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The issue of mold growth and its impact on the real estate profession is getting
a lot of attention lately – especially in the U.S. While mold is something
REALTORS need to be aware of, and definitely need to disclose, the jury is still
out on whether mold is a huge health concern.
Disclosure is always a Realtor’s best course of action for any discovery of mold
or other defect in a house they are selling. In the U.S., the National
Association of REALTORS (NAR) is encouraging its state associations to advocate
the adoption of laws that will provide a defence to claims against brokers who
have truthfully disclosed any known problems.
Mold is everywhere (indoors, outdoors, in food, etc.) Molds produce spores,
which are also everywhere. There are thousands of types of molds (most harmless
to people) but only a few are “bad molds.” Two “bad molds” most commonly
referred to are in the genus Aspergillus and Stachybotrys chartarum. Some toxic
and pathogenic molds produce, among other things, mycotoxins, which could be the
alleged culprits in toxic mold cases. However in small quantities these molds
would have little or no effect on people who are not hypersensitive to molds.
Most mold problems come from water damage. But, it doesn’t just have to be
plumbing water damage or leaking roofs. It can also be as a result of too much
humidity; poor ventilation systems; wet construction materials (e.g. wet wood);
poor construction or design. Many buildings are now so “tight” for energy
efficiency that there’s no way for moisture to leave the building.
Mold used to be considered merely one of the consequences that could result from
water damage. Now, mold is being viewed as a cause of damage. Some insurance
companies are considering excluding mold from both first party and third party
coverages.
Property owners may be able to obtain site-specific environmental insurance that
specifically includes mold coverage. However, since the premiums for
environmental insurance are quite high (about $10,000 for $1 million of
coverage) this may only be an option for commercial property owners. The insurer
will check out the building and the maintenance, etc. to assess its risk before
setting a premium and insuring the property.
The key to controlling mold growth is to control the moisture and humidity
levels. The first thing that needs to be done is to find the source of the water
and moisture and stop it. Then, the mold should be cleaned up. However, once the
problem gets beyond a small clean up, mold remediation may be needed. It is
important to ensure that the entire problem area is remediated otherwise the
mold infestation will grow back. Currently, the mold remediation industry is
unregulated however, that might change, as there are some areas in the U.S.
already developing remediation guidelines.
While no one disputes the fact that mold exposure may produce allergic responses
in certain individuals, for every expert that says there is a link between
indoor mold growth and severe health problems, there’s one who says there isn’t.
To date, there have been no Canadian mold cases where any amount has been
awarded for personal injury. Even the best-known U.S. decision, where a Texas
jury awarded a woman $32 million against her insurance company was based on a
claim of “bad faith” against the insurer, not personal injury. In that case, the
judge would not even allow evidence of health problems because he held that the
scientific evidence was too contradictory. The appeal decision in that case was
recently issued. As expected, the appellate court totally eliminated the
punitive damage award, which made up most of the $32 million and reduced the
verdict to $4 million.
There are several cases dealing with indoor mold alleging (among other things)
personal injury as a result of the mold that are heading towards the Canadian
courts. Precedent-setting decisions in these cases may still be several years
away. This issue is still in its infancy in Canada. As the issue of mold emerges
in Canada, buyers and sellers would be wise to be as well informed as possible.
The best advice to sellers is to disclose any water problems or presence of mold
up front. The best advice to buyers is “beware.”
Here are some websites providing information about mold:
CMHC - The Condominium Owners' Guide to Mold –
http://www.cmhc-schl.gc.ca/en/burema/gesein/abhose/abhose_ce44.cfm
. ;
Fighting Mold - the Homeowners Guide –
http://www.cmhc-schl.gc.ca/en/burema/gesein/abhose/abhose_ce08.cfm . ;
Solving Persistent Moisture Problems and Moisture Damage –
http://www.cmhc-schl.gc.ca/en/imquaf/himu/bebufa_005.cfm.
National Centre for Environmental Health -
Mold: Facts | CDC APRHB
Web site for EPA guide on mold
www.epa.gov/iaq/molds/moldguide.html
Owners of contaminated property in Ontario can recover damages from neighbouring
polluters, even if the owners do not intend to clean up the contamination.
Courts may order damages based on the costs of clean-up to a "pristine" state, a
higher standard than required by the Ministry of the Environment clean-up
guidelines.
The stringent "pristine" standard may be invoked even where the current land use
is commercial or industrial. Once the site is in a 'pristine" state, or damages
have been awarded, there is no stigma attached to that site for once having been
contaminated.
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