat, congestion etc. (Mold in Homes, Minnesota Department of Public Health, www.health.state.mn. us). The list includes symptoms typically associated with allergies.

It is unclear whether there is more mold in the air or in building materials, whether current building techniques are causing an increase in mold growth, or whether there is simply a greater awareness of mold’s presence, thus causing a “mold alarm.”

Perhaps part of this awareness comes from a string of recent cases on the subject of mold. For example, in Delaware, tenants sued their landlord successfully for “injuries allegedly caused by the condition of the Landlord’s property.” (NAR Letter of the Law citing New Haverford Partnership v. Stroot, No. 549, 1999, 2001 WL493216 (Del. May 8, 2001)). The Delaware Supreme Court upheld a jury verdict in the amount of $1.4 million.

At trial, the tenants testified that their apartment had obvious problems with various fungi and that the landlord did not correct the problem. The tenants argued that as a result of this failure, they suffered health problems caused by the mold. The Delaware Supreme Court affirmed the jury verdict finding a causal link between the mold present and the tenants’ health problems. (Author’s note: This probably means the jury believed the testimony of the tenants’ expert witnesses).

In a Texas case, a $32.1 million verdict was awarded to a couple who owned a mansion found to be contaminated with the toxic Stachybotrys mold. This case involved a lawsuit against the company that insured this property. One quite distinguishing characteristic that may separate this case from others is that, in Texas, the insurance contract covers damage produced by slow leaking water. As one author states, “In most of the U.S., policies cover water damage only when the event is ‘sudden and accidental,’ such as a burst pipe or wind-driven rain.” (Elizabeth Razzi, “The New, New Scourge,” Kiplinger’s, October, 2001 p. 107).

There is yet another instance where a Foresthill, California couple donated their home to a volunteer fire department who burnt it to the ground because the couple is convinced the toxic strain of black mold produced serious illnesses in their young son. The owners, according to a magazine article, are planning a lawsuit against their brokers. They believe the brokers who handled the sale knew of the mold contamination and did not disclose the problem, which the brokers of the property deny. (“The Fire Cure,” People, July 9, 2001, p. 110).

Considerations for Real Estate Professionals

Given all of this news, what is a real estate professional to do? The difficulty here is that, as with many things, affected parties look for someone to blame, when indeed no one can be sure who or what is to blame for mold problems. What brokers can do is stay current on the latest information available and remain alert for possible mold problems. The Minnesota Department of Health recommends investigating before testing. It lists some items to include in an investigation:

• Look for visible mold growth (may appear cottony, velvety, granular, or leathery and have varied colors of white, gray, brown, black, yellow, green). Mold often appears as discoloration, staining, or fuzzy growth on the surface of building materials or furnishings.

• Search areas with noticeable mold odors.

• Look for signs of excess moisture or water damage. Look for water leaks, standing water, water stains, and condensation problems. For example, do you see any watermarks or discoloration on walls, ceilings, carpet, woodwork or other building materials.

• Search behind and underneath materials (carpet and pad, wallpaper, vinyl flooring, sink cabinets), furniture, or stored items (especially things placed near outside walls or on cold floors). Sometimes destructive techniques may be needed to inspect and clean enclosed spaces where mold and moisture are hidden; for example, opening up a wall cavity. (Home investigation, Mold in Homes, www.health.state.mn.us).

Brokers might provide some basic information about mold or references to helpful not-for-profit Web sites to clients, perhaps using internal buyer agency checklists as reminders to agents. Brokers might also build a list of reputable inspectors and/or contractors who can spot and perhaps remediate mold problems. As always, if a mold problem is suspected or known, the broker should disclose this information and point out the signs to the broker’s client (whether buyer or seller). If the broker is the seller’s agent, the broker should remind the client that information about the physical condition of the seller’s property is, generally speaking, not confidential to the seller.

To summarize, the extent of “the mold issue” is not yet known. There is no known scientific causal link established between mold strains and very serious illnesses according to the CDC (Questions and Answers on Stachybotrys Chartarum and other Molds, www.cdc.gov, Question #1). It has been held by the courts to be a problem for which someone other than the resident will pay, for example insurance companies and landlords.

There are not yet any standards that give guidance as to acceptable or non-acceptable levels of mold growth according to the U.S. Environmental Protection Agency (EPA Indoor Air Regulations and Mold, www. epa.gov/iaq/pubs/moldresources. html). However, it is an issue that warrants continued attention, education and quite probably, disclosure where mold is present or suspected.

“Are toxic molds something to be alarmed about? ‘No,’ says Carol Johnson, an epidemiologist with the CDC. You should be concerned, but not panicked. All molds, even the toxic-causing ones, can be cleaned up by the homeowner with a mild bleach solution if they exist in small quantities.’ In fact, most people never realize that toxic molds are present in their home because they clean them up before they have a chance to grow big enough to present a hazard.” (“Truth be Told on Mold,” www.todayshomeowner.com/ repair/19980211.digest1.html).

by Betsy Urbance, IARLegal Hotline Attorney