Builders And Insurers Are Placing Mold Clauses In Their Contracts

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Builders And Insurers Are Placing " Mold Clauses " In Their Contracts

by Stuart Lieberman

Mold claims can be very costly. Property damage claims relating to

mold have, in a few cases, exceeded one million dollars. And personal

injury claims can be costly as well. In response to this, corporate

America has been busy looking for ways to escape mold related

liability.

For example, builders are trying to protect themselves from mold

claims by placing mold exclusions in their contracts. Recently I saw

a contract from a home seller that disclaimed any liability to the

buyer caused by or relating to mold growth.

Your real estate lawyers needs to be watchful for these clauses and

must ensure that you understand the risk if you sign an agreement

with this exclusion. Personally, I think efforts to immunize builders

in this manner are unconscionable.

Mold has been around longer than we have. But it has been a basis for

legal liability for a relatively short period. For the most part,

mold lawsuits have been around for only the last 10 years.

Mold requires a moisture source and darkness to grow. That being

said, why should a builder need any special mold protection?

If the roof isn't leaking, if the piping is sound, if the insulation

is properly installed, in other words, if the home is well

constructed, why safeguard against mold claims?

Why not simply build a better home? That's a new thought. Eliminate

the ongoing water sources. I would be concerned about a home being

sold with a mold clause. Maybe the builder lacks confidence in his

own ability or that of his subcontractors.

Insurance companies are now concerned about mold as well. What had

seldom been a claim basis is turning into a carrier nightmare.

Some carriers are carving out mold claims from their basic policies.

If you want that protection, you need to pay extra for it. And even

then, it is restricted.

This can be a real problem. Often treating mold means knocking down

walls and re-building. What will you do if you have this issue, but

have no insurance coverage? People will soon find themselves in this

situation.

Because homes are supposedly more energy efficient now than ever

before, they tend to trap moisture and therefore, I am told,

encourage mold growth. That may be one reason why mold complaints are

on the rise.

Also, we are talking about it a lot more now. In the past it simply

did not occur to homeowners, or for that matter their lawyers, that

claims for mold damage could be filed. You are reading this column,

for example. A few years ago no one would have written about this.

The cure is usually easy. Very often mold can be eliminated with

bleach. You also need to ensure that moisture sources have been

eliminated. Ventilation also helps. State and local health

departments have a lot of information concerning simple mold

abatement.

The bottom line is this: Home sellers and insurers are cleverly

trying to avoid mold liability; read the contracts before you sign.

And if they are bad contracts, see a lawyer and protect yourself.

Published: June 24, 2004