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Mold – The New Four Letter Word for Landlords

Why is mold the new four letter word? According to the Insurance Information Institute, the amount paid out by insurers for mold-related claims more than doubled between 2001 and 2002, rising from $1.3 billion paid in 2001 to more than $3 billion paid the following year, despite the lack of definitive evidence linking mold to brain damage, reproductive problems, or cancer, according to a widely covered spring 2004 report issued by the Institute of Medicine, an arm of the National Academy of Sciences. As Bill Hallett, an instructor for the New Mexico Real Estate Association says, “all that has been proven is that some people can get sick from some kinds of mold some of the time, and that seems to be enough to start the lawsuits”.

 What is mold?

Mold, a fungus, is everywhere and most of it is harmless. Outdoors mold breaks down organic matter such as toppled trees, fallen leaves, and dead animals. We would not have food and medicines, like cheese and penicillin, without mold. Indoors, mold growth should be avoided. Some varieties, such as the aspergillus and stachybotrus strains, are known to produce potent toxins under certain circumstances.

Molds can grow on virtually any substance, needing only two conditions to thrive:moisture and food. Some molds eat wood, paper, carpet, foods and insulation, while others eat the dust and dirt found in the moist regions of a building. And herein is the problem. Mold feeding can weaken structures and mold spores can cause respiratoryproblems and allergic reactions. Moisture control is the key to prevent mold: promptly fixing leaks and cleaning up spills or standing water substantially reduces the potential for mold growth. Also make sure ventilation equipment works properly, such as bathroom vents.

What should you do if you detect mold?

In two words: disclose and remediate. Your risk for a high-cost liability in mold cases today is huge if fraudulent activities (i.e, not disclosing the existence of mold) can be proven. Concealing hazardous contamination, supervising or approving a slapdash mold cleanup exposes you to punitive damages possibly more costly than negligence claims.

Consult a lawyer to determine whether a special mold disclosure disclaimer form should be developed and signed by the current tenants. Your lawyer may even advise disclosing in the lease agreement with future tenants previous or present building water and mold problems, and what the owner or manager has done, if anything, to correct such problems, just as you do for lead based paint.

If a tenant complains or you notice mold smell or air quality issues, act immediately. Consult a Certified Industrial Hygienist to come on-site and perform an assessment to tell you what type of mold is present and how to safely remove it. Carefully document removal of mold, (called moldremediation) to show the scope and quality of the work done. Volumes of information areavailable on the Internet on mold remediation. For starters, try the National Apartment Association website http://www.naahq.org/searchResults.htm?q=mold , or the Centers for Disease Control at http://www.cdc.gov/niosh

Once work is complete, ask the Certified Industrial Hygienist to return to the property to certify that it is free of harmful mold. Not only are lawsuits a problem; getting financing on a property with mold is a huge issue Says Andy Reed, Vice President with Citizens Bank of Las Cruces, “Mold is a four letter word that will a kill a loan quickly. We will not touch a building until it has been certified mold free.”

Annette West, MBA, CPA, Realtor® can be reached at AWest@NMApartment.com