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Builders And Insurers Are Placing "Mold Clauses"

June 24, 2004

Builders And Insurers Are Placing “Mold Clauses” In Their Contracts

By Stuart Lieberman, Esq
Realty Times

Mold claims can be very costly. Property damage claims relating to mold have, in a few cases, exceeded one million dollars. And personal injury claims can be costly as well. In response to this, corporate America has been busy looking for ways to escape mold related liability.

For example, builders are trying to protect themselves from mold claims by placing mold exclusions in their contracts. Recently I saw a contract from a home seller that disclaimed any liability to the buyer caused by or relating to mold growth.

Your real estate lawyer needs to be watchful for these clauses and must ensure that you understand the risk if you sign an agreement with this exclusion. Personally, I think efforts to immunize builders in this manner are unconscionable.

Mold has been around longer than we have. But it has been a basis for legal liability for a relatively short period. For the most part, mold lawsuits have been around for only the last 10 years.

Mold requires a moisture source and darkness to grow. That being said, why should a builder need any special mold protection?

If the roof isn’t leaking, if the piping is sound, if the insulation is properly installed, in other words, if the home is well constructed, why safeguard against mold claims?

Why not simply build a better home? That’s a new thought. Eliminate the ongoing water sources. I would be concerned about a home being sold with a mold clause. Maybe the builder lacks confidence in his own ability or that of his subcontractors.

Insurance companies are now concerned about mold as well. What had seldom been a claim basis is turning into a carrier nightmare.

Some carriers are carving out mold claims from their basic policies. If you want that protection, you need to pay extra for it. And even then, it is restricted.

This can be a real problem. Often treating mold means knocking down walls and re-building. What will you do if you have this issue, but have no insurance coverage? People will soon find themselves in this situation.

Because homes are supposedly more energy efficient now than ever before, they tend to trap moisture and therefore, I am told, encourage mold growth. That may be one reason why mold complaints are on the rise.

Also, we are talking about it a lot more now. In the past it simply did not occur to homeowners, or for that matter their lawyers, that claims for mold damage could be filed. You are reading this column, for example. A few years ago no one would have written about this.

The cure is usually easy. Very often mold can be eliminated with bleach. You also need to ensure that moisture sources have been eliminated. Ventilation also helps. State and local health departments have a lot of information concerning simple mold abatement.

The bottom line is this: Home sellers and insurers are cleverly trying to avoid mold liability; read the contracts before you sign. And if they are bad contracts, see a lawyer and protect yourself.

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