Things You Should Know About Mold

| 10 Things to Know About Mold |
| Mold Hazards & The Law | Senate Bill 732 Toxic Mold Disclosure Law |

A Brief Guide to Mold, Moisture, and Your Home (EPA)

Ten Things You Should Know About Mold

1. Potential health effects and symptoms associated with mold exposures include allergic reactions, asthma, and other respiratory complaints.
2. There is no practical way to eliminate all mold and mold spores in the indoor environment; the way to control indoor mold growth is to control moisture.
3. If mold is a problem in your home or school, you must clean up the mold and eliminate sources of moisture.
4. Fix the source of the water problem or leak to prevent mold growth.
5. Reduce indoor humidity (to 30-60% ) to decrease mold growth by: venting bathrooms, dryers, and other moisture-generating sources to the outside; using air conditioners and de-humidifiers; increasing ventilation; and using exhaust fans whenever cooking, dishwashing, and cleaning.
6. Clean and dry any damp or wet building materials and furnishings within 24-48 hours to prevent mold growth.
7. Clean mold off hard surfaces with water and detergent, and dry completely. Absorbent materials such as ceiling tiles, that are moldy, may need to be replaced.
8. Prevent condensation: Reduce the potential for condensation on cold surfaces (i.e., windows, piping, exterior walls, roof, or floors) by adding insulation.
9. In areas where there is a perpetual moisture problem, do not install carpeting (i.e., by drinking fountains, by classroom sinks, or on concrete floors with leaks or frequent condensation).
10. Molds can be found almost anywhere; they can grow on virtually any substance, providing moisture is present. There are molds that can grow on wood, paper, carpet, and foods.

MOLD HAZARDS AND THE LAW

There are more than 100,000 species of mold. Most types of mold are not hazardous to healthy individuals though prolonged or excessive exposure can cause or exacerbate asthma or other allergies. Molds sometimes produce chemicals called mycotoxins that can cause illness in sensitive people. The species of greatest concern is Stachybotrys chartarum or Stachybotrys atra which is commonly called black mold.

Thus, it can be difficult to determine what level of exposure is harmful. There are no federal or state standards for what levels of exposure to molds presents significant health risks. There are no federal standards for mold though the EPA published a guideline for remediating mold in schools and commercial buildings. New York City has established guidelines for assessing and remediating mold. In addition, a number of states in the south and west are considering enacting mold-related legislation. For example, the California legislature is considering a number of bills that would establish cleanup standards for mold and mandate disclosure of mold problems when buildings are sold or leased. If these laws are adopted, Phase I ESAs in these states will have to address the possibility of mold infestation.

Molds usually appear because of excessive moisture in a building. The moisture is often a result of construction defects or maintenance problems such as leaking windows or roofs, failed sealant joints, inadequate or missing flashing, leaking pipes, cracks in the siding or poorly designed HIV systems. Mold can grow on materials with a high cellulose content such as drywall sheetrock, dropped ceiling tiles and wood that become chronically moist or water-damaged due to excessive humidity, water leaks, condensation, or flooding.

While mold is not usually addressed in environmental due diligence, it is fast becoming a concern to building owners, contractors, architects and insurers. In the past few years, hundreds of lawsuits have been filed for mold damage to homes, apartment complexes, commercial buildings, schools and courthouses.

One reason for the proliferation of the mold lawsuits is the use of cheaper building materials such as plywood and plasterboard which are more prone to breed molds when wet. However, homeowners are also becoming increasingly aware of the health issues associated with molds and are now filing claims when they discover mold under sinks, under floors and behind wallpaper. One insurer estimates that over $50 million in mold claims this year. Indeed, the Texas Insurance Council of Texas estimated that mold-related claims have risen 135% since 1999. As a result, insurers in Texas have asked the Texas Insurance Commissioner to exclude coverage for mold damage from standard homeowners policies.

Not surprisingly, insurers are seeing an increase in claims under GL policies for damages attributable to toxic mold. Courts have divided on a number of key issues.

One key definitional issue is whether toxic mold can be considered a contaminant or a pollutant? Many courts seem to be refusing to apply the contaminant exclusion in the context of indoor air quality claims. For example, in Donaldson v. Urban Land Interests (564 N.W. 2nd 728), a Wisconsin state court held that injurious concentration of harmful substance in poorly ventilated areas was not a "pollutant". However, in Reliance Ins. Co. v. Moessner (121 F 3d 895), the Court of Appeals for the Third Circuit held that an absolute pollution exclusion excluded coverage for tenant's claim for bodily injury after inhaling lead paint fumes.

Another dispute is whether indoor air falls may be considered "atmosphere" and thus fall within the pollution exclusion. Many courts have held that releases of contaminants into indoor air are not releases into the atmosphere and that the pollution exclusion does not apply.

Another key issue is whether the release of fungal contaminants can be deemed to be "sudden and accidental"? Courts seem to have divided along the same lines with mold as they have with other contaminants. Some courts view the sudden and accidental exception as nothing more than a reiteration of the fortuity requirement contained in the occurrence element of an insuring agreement. However, other courts have limited the exception's application to releases that are abrupt in a temporal sense.

Texas is one the leading states for mold-related lawsuits. For example, a jury in Austin, Texas recently awarded $32 million to a couple who sued their insurer after the company allegedly failed to repair a water leak in their 22-room home in Dripping Springs, Texas. The jury awarded $6.2 million in actual damages $12 million in punitive damages, $5 million for emotional distress, and $8.9 million in attorneys' fees. In December, another insurer settled a mold-related bad-faith lawsuit for $1.5 million in Blum v. Chubb Custom Insurance Co. (No. 99-3563, Nueces Co., Texas Dist. Ct.).

California is another popular venue for mold lawsuits. A California homeowners group recently settled a $1.3 million mold lawsuit against builders and contractors in Club at Wood Ranch v. Roberts Group (No. 21522, Ventura Co., Cal. Super. Ct.). This action followed another California case where a federal jury awarded $18 million to a homeowner against an insurer who declined coverage (Anderson v. Allstate Insurance Co., No. 00-907 (E.D. Cal.)). All but $500,000 of the verdict was for punitive damages. The trial judge subsequently reduced the award to $3 million.

Some of the earliest mold damages cases have been brought in Florida where the humid climate provides good conditions for mold. In 1997, a plaintiff was awarded $11.5 million plus attorneys' fees for mold damage to a Florida courthouse. In Centex-Rooney Construction Co. v. Martin County (706 So.2d 20, Fla. 4th Dist. Ct. App. 1997), the county sued the architect and builders for construction defects in a $13 million courthouse that led to mold damage. 15 workers became sick from the mold. The total value of the verdict exceeded the cost to construct the courthouse.

Thus, when a transaction involves office buildings, hotels, or residential buildings, it is also advisable to expand the scope of the ESA or conduct a Property Condition Report to investigate for the presence of molds.

Synopis of Senate Bill 732 Toxic Mold Disclosure Law

Standard for Identification and Remediation

• Directs the Department of Health Services to adopt permissible exposure limits for mold in indoor environments, based on the latest scientific data and any existing standards by authoritative bodies.
• Directs the Department of Health Services to adopt mold identification standards for the environmental assessment of molds in indoor environments based on the permissible levels of exposure, the latest scientific data, common industry practices and any existing standards by authoritative bodies.
• Directs the Department of Health Services to adopt mold remediation, based on permissible levels of exposure, the latest scientific data, common industry practices and any existing standards by authoritative bodies.

Disclosure

Requires landlords and sellers of residential and commercial property to provide written disclosure to potential tenants or buyers, identifying the current presence or prior existence of mold and disclosing if it exceeds the permissible exposure limit.

Authority

Authorizes the Department of Industrial Relations to respond to mold complaints and grants the department responsibility to enforce standards in the workplace. Also amends the sub-standard housing code to include the presence of molds and allows code enforcement officers to effectively address concerns about molds.

Board and Certification

Directs the Department of Health Services to develop standards of education and certification for mold-testing professionals and mold remediation specialists.