Mold in Wisconsin Properties

By Debbi Conrad

While there are many biohazards on the minds of Americans, some REALTORS^® have been facing some of the problems that occur when a property is infested with toxic mold. In the following scenarios described to the Legal Hotline, it appeared that one property may be beyond saving while the other is a good candidate for remediation.

Two air tests and one swab test performed by an Illinois home inspector in the basement of a Beloit home revealed toxic mold. One air test was taken outside of the building, to serve as the control sample and show what levels of different molds occur naturally in the area. The inside air sample showed elevated quantities of Penicillium and Aspergillus mold, indicating that these molds were colonizing in the basement and going airborne. A swab test done by the home inspector on visible black mold had high amounts of Stachybotrys, Penicillium and Aspergillus. These are all mycotoxins — poisonous substances or toxins produced by a few types of mold. The charge for the sampling and analysis by an out-of-state lab was $270.

An environmental contracting firm gave a bid for mold remediation. This was to include containment of the work area; removal of paneling, wall board, insulation and carpeting; air scrubbing by a machine that removes particles and destroys airborne spores from the air; application of disinfectant and HEPA vacuuming; and costs of personal protective equipment and clothing used by workers. The remediation bid was for $10,324.

How can a REALTOR^® or his or her client know if the environmental firm is qualified and if the bid is reasonable?

REALTORS^® and parties can certainly ask environmental contractors for credentials and resumes, but there are no lists of certified or approved mold contractors. Large environmental companies and the state lab hold training classes for proper sampling techniques, and testing can be done at most state certified labs. Contractors, however, are hard to find because this is a relatively new field. In this case, the bid does not seem to be patently unreasonable, but it would be hard to know for sure without other bids to compare it to or some other expert to confirm that their methodologies are sound.

The seller must decide whether to remediate. This home will likely never sell unless the work is done or unless a buyer is found that wants to do the work himself and rehabilitate it.

An agent who often lists foreclosed properties has listed a house with severe water damage and a severe mold infestation. A water leak in this vacant property went unattended, permitting an extensive growth of mold. One person entering the house thought that there was a striking green/black carpet, which turned out to be the mold that has taken over the carpet. The agent has told the sellers that she will not enter this property under any circumstances and put her health in jeopardy. The agent has recommended that this house be donated to the fire department and burned down in a training drill because it is so bad. The city seems not to care and will not even look at the property because it is vacant.

The seller, Fannie Mae, has a Disclosure and Release Form which must be signed before anyone can enter the property. The form says, "Fannie Mae has been informed that as a result of a water leak, mold and/or other microscopic organisms may exist at the property and microscopic organisms and/or mold may cause physical injuries, including but not limited to allergic and/or respiratory reactions or other problems, particularly in persons with immune system problems, young children and/or elderly persons." Is this enough to cover all bases for all who will be involved in this transaction?

The Fannie Mae waiver/disclosure form is technically accurate, but it does not seem to give enough information to make people appreciate the potential extent of the danger. In many situations, this disclosure would be sufficient, but because the environmental concern with toxic mold is relatively new, the public and even the local authorities do not have a general awareness of the problem and we do not yet have any pamphlets or brochures to distribute to consumers (although these products are under development). It may be best for everyone's protection to give a more detailed description of the problem and more information explaining the health risks involved.

Mold liability

As more consumers are becoming aware of the dangers with toxic mold, the liability suits have begun, most aimed at insurance companies. Unfortunately, some real estate brokers have been sued too. In Arizona, a buyer sued the listing broker when he learned — after he had bought the house — that there was a heavy mold infestation that would cost $60,000 to remediate. It should be clear to REALTORS^® that a serious mold infestation is a material adverse fact that must be disclosed. Sellers should be disclosing known mold problems on item C15 of the real estate condition report: "I am aware of a defect caused by unsafe concentrations of, or unsafe conditions relating to, radon, radium in water supplies, lead in paint, lead in soil, lead in water supplies or plumbing system or other potentially toxic substances on the premises." Clearly toxic mold like Stachybotrys is a potentially toxic substance on the premises.