Mold Litigation Has Moved from Homes to Condos

By: Lori T. Williams, Esq.

Imagine it’s a rainy day, and you live in a home where it rains “inside” as well as outside, and you discover the presence of a black oily mold under wet carpeting. Attorney Jennifer Grieco became somewhat of an expert in mold litigation when her client faced this condition in 1999.  She learned that this mold was known as Stachybotrys, and it was reported to have the potential for toxic effects for homeowners.  ”Initially, mold cases were threatened to be the next “asbestos” litigation and the unknown effects of mold exposure certainly resulted in some initial hysteria. Fortunately, the EPA studied the issue and developed well-accepted standards for the clean-up of mold in homes, schools, and other buildings.”

Today it is well accepted within the medical industry that mold is an allergen, and can cause allergic reactions and/or asthma in individuals who are susceptible. However Grieco notes that the “toxic effects of certain “toxic” molds are more controversial.  Despite what the EPA has issued, mold cases always come down to a battle of experts whether it be on the issue of the adverse health effects of exposure, the proper clean-up of mold in a home and of the contents, or the sources of water and whether the water is entering as a result of builder error or a code violation.”

While mold cases still exist, they did not reach the level of litigation initially suspected in the early 2000′s. “After a number of substantial verdicts and settlements throughout the country, the insurance industry quickly stepped into action to limit its exposure by excluding mold claims in their policies or offering very limited coverage.  Without insurance, judgments against single family landlords or federally subsidized apartment buildings can be uncollectible.  Additionally, a large number of mold cases were against builders as a result of the boom of new construction in this area prior to 2008.  Without insurance, the small building company simply folded in the face of a judgment. And now that new construction has significantly decreased, there are less viable construction mold cases”, says Grieco.

In recent years, mold litigation cases are brought most frequently by homeowners of Condos. Liability remains with the condo association, who is responsible for the exterior elements that typically allow for water intrusion. However, it can take a number of years to see the effects of faulty construction in the interior of a home.  According to Grieco, “a home could have been built with inadequate or faulty flashing that has been allowing water into the wall cavity of the home.  It can take years for the water to travel inward so that the homeowner sees evidence of water staining, or mold on the interior of the drywall in their home.  In those circumstances, the statute of limitations is usually expired against the original builder, or the builder has gone out of business.  But the condo association is still responsible for repairing damage from the common elements including roofing, flashing, plumbing, etc.”

In situations where the condo association and/or its management company failed to timely repair, there may be insurance coverage for those claims.  However, in many instances, the condo association’s insurance carrier will deny coverage based upon a provision in the policy that builder error or workmanship is not a covered claim.  In those circumstances, special assessments will have to be assessed to all condo owners, so that the exterior sources of water intrusion can be fixed as well as for proper remediation of the resulting interior damage.

Grieco offers 4 tips to home owners when it comes to potential mold problems in their home, apartment, or condo:

1.  Hire a forensic architect or indoor air quality specialist to determine if there are any construction defects

The statute of repose limits claims for negligence against a builder to 6 years from date of occupancy, even if the homeowner couldn’t discover the problem until 10 years after construction.  There is no “discovery” rule to extend the statute of limitations for ordinary negligence.   If you suspect water intrusion or mold and the home is still less than six years old, it is in your best interests to have the home inspected by a forensic architect or indoor air quality specialty, at your own expense, to see if the home has any construction defects that could become more significant issues the longer you live in a home and/or the longer the home is exposed to the elements.  The final inspection by the city or township building department after construction does not typically discover the problems that result in long-term water damage and mold litigation cases.

2.  Document the problem ASAP and give notice to the condo association or management company

If you live in a condo association or an apartment, report evidence of water staining, condensation, or  a moldy smell, by providing a written statement to the condo association or management company as soon as you are aware of it.  Mold only gets worse and more expensive to clean the longer it is allowed to live in a home.  This is due to water always being present from the exterior, humidity, or interior water sources.  Mold can develop within 24-48 hours of exposure to sufficient moisture wetting cellulose building materials, such as drywall or insulation, and it will remain until it is removed.

3.  Have the suspected area examined by a qualified company retained by your insurance company or your condo association

Do not attempt to investigate, by yourself, the interior damage in your home that you suspect could be water intrusion or mold.  If you fail to take the appropriate precautions to protect yourself, your home, and your contents, you could be making the situation worse.

4.  Obtain sufficient insurance that protects you and your contents, in the event of mold in your condo

Some condominium bylaws specifically exclude damage to the homeowner’s contents, even if the damage is caused by the water intrusion and mold, which resulted from an exterior common element such as the roof which is the association’s responsibility to repair.  A condo owner should investigate and obtain appropriate homeowner’s insurance to cover the cost of cleaning or replacing contents, and temporary relocation, or they may risk being forced to incur these expenses on their own.

Jennifer Grieco began her legal career in 1997, working at the Southfield, MI law firm of Sommers Schwarz P.C.  She practiced in their commercial litigation group, moving up to partner in 2003. Grieco moved over to the defense side 4 years later, and was a shareholder at the Southfield, MI law firm of Maddin Hauser in their professional liability group.  Grieco was primarily defending lawyers and other professionals from 2007 to 2010, until she joined the Birmingham practice of Neuman Anderson as a partner in 2010. Grieco continues to handle complex commercial litigation, and enjoys a broad range of commercial disputes with an emphasis on business tort claims including professional malpractice, construction litigation and coverage claims. ”The cases are unique and interesting.  While I have practiced both solely plaintiff’s litigation and purely defense work, I prefer the ability to handle any side of the argument or dispute for my client and not being pigeon-holed into one ideology.  Being able to make both sides of the argument is part of the challenge of commercial litigation.” For more information about Grieco or her practice, visit www.neumananderson.com.

In addition to her legal experience, Grieco served as President of the Oakland County Bar Association from 2010-2011, President of the Woman’s Bar Association of Oakland County from 2003-2004 and Chair of the OCBA New Lawyer’s Council from 2001-2002.  She was elected to the Board of Commissioners for the State Bar of Michigan in 2011, and is a current member of the SBM Negligence Council and the SBM Character and Fitness Committee. Grieco has also been recognized by Michigan Lawyer’s Weekly as a 2011 Women in the Law award recipient, and a DBusiness Top Lawyer for 2012.

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Lori T. Williams is a 23 year attorney based in Birmingham, MI. She owns a legal referral and legal consulting business called Your Legal Resource, PLLC. She assists individuals and small businesses in need of legal advice or representation by connecting them with the right legal specialist for their situation. She also provides consulting services for attorneys and other professional service providers on how to generate more business through effective branding, marketing, networking, and by creating strategic partnerships. For more information, visit www.bestlegalresource.com.