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American Bar Association - Defending Liberty, Pursuing Justice

June 2008

Vol. 4, No.3

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Real Estate

 

Got Mold? A Brief Guide to Liability and Notice Requirements

The following is a summary of an article that appeared March 5, 2008, in the Marten Law Group’s Environmental News. The full text of that article can be viewed at this link.

Thousands of mold-related lawsuits have been filed in the United States during the last decade. Prior to 2000, most mold claims were routinely settled for relatively nominal amounts of $5,000 or less. Today, mold claims by commercial developers and homeowners routinely exceed $100,000, and some are resolved for much higher amounts.

In 1994, the Centers for Disease Control and Prevention was alerted to a “cluster” of infants who had died from acute pulmonary hemorrhage in Cleveland, Ohio. See E. Page and D. Trout, “The Role of Stachybotrys Mycotoxins in Building-Related Illness,” 62 Am. Indus. Hygiene Ass’n J. 644–48 (2001). A study conducted among those cases determined that there was a relationship between water damage in homes, the presence of mold, and the incidence of acute pulmonary hemorrhage. These studies alarmed the public health community, and triggered investigations by government agencies. See Mold: A Growing Problem,Joint Hearing Before the House Subcomm. on Oversight and Investigations and the Subcomm. On Housing and Community Opportunity of the Committee on Financial Services, 107th Cong. 57 (2002) at 8–9.

Since that time, evidence has emerged calling into question the causal relationship between exposure to mold and the most serious lung injuries. In addition, independent review bodies have backed away from the most troubling of the studies’ conclusions, advising government agencies to adopt the position that the current science does not support a causal link between exposure to stachybotrys chartarum and lung injury. Notwithstanding these statements, mold litigation continues to explode, and a discovery of mold often leads to costly remediation projects.

Insurance Exclusions Since 2003

From 2001 to 2003, the cost of mold claims more than doubled. United States insurers paid out $1.3 billion in mold-related claims in 2001, and more than $3 billion in mold-related claims in 2002. As a result of a sharp increase in mold claims, in 2003 the insurance industry adopted a universal mold exclusion and began inserting language implementing that exclusion into form policies. Since 2003, virtually all property and liability policies have contained mold, microbial matter, or fungus exclusions. D. Dybdahl, Managing Mold Related Risks, After the Mold Exclusions Become Effective.

General Background on Mold

Mold spores are ubiquitous; however, not all varieties of mold are toxic. The term “toxic mold” refers to molds that produce mycotoxins, which are chemicals that produce allergic reactions in humans. The most recognized variety of toxic mold is stachybotrys chartarum. “Sick building syndrome” is generally attributed to airborne exposure to mold byproducts and is most widely associated with stachybotrys, though other molds can produce the mycotoxins that cause the condition. See B. Hardin, et al., Adverse Human Health Effects Associated With Molds in the Indoor Environment, American College of Occupational & Envt’l Medicine (October 27, 2002) at 4. Typical allergic reactions are sinus irritation, hay fever, or asthma, though more serious reactions have been reported at elevated exposure levels.

Recommendations on Remediation

The Centers for Disease Control has prepared a fact sheet: Facts About Stachybotrys Chartarum and Other Molds, and EPA has prepared A Brief Guide to Mold, Moisture and Your Home. EPA’s most extensive recommendations regarding remediation in commercial structures are contained in its pamphlet, Mold Remediation in Schools and Commercial Buildings, which provides extensive guidance on the evaluation and remediation of mold in commercial structures.

States also have informational websites. For instance, the Washington Department of Health has a number of different webpages with information regarding mold, potential health effects, and the remediation of mold, for example, Got Mold? Frequently Asked Questions About Mold, a page with general information on stachybotrys chartarum, see www.doh.wa.gov/ehp/ts/IAQ/MoldStachybotrys.HTM and the Washington Department of Health’s page on notification requirements under the Landlord-Tenant Act. www.doh.wa.gov/ehp/ts/IAQ/mold-notification.htm. Oregon OSHA has prepared an electronic Fact Sheet on mold, which gives recommendations for the evaluation and remediation of mold in buildings.

There Are Currently No Legally Enforceable Standards for Exposure to Mold

There are currently no federal standards establishing limits for mold exposure, nor do most states expressly regulate mold exposure. For example, while the Washington State Department of Health has mold information on its website, and makes specific reference to the potential health effects of exposure to stachybotrys chartarum, there are currently no Washington state standards establishing limits for mold exposure. As another example, the State of Oregon has not adopted exposure levels for any type of mold, and the Oregon OSHA website confirms that it does not address mold or the quality of indoor air.

Notice Issues Regarding Mold

Even without established exposure limits, some states have adopted notice requirements when mold is discovered. In Washington, for example, under its residential landlord-tenant act, landlords are required to notify tenants about mold and supply them with information. See RCW 59.18.060(12) (requiring landlords to provide written notice in a visible public location of possible mold contamination). The statute provides that landlords are immune from civil liability for the notice requirements, “except where the landlord and his or her agents and employees knowingly and intentionally do not comply.” RCW 59.18.060(13). Under case law, however, the landlord’s liability could be limitd to damages caused by defects which the landlord knew about at the commencement of the lease, but failed to inform the tenant. Lian v. Stalick, 106 Wn. App. 811, 819 (2001); see also, Frobig v. Gordon, 124 Wn.2d 732, 736 (1994).

In California both tenant and landlord have notice duties when it comes to mold: California requires commercial or industrial tenants who become aware of mold are required to inform their landlord, Cal. Health & Safety Code §§ 26142, 26145, and that commercial and industrial landlords who have notice of the existence of mold have “an affirmative duty, within a reasonable period of time, to assess the presence of mold or condition likely to result in the presence of mold and conduct any necessary remedial action.” Cal. Health & Safety Code § 26143. There is no uniformity in notice and reporting requirements, however. For example, as noted above, Oregon has no statute requiring notice of mold or exposure.

Although there is no uniform state or controlling federal statutes concerning the liability of a property owner or tenant in connection with mold, real estate attorneys are well advised to review the CDC and other websites referenced above concerning mold, and also review their state statutes and case law for possible notice obligations and liability in instances where mold is likely to be present or is known to occur.

Steven G. Jones can be reached at . Steve is a partner in the Seattle environmental law firm The Marten Law Group, where he is the chair of the firm’s litigation department. He has handled complex environmental and land use litigation for both public and private clients for 15 years. Steve has particular expertise in litigation arising under CERCLA, the Clean Water Act, the Federal Torts Claim Act, and representing clients in litigation involving solid waste and nuisance issues. He also has extensive experience litigating land use issues under both SEPA and under Washington’s Growth Management Act. Steve has handled cases before all levels of the state and federal courts, along with administrative litigation before Washington’s Pollution Control Hearings Board, the Growth Management Hearings Boards, and Washington’s Utilities and Transportation Commission.

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