Contamination concerns grip builders, insurers owners

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Breaking the mold

Contamination concerns grip builders, insurers owners

By Steve Kerch, CBS.MarketWatch.com

Last Update: 5:05 PM ET March 8, 2002

CHICAGO (CBS.MW) -- Molds are everywhere in the environment, growing where

moisture and food are present. They bring us such useful products as the

antibiotic penicillin and ripened cheese Chevre.

But molds also have crept into the real estate world, and their presence is

anything but benign. Home builders, Realtors, multifamily property managers,

homeowners and renters increasingly are being forced to confront issues of

mold contamination, which has also produced numerous multimillion-dollar

lawsuits across the country.

" The key issue with mold is that it is everywhere. Outdoors, indoors --

you're breathing spores today. We're seeing a lot of problems with mold not

because it's there, but because it is not being taken care of properly, "

said Arif Quraishi, chief executive officer of the Institute for

Environmental Assessment in Brooklyn Park, Minn.

Subject of study

No one knows how many types of mold exist. Estimates range anywhere from

70,000 to 1.5 million, Quraishi said. Thousands of them are black, not just

the stachybotrys that has made the most news invading homes. The

Environmental Protection Agency says there are molds that can grow on wood,

paper, carpet, food -- even dynamite.

And there has been little scientific study of molds' connection to illness.

The few large-scale studies that have been done focused on those who had

prolonged exposure in occupational settings -- such as farmers who work

around moldy hay -- or who had eaten mold-contaminated foods, Quraishi said.

Molds do, however, pose a medical threat to those who are sensitive to their

spores and those with asthma or other respiratory ailments. And depending on

the degree of one's sensitivity, the threat can be great.

Exposure to molds can cause symptoms such as nasal stuffiness, eye

irritation or wheezing, according to the Centers for Disease Control in

Atlanta. Those with serious allergies to molds may suffer more severe

reactions, including fever and shortness of breath.

" Mold is a big question mark right now. There is a lot of science being done

on it ... but it is an emerging issue, " said Garczynski, president of

the National Association of Home Builders.

In a survey by the NAHB, 28 percent of builders nationwide reported having

mold in at least one house under construction last year and 18 percent said

the problem had appeared in occupied houses. Still, the total number of

homes affected across the country represents only about 1 percent of all new

homes.

Although mold contamination has created the biggest stir in Texas and

California, attention on the issue has alerted more homeowners to potential

problems and reported cases are spreading.

Lawsuits multiply

" Mold is the current media rage and the current legal rage -- lawsuits are

being filed across the country, " said Perrone, an attorney with

Mc & English LLP in Newark, N.J., citing a $30 million-plus Texas

verdict and an $18 million judgment in California in two highly publicized

mold contamination cases.

" Most of these moisture problems are relatively minor. But it you don't get

in within 24 to 48 hours to clean up, mold is going to grow. And it's time

plus neglect that is going to equal big money for plaintiffs, " he said.

Enough builders are concerned that a session on mold problems at the recent

International Builders Show in Atlanta drew an overflow crowd. Home building

sites are particularly vulnerable to mold problems because building

materials often remain exposed for days during construction.

" It will take a whole myriad of parts to solve. It's not just a building

materials problem; it's air circulation, building codes and other things, "

said Bruce , a home builder from Walnut Creek, Calif., and immediate

past president of the NAHB.

Home insurers, too, are getting soaked by mold claims.

, president of Elkins/, a property insurance brokerage firm

in Los Angeles, said insurance companies are refusing to write policies on

homes and commercial buildings if prior water damage claims have been made

or if inspections turn up the potential for mold problems.

" Problems in obtaining homeowner insurance could delay thousands of home

sales in California, " said.

She noted that most mortgage lenders require that a homeowner policy be

issued before closing a home loan. Recently, an insurer refused to cover a

10,000-square-foot Beverly Hills home because the company's inspector found

water build-up in the pool house, she said.

Premiums could rise

Whether insurance companies write policies where mold is an issue or not,

all homeowners are likely to see premium increases as insurers seek to cover

the volume of claims stemming from mold, said. In some cases, those

increases could be as much as 40 percent, she said.

In January, A.M. Best Co. said unexpectedly large mold-related claims have

led to significant disruption in the Texas housing market. Several home

insurers have stopped writing new business entirely in the state, while

others have scaled back.

" Not only has frequency of mold claims increased exponentially across the

state, but the severity has also trended upward over the past 18 months, "

the rating company noted in a special report.

The EPA says there is no practical way to eliminate all mold and mold spores

in the indoor environment. And Quraishi says there is no way to cut off the

nutrient sources on which molds feed. The only way to control mold growth is

to control moisture.

If mold is a problem in your home, you must clean it up and eliminate

sources of moisture. Among the EPA's tips:

Wash mold off hard surfaces and dry completely. Absorbent materials, such as

ceiling tiles and carpet, may have to be replaced if they are contaminated

with mold.

Fix leaky plumbing or other sources of water.

Keep drip pans in your air conditioner, refrigerator and dehumidifier clean

and dry.

Use exhaust fans or open windows in kitchens and bathrooms when showering,

cooking or using the dishwasher.

Vent clothes dryers to the outside.

Maintain low indoor humidity, ideally between 30 to 50 percent relative

humidity. Humidity levels can be measured by hygrometers, which are

available at local hardware stores.

Clean and dry any damp or wet building materials and furnishings within 24

to 48 hours to prevent mold growth.

Prevent condensation: Reduce the potential for condensation on cold surfaces

(i.e., windows, piping, exterior walls, roof, or floors) by adding

insulation.

In areas where there is a perpetual moisture problem, do not install

carpeting.

The EPA maintains a list of mold resources on its Web site.

" The bottom line: Any time you have mold growth inside, get rid of it, "

Quraishi said.

Steve Kerch is the real estate editor of CBS.MarketWatch.com in Chicago.