Mold has become a hot topic for the real estate industry in the last five years or so. Back in the late 1990s, news programs, such as 20/20, aired stories about people becoming very ill - and even dying - due to toxic black mold growing in their homes. Up until then, no one had heard of mold or mold remediation. Because it was a specialized industry, mold experts were limited to pharmaceutical firms, health care companies, and professionals who treated individuals with extreme reactions to mold.

Now mold is huge problem for real estate investors as it can literally break a deal and your pocketbook. We caught up with Steve Goselin, VP of Sales and Marketing for EnviroTech Clean Air, Inc., a Stoneham, MA mold remediation company, to learn more about mold and what real estate investors need to know to protect their interests.

ForeclosuresMass Monthly: Steve, what exactly is mold and why is it such a problem these days?

Steve Goselin: Mold forms due to moisture. You've probably already experienced minor mold in your home - if your bathroom doesn't have adequate ventilation, for example, mold can form on the ceiling, walls, and fixtures. And of course, we all have moldy food in our refrigerators at some point or another!

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Mold spores are everywhere and are a natural part of the environment. You can find mold in beer, wine, cheese, and penicillin. Mold degrades and returns organic matter, such as fall leaves and grass clippings, to the earth. So mold is a necessary part of our lives.

But in the indoor environment, mold is an allergen. It affects people who are sensitized to it. It's the hype and panic surrounding the scary black mold stories that's driving the litigation.

Because the bottom line with mold is this: It's not a problem until someone says it's a problem.

FMM: That sounds like a loaded statement. What do you mean?

SG: As real estate investors already know, when a property gets inspected, tests are run for radon, lead, etc. In Massachusetts, and other states as well, you have acceptable and unacceptable levels for these substances. You can measure the level of radon or the amount of lead in the water and then check to see if these levels surpass the accepted levels set by the state.

Although you can measure the levels of mold, and quite accurately, the state of Massachusetts has not set acceptable or unacceptable mold levels. In fact, mold investigation and remediation are completely unregulated.

FMM: How does this create problems for investors or property owners?

SG: The fact that mold investigation and remediation is unregulated means the industry is ripe for misrepresentation. If a property inspector states there is mold on the property - and you're the seller - you now have a real problem. That's because you have a document that states the property has mold.

Whether or not it's the scary black mold or some other type, you're now stuck with cleaning the building because you can't sell a property contaminated by mold. Or you can, but then you have to disclose the contamination, and of course, no one is going to buy a mold-contaminated property.

Mold is causing huge problems in the current market. I get calls all the time that go like this: someone has had his house on the market for months and months, and then once a buyer comes along and has the property inspected, the seller is told that there's mold in the attic. The buyer says, "I can't buy this house, my children will get sick, they'll get brain damage, yada, yada, yada." The buyer calls in a company like mine for a clean up estimate, finds out it costs $6K - $10K, and then negotiates with the seller and gets the price knocked down.

When I call back after the sale closes to schedule the clean up, I find out the mold is "no longer an issue."

FMM: So what can a property owner do if a building is documented as having mold?

SG: The first thing you want to do is hire an independent inspector who specializes in indoor air quality to do an evaluation. Make sure this person is a true independent consultant - you don't want a remediation company doing your analysis because that's a conflict of interest. My company, for example, does not test or verify our work - we only do clean up.

Once your evaluation is complete, you then hire a remediation company or contractor who comes in to clean up the mold. Once that's complete, the inspector does a post-test to verify the property is clean.

What's crucial is that you get the document that states you have a clean building. I cannot stress enough how important this document is.

FMM: Do you have tips for hiring a good mold remediation company?

SG: That's a good question because it's one most people don't ask. When looking for a mold remediation company, ask the following questions:

• Do they have certification? The two main industry certifications come from the Indoor Air Quality Association (IAQA) and the American Indoor Air Quality Council (AIAQC). These certifications carry real weight.
• Who carries the certification? This is another important question. As a principal for my company, I can carry the certification and that makes the company certified. However, I'm not on the job doing the work nor am I supervising those who are. You want to hire a company that has certified supervisors - and make sure they are on-the-job supervisors. Also ask what type of training the workers have been through and how long each person has been on the job.
• Do they have insurance? This is a biggie and one few people ask about. On top of contractor liability and workman's comp, a mold remediation company needs to carry a specific type of pollution insurance, especially if they do work in large buildings. Pollution insurance is extremely costly and separates the real industry players from "trunk slammers" - those working out of their vans or trucks. If a company doesn't carry this insurance, and contaminates the entire building, regular insurance won't cover it. In short, you are hosed.

You can also check with the Better Business Bureau to ask if any complaints have been registered against a prospective company or if they have complaints against them with the EPA.

FMM: Do you have any final advice?

SG: Yes. Be very concerned anytime someone puts "mold" in a written report. If you're buying a property with a mold problem, you now have to disclose the problem or have the property cleaned before you sell. If you sell without disclosing a mold problem, you're in for serious liability if, five years from now, someone moves in with an asthmatic child who has a severe reaction to mold. Hire independent consultants to test and verify that you did a mold clean up, and perform due diligence when hiring a remediation company. These steps will help ensure you stay on the right side of mold and the law.

Steve Goselin is the VP of Sales and Marketing for EnviroTech Clean Air, Inc., a mold remediation firm based in Stoneham, MA. He can be reached at 800-698-1300 or by email at SGoselin@Breatheasier.com.

« Legal Spotlight on Mold

November 2007

"No Closing Costs" Too Good to be True? »

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