Mold Claims Are Inevitable: What You Need To Know

Mold issues frequently light up the situation board.  Residents get hysterical over mold.  The hysteria is unfounded.  Mold is everywhere.  Mold makes up twenty five percent of the earth’s biomass.  This explains why almost everyone has had some form of mold growing in their residence at one time.  Given how much mold naturally occurs in the environment, if mold were extremely toxic, serious mold related illnesses would be an everyday occurrence.

With Google reporting over half a million hits for “toxic mold”, it is not surprising many residents believe that even a small amount of mold has immediate and serious health effects.  Just as pollen aggravates allergy sufferers, the fact that mold can cause, or aggravate routine allergy symptoms is not disputed.  However, scientific research does not support the conclusion that mold can cause significant and permanent health problems.  Residents demand compensation for mold because of the litigious nature of society.  Residents also demand compensation for mold because the media, trial attorneys, and mold remediation companies are constantly reinforcing the negative health effects of mold despite a lack of scientific evidence.

Residents will almost always blame you for mold in their rental unit.  Mold needs moisture to grow.  Given Colorado’s dry climate, mold usually needs a constant water source to grow.  Almost all mold is caused by water intrusion events, or leaks either from inside a unit or outside of a unit.  Except for resident-caused water intrusions, most water intrusions are maintenance related, or in most cases your responsibility. Even if the resident caused the water intrusion, you are still responsible for remedying mold in most cases.  Regardless whether you’re responsible for causing the problem or remedying mold, residents will always look to you.

Your lease documents and procedures will not prevent mold claims.  However, your lease and policies can do the most to minimize the impact of mold claims.  Because mold growth requires a water source and does not occur overnight, your lease documents must require residents to immediately report any mold growth and water intrusions.  Again, given resident hysteria over mold, such provisions won’t prevent residents from making claims.  However, a mold lease provision will greatly reduce resident damages claims, especially in the worst cases when residents demand the most.  “Yes, we know it is bad.  However, it is bad because you failed to report the situation as required by your lease”.  If nothing else, appropriate mold-related lease provisions give you leverage to make the resident be reasonable.

Renter’s insurance can also minimize mold losses.  You should evaluate whether a resident’s renter’s insurance policy will cover mold-related losses.  If you make renter’s insurance available to your residents, you should inquire whether such policies cover mold-related events.  Additionally, alternative lodging is a significant cost associated with mold situations.  When residents conclude that they shouldn’t occupy the premises, the first demand is always “you need to put me up in a hotel”.  Even if the resident does not make the hotel demand, significant mold remediation should only be performed when the resident is not occupying the unit.  If the resident’s renter’s insurance covers alternative lodging, mold related costs will be reduced, and it will be easier to get the resident to vacate during remediation.

Because the resident should vacate during most mold remediation that requires construction, your lease should address the issue. Regardless of whether a resident makes a hotel demand, some residents will insist on occupying the unit during mold remediation.  Unfortunately, too many leases either do not address this issue, or are ambiguous.  Your lease has to give you the right to force the issue with a resident if you need the resident out to remediate mold, or to make any repair.  For example: regardless of the extent of damage to the Premises or any portion of the community, Landlord may upon written notice immediately terminate this Lease, if in Landlord’s sole and absolute discretion, any repairs necessitated by any event would be either impractical or dangerous if Resident continued to occupy the Premises.

If a resident claims mold, you are usually faced with the issue of whether or not to conduct mold testing.  The non-testing advocates argue that testing only proves the resident’s case if there is mold, and therefore you should never test, but only remediate.  Further, many experts argue that air sampling testing, the most common form of mold testing, is unreliable at best.  Airborne particle levels vary enormously from minute to minute, and this variation is not considered in airborne indoor mold spore count testing.  Any attempt to determine mold spores in the air is invalid unless long term time weighted average measurements are made. Your standard run of the mill mold test is not going to address all of these concerns and thus is of little to no value.  Overall, experts do not recommend testing in most circumstances where there is less than thirty square feet of mold, and no other reason to test.
While there is significant merit to the non-testing argument, you may face circumstances that warrant testing.  First, you have a hypersensitive resident and no visible mold.  Even if the testing won’t withstand scientific scrutiny, testing is likely to be negative, and a negative test result can shut down resident complaints.  Second, sometimes a resident walks into the onsite office with his own mold test results.  Testing should be considered to counter the resident’s test especially when there is little, or no visible mold.  Third, post remediation testing can document a lack of mold and alleviate resident concerns.  When there is significant visible mold, testing serves no purpose and will only fuel the resident’s belief that he has been damaged.  Your company needs a well thought out mold testing policy.  Onsite managers should not be making the call when a resident reports a mold situation.

The call comes.  A resident reports mold.  The resident is demanding a hotel.  The resident is also demanding money for being sick, for replacing personal property, and for moving.  Your maintenance team investigates.  Maintenance finds a six inch by three foot strip of black mold in the living room of the two bedroom apartment.  The resident did not report the problem sooner because the wall was covered with a sofa.  The investigation concludes the water source is a slow leaking pipe in the wall.  Costs to repair the drywall and pipe are reasonable.  The reasonable result would be to promptly fix the problem, and if necessary, have the resident temporarily vacate the unit for a short period while the remediation takes place.  However, this result may be difficult to achieve for several reasons.

Despite the small mold area, the resident will make unrealistic and legally unsupportable damage demands.  Most residents will claim that the mold somehow made them ill.  Residents claim health problems that miraculously and instantaneously go away when the resident is not in the unit.  Despite the low levels of mold, residents often claim that every stick of their personal property in the unit has been contaminated by the “toxic spores” of the mold.  If the resident has hired a mold tester, the mold tester supports and fuels the resident’s unrealistic demands.  Similarly, many attorneys will assert the total property contamination theory.  The theory is that airborne mold spores emanating from a very limited area, floated through the rest of the unit, and contaminated all of the resident’s personal property resulting in its total destruction.

The total contamination theory is not supported by mold experts, the EPA, or basic science.  Even if we assume that mold growth in a unit spread mold spores throughout the entire unit, almost all property in the unit will be salvageable.  Mold does grow from mold spores.  However, mold cannot grow without water (moisture). Even if mold spores are everywhere, the spores won’t turn into mold without the addition of a constant source of moisture (water).  When the spores are removed, the potential for mold is eliminated. Unless there has been a total water saturation event, both mold experts and the EPA agree that mold spores can be eliminated by simple cleaning methods.  Hard surfaces (non-porous) material can be wiped with a water detergent solution.  Porous property such as clothing can be laundered.  In most cases, only some porous property (typically furniture) will be unsalvageable because it cannot be effectively cleaned.

Despite the clear protocols for mold remediation and the scientific evidence, residents will still think everything is contaminated and demand that it be replaced, or be cleaned.  Ok, you’re willing to get things cleaned.  You obtain a bid to have the unit and property cleaned to eliminate mold spores.  However, the mold remediation firms may likely only compound your problems.  Even though the mold is limited to a single wall in the unit, the bid to clean the unit and the resident’s property is in excess of ten thousand dollars.  You get a second bid.  The second bid is better, but not much.  The second bid is almost ten thousand dollars.  Mold remediation firms are in business to make money.  Further complicating the situation, the mold remediation firm can’t guarantee there will be no mold after they are done because mold naturally occurs everywhere in the environment.

This brings us back to the necessary effective lease provisions and policies need to deal with resident mold claims.  Whether it’s through the leverage of lease termination, the resident’s renter’s insurance, putting the resident up in the model or guest suite, or voluntarily putting the resident up in a hotel, you must be able to get the resident out quickly to immediately engage in remediation efforts.  Once the resident is out, assuming proper qualifications and training, your onsite maintenance team can deal with many  mold situations.  For water saturation events or significant mold scenarios beyond the onsite maintenance team’s capability, mold remediation vendors can act quicker, more effectively, and more cost effective when the resident is not occupying the unit.

Similar to any vendor work, you should obtain multiple bids for mold remediation.  If the bids seem ridiculous, and they will, thoroughly question the remediation firms’ methodology, qualifications, and the scientific and legal justification for protocols.  For example, some firms will justify high remediation costs based on a full containment strategy.  However, EPA protocols dictate only limited containment for affected surface areas of less than one hundred square feet, and this is only for complete water saturation events.  Again, mold remediation firms are in business to make money.  When appropriate, limit the scope of the remediation to EPA or scientifically required protocols.  While the remediation firms may argue that some work is necessary, you should not pay mold remediation rates for EPA remediation protocols that can be performed by laypersons or your onsite staff.  In other words, you shouldn’t pay remediation rates for cleaning, including wiping hard surfaces, dry cleaning, and laundering clothing.

Regardless of the facts and the low probability that the resident would win in court over a mold claim, many residents and attorneys will not go away without compensation. While the scientific literature indicates that the resident should not recover for health-related damages, no result is automatic in court.  You may also face claims potential legal liability for property damages, rent abatement, and moving costs, among other items of damages.  While you are likely to win cases involving insignificant amounts of mold, the cost of victory may greatly exceed the cost of a settlement with the resident.

Accordingly, like any potential lawsuit, defense costs and chances of losing in court should be immediately considered in settlement analysis.  The cost of defense will vary greatly based on the situation, and whether or not the resident has hired an attorney.  However, attorneys’ fees to defend even a simple mold case in county court could easily total five thousand dollars.  Further, even if you win in court, you many not be awarded your attorneys’ fees, or may not be able to collect them from the resident.  There is also the significant cost of lost staff time to participate in the lawsuit.  Each potential mold lawsuit needs to be individually evaluated based on the facts.  However, based on defense costs, like any other litigation, settlement may be advisable, and even desirable, especially if the resident is wiling to move on for a reasonable amount.

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