February 8th - 2003

Is mould a big deal?

The issue of mould growth and its impact on the real estate profession is getting a lot of attention lately – especially in the U.S.

The issue of mould growth and its impact on the real estate profession is getting a lot of attention lately – especially in the U.S. While mould is something REALTORS need to be aware of, and definitely need to disclose, the jury is still out on whether mould is a huge health concern.

Disclosure is always a REALTOR’s best course of action for any discovery of mould or other defect in a house they are selling. In the U.S., the National Association of REALTORS (NAR) is encouraging its state associations to advocate the adoption of laws that will provide a defence to claims against brokers who have truthfully disclosed any known problems.

Mould Basics

Mould is everywhere (indoors, outdoors, in food, etc.) Moulds produce spores, which are also everywhere. There are thousands of types of moulds (most harmless to people) but only a few are “bad moulds.” Two “bad moulds” most commonly referred to are in the genus Aspergillus and Stachybotrys chartarum. Some toxic and pathogenic moulds produce, among other things, mycotoxins, which could be the alleged culprits in toxic mould cases. However in small quantities these moulds would have little or no effect on people who are not hypersensitive to moulds.

Most mould problems come from water damage. But, it doesn’t just have to be plumbing water damage or leaking roofs. It can also be as a result of too much humidity; poor ventilation systems; wet construction materials (e.g. wet wood); poor construction or design. Many buildings are now so “tight” for energy efficiency, that there’s no way for moisture to leave the building.

An insurance issue?

Mould used to be considered merely one of the consequences that could result from water damage. Now, mould is being viewed as a cause of damage. Some insurance companies are considering excluding mould from both first party and third party coverages.

Property owners may be able to obtain site-specific environmental insurance that specifically includes mould coverage. However, since the premiums for environmental insurance are quite high (about $10,000 for $1 million of coverage) this may only be an option for commercial property owners. The insurer will check out the building and the maintenance, etc. to assess its risk before setting a premium and insuring the property.

Clean up

The key to controlling mould growth is to control the moisture and humidity levels. The first thing that needs to be done is to find the source of the water and moisture and stop it. Then, the mould should be cleaned up. However, once the problems gets beyond a small clean up, mould remediation may be needed. It is important to ensure that the entire problem area is remediated otherwise the mould infestation will grow back. Currently, the mould remediation industry is unregulated however, that might change as there are some areas in the U.S. already developing remediation guidelines.

Is mould a health concern?

While no one disputes the fact that mould exposure may produce allergic responses in certain individuals, for every expert that says there is a link between indoor mould growth and severe health problems, there’s one who says there isn’t. To date, there have been no Canadian mould cases where any amount has been awarded for personal injury. Even the best-known U.S. decision, where a Texas jury awarded a woman $32 million against her insurance company was based on a claim of “bad faith” against the insurer, not personal injury. In that case, the judge would not even allow evidence of health problems because he held that the scientific evidence was too contradictory. The appeal decision in that case was recently issued. As expected, the appellate court totally eliminated the punitive damage award, which made up most of the $32 million and reduced the verdict to $4 million.

Buyer “Beware”

There are several cases dealing with indoor mould alleging (among other things) personal injury as a result of the mould that are heading towards the Canadian courts. Precedent-setting decisions in these cases may still be several years away. This issue is still in its infancy in Canada. As the issue of mould emerges in Canada, REALTORS would be wise to be as well informed as possible. The best advice to sellers is to disclose any water problems or presence of mould up front. The best advice to buyers is “beware.”

Information on mould

Here are some websites providing information about mould:

Health Canada - "Fungal Contamination in Public Buildings: A guide to recognition and management - http://www.hc-sc.gc.ca/ehp/ehd/catalogue/bch_pubs/fungal.pdf

CMHC - The Condominium Owners' Guide to Mold - http://www.cmhc-schl.gc.ca/en/burema/gesein/abhose/abhose_ce44.cfm. ; Fighting Mold - the Homeowners Guide - http://www.cmhc-schl.gc.ca/en/burema/gesein/abhose/abhose_ce08.cfm. ; Solving Persistent Moisture Problems and Moisture Damage - http://www.cmhc-schl.gc.ca/en/imquaf/himu/bebufa_005.cfm.

National Centre for Environmental Health - www.cdc.gov/nceh/airpollution/mold/moldfacts.htm

Web site for EPA guide on mold www.epa.gov/iaq/molds/moldguide.html

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Ontario Real Estate Association

Jean-Adrien Delicano

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Ontario Real Estate Association
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