Since the days of the first settlers, mold has been a part of the Florida real estate scene. But, a series of high-profile cases around the country have raised concerns about health hazards associated with some types of mold. Here’s a look at how this growing issue is likely to affect Florida’s real estate professionals.
In 1992, employees at a new Martin County courthouse complex in Stuart began complaining of breathing problems and headaches. After a toxic form of mold was discovered behind wallpaper and ceiling tiles, the two-building complex was evacuated. It took the county five years and about $27 million to clean up and repair the complex so it could reopen.
In a landmark Texas case last year, Melinda Ballard and family won a $32 million judgment against their homeowner’s insurance company after suffering serious health problems believed to be related to toxic mold. Today, one must wear protective breathing gear and clothing to enter the Ballards’ 22-room mansion, which lies abandoned after an unrepaired water leak led to an explosion of mold throughout the home.
In California, dozens of lawsuits have been filed in the past few years involving the growth of mold following water damage to homes. Many suits have been settled for $1 million or more.
With cases like these in the national headlines, the problem of toxic mold is likely to affect the Florida real estate market in the next few years. While there is considerable debate about the potential health hazards and the seriousness of the mold problem, public awareness of the issue is rising rapidly. That means real estate salespeople will soon be facing questions like these:
1. How do you determine if a serious mold problem exists?
2. How can a problem be resolved so the transaction can close?
3. How does a mold problem affect the value of a home?
4. How will a mold problem impact homeowners insurance?
5. What does a sales professional need to disclose to a potential buyer?
6. How can professional liability be reduced?
“If I were a Realtor, I’d want to be sure I had all the facts on the environmental status of the building [or house],” says Richard Lipsey, a consulting toxicologist and president of Lipsey & Associates, in Jacksonville. Lipsey, a leading national consultant on the issue of toxic mold, conducted about 100 inspections for mold and other “sick-building” problems in the past year. “If you can see mold, smell mold or suspect mold, you should consider a sick-building investigation.”
A Health Issue
Mold was part of the Florida landscape long before humans arrived. A type of fungus, mold can be found almost everywhere that moisture accumulates, from tree limbs to pool decks to the floorboards and interior walls of poorly ventilated rooms.
“Florida has the perfect environment for mold,” says Leslie O’Neal Coble, an attorney with Holland & Knight LLP in Orlando, who spoke recently at a Florida Association of Realtors workshop on mold. “There are 1,000 different kinds of mold. It’s in the air you breathe indoors and outdoors, and most of the time it doesn’t create a problem.”
Molds perform a valuable service in breaking down decaying organic materials as they emit chemicals that dissolve food. In fact, the antibiotic penicillin was developed from the Penicillium mold. However, many types of mold grow on wood, particleboard, paper, carpet and other building materials. If there is a leak in a roof, a burst pipe, a malfunctioning air-conditioning system or other moisture problem, mold can grow with explosive speed.
Lipsey notes that mold is especially fond of cheaper building materials, including pressed wood and fiberboard, commonly found in new construction. “When these materials get wet, they stay wet ten times longer [than more durable, expensive building materials and wood],” he says. “They also provide a source of nutrients for the more pathogenic molds.”
The effects of toxic mold in a home can also be made worse by today’s airtight construction techniques designed to reduce energy consumption. That means that any airborne chemicals or spores recirculate more often through a home built using such methods, potentially irritating the lungs or attacking other body systems. Researchers estimate that about 50 to l00 common indoor mold types have the potential for creating health problems, including asthma, sinusitis and infections.
Perhaps the worst type of mold is Stachybotrys atra, known as “black mold” for its distinctive black or dark green color. Stachybotrys has been associated with many of the most serious sick-building health problems, including those that caused the Ballard case to be brought in Texas and a cluster of infant deaths in Cleveland.
Mycotoxins produced by molds like Stachybotrys are among the most toxic substances known to humans, according to Dr. Michael R. Gray, an Arizona physician who studied a series of 75 patients with confirmed exposure to toxic molds. “Inhalation and absorption of mycotoxins have been clearly demonstrated to be causative of human illnesses,” he wrote in a recent report, Molds, Mycotoxins, and Human Health.
While a number of mold-related research studies are now underway, at present there are no state or federal standards for determining the amount of exposure to harmful mold that creates a health hazard. “Although research shows a relationship between mold exposure and illnesses,” Coble says, “what’s lacking is an understanding of how much mold makes someone sick.”
Steps to Take
Until researchers can clarify the health issues, the presence of mold in a residential or commercial property is likely to become a source of contention in valuing a property, preparing contracts and closing a sale.
Coble suggests that a listing agent consider taking the following steps:
1. Look for visible mold and check for “musty” odors.
2. If there are signs of mold or water damage, be sure to document them.
3. Ask the owner about recent roof or plumbing leaks, or flooding problems.
4. Ask if any family members have had persistent respiratory problems, allergies or asthma — a sign of potential mold.
“At this point, nobody is sure about the agent’s duty to disclose,” says Coble. “After all, most homes in Florida probably have had some type of leak in the past. But if you see mold or smell it, you need to look further.”
A visual inspection should include any areas damaged by water, such as cabinets under the sink, attics, carpets and visible open space inside wall cavities. A thorough inspection by a trained professional may involve opening several walls and taking samples, as well as conducting air tests and collecting dust samples."
Attacking a mold problem is a two-step process that involves cleaning up the mold and eliminating the source of moisture. Disinfectants and bleaches can be used to remove harmless molds whose only problem is an unsightly appearance that detracts from the value of a home. Absorbent materials, such as ceiling tiles and carpet, may have to be replaced if they are contaminated with mold.
But black molds in the home need to be approached with extreme caution. If lab tests indicate the presence of Stachybotrys or other toxic molds, the contaminated area must be isolated and materials removed with extreme care to avoid spreading the spores.
At the same time the mold is being attacked, the source of the moisture problem must also be addressed. That may mean fixing pipes, replacing the roof or installing a new air-conditioning system. That can be an expensive solution, but it’s the only way to prevent mold from coming right back.
“The best defense against mold is to keep the air conditioning on,” Coble adds. “That not only keeps the temperature low, but it reduces the humidity so mold is less likely to grow.”
The Future of the Issue
Insurers are looking closely at their potential liability for mold-related claims. In Texas, which has broad homeowner’s coverage, major insurers temporarily stopped writing new policies following the Ballard verdict. In January, Louisiana’s insurance department approved mold exclusions for certain lines of insurance.
In Florida, more than 35 insurers have asked the state Department of Insurance to spell out their responsibilities in mold-related claims. They may also seek to limit the amount that would be paid out on a single mold claim. Both current homeowners and prospective buyers should review their insurance policies closely to see if mold-related problems are covered.
Coble says some builders and owners of apartment complexes are now putting disclaimers into their contracts and leases, saying that mold is a naturally occurring substance and that they can’t be held responsible for any health problems it might cause. That trend is likely to continue.
Builders are also looking at their construction practices in an effort to reduce the potential for mold problems. “It’s one of the most important issues home builders face,” said Bruce Smith, a California builder and past president of the National Association of Home Builders, at a recent conference. “It’s an issue that is affecting the housing industry very much. The potential costs to builders are huge.”
Summing up the situation, Coble calls for a balanced approach to the concerns about mold. “The science is still evolving,” she says. “There does appear to be a problem, but it’s not as life threatening as some people would make it appear. But it’s a mistake for owners — or real estate professionals — to ignore this important issue.”
