Toxic Mold: A Serious Health Problem or Consumer Hysteria?

The Environmental Protection Agency (EPA) web site includes ?A Brief Guide to Mold, Moisture, and Your Home,? which provides information and guidance for homeowners and renters on how to clean up residential mold problems and how to prevent mold growth. The Centers for Disease Control and Prevention (CDC) site has information on air pollution and respiratory health, including a question and answer page. The CDC says there are very few case reports of mold in the home causing internal bleeding or memory loss, and no link has been established. But given the mounting interest in the mold issue, the CDC is funding a broader study of mold?s health effects. Most scientists say the only proven effects from mold are allergic reactions and possible respiratory problems ? including asthma. Still others believe that mold fear is being whipped up by lawyers and mold cleanup companies eager to ?turn mold into gold.? Whatever you might believe, the stories of mold panic are very widespread.

In some states like Texas, some insurance companies have placed a moratorium on new home insurance policies, causing rates to skyrocket. In some instances, home closings have been delayed because people couldn?t get insurance. According to the Texas Department of Insurance, water-related claims of $5,000 or more in Corpus Christi, in which mold damage is a component, cost insurers an average of 537 percent more than the average statewide cost per policyholder. A Corpus Christi homeowner with an $80,000 brick veneer home can expect to pay anywhere from $800 to $1,745 annually for home insurance for a comprehensive policy. That figure jumps to a high of $2,094 for a wood-frame home. If framed properly, that could be a big marketing angle for our industry.

In California, legislation is now on the books requiring landlords and owners of both commercial and residential property to disclose to prospective buyers and tenants the presence of toxic mold that exceed certain exposure limits. The law does not require landlords to sample, inspect or test for levels of such toxins, but it doesn?t attempt to shield liability either. Nevertheless, case law has held landlords liable (and builders and contractors as well) and may continue to hold others liable even if they don?t test. Courts have ruled that just as motorists must know the rules of the road failure to inspect prior to leasing is something landlords do at their own peril because there is an implied representation of habitability that accompanies the lease.

At the federal level, legislation has been introduced by Representative John Conyers (D-MI) which, among other things, would establish a research and public education program on mold and create a national toxic mold hazard insurance program. This legislation, the United States Toxic Mold Safety and Protection Act of 2003, otherwise known as the Melina Bill, has been referred to several Committees in the House of Representatives, including Energy and Commerce, Financial Services and Ways and Means. The bill currently has 26 cosponsors, but has not been the subject of any hearings in either committee. To put it mildly, the bill is very broad and, in my view, will have significant budgetary impacts, not to mention potential impacts on the construction industry.

In addition to requiring the Centers for Disease Control (CDC) and the Environmental Protection Agency (EPA) to undertake a joint study of the health effects of indoor mold growth, the bill also seeks to establish standards for mold inspection, mold remediation and toxicity testing as well as standards for the design, installation and maintenance of air ventilation and/or air conditioning systems to prevent mold growth or creation of conditions that foster mold growth. The EPA, CDC, National Institutes of Health and the Department of Housing and Urban Development would also have to sponsor public education programs to increase public awareness of the dangers of mold growth or toxic mold.

Like it so far?

Lessors of each unit of public housing property would be required to conduct annual inspections in accordance with model standards and techniques for preventing and controlling mold in new and existing buildings as set forth in the bill. These standards and techniques are intended to accommodate geographic differences in construction types and materials, geology, weather and other variables that may affect mold levels in buildings. The HUD Secretary and Administrator of EPA would also be required to promulgate regulations for the disclosure of mold hazards in public housing which is offered for sale or lease. There are civil penalties for willful misrepresentations of mold inspections.

It gets better.

The bill further authorizes grants to be made available to State and local governments to cover costs associated with remediating mold growth in buildings owned or leased by such governments, including but not limited to schools and multifamily dwellings. The grants would also cover the costs of temporary housing, food and moving costs for periods not in excess of 6 months for individuals severely impacted by toxic mold in their residences who are without insurance coverage and who don?t have the financial resources to obtain alternate housing.

Better still, tax credits of up to $50,000 would be authorized to cover 60 percent of the mold inspection and remediation expenses paid or incurred by the taxpayer and not reimbursed by insurance in any taxable year.

The most extensive sections of the bill are those that pertain to the creation of the National Toxic Mold Hazard Insurance Program. The Director of the Federal Emergency Management Agency would be required to establish and carry out an insurance program to enable interested persons to purchase insurance against losses resulting from mold hazards in real properties throughout the United States. Residential properties designed for the occupancy of from one to four families would have priority for insurance coverage. But the Director of FEMA would also be granted wide discretion to make insurance available to cover other types and classes of properties ? residential, business, properties owned by State and local governments or properties occupied by private nonprofit organizations. It doesn?t take much imagination to foresee the expansion of bureaucracy and dedication of taxpayer dollars that would result from such an effort.

But given the increasing number of law suits around the country and the level of hysteria related to them, it may well be that, just as the government did with terrorism insurance post 9/11, not to mention the legislation Congress is currently working on to resolve asbestos claims, they are once again asked to step in and resolve the legal quagmire surrounding mold.

Stay tuned.