A practical approach to mold for property owners.

The possibility of becoming a defendant in a case involving "toxic mold" strikes fear into the hearts of very property owner, property manager and people responsible for property maintenance. This is largely true because most of the information which is transmitted about mold is very unscientific and, in many cases, inaccurate.

Mold is literally everywhere and has existed on this earth long before human life. There are very few species of mold that have any affect on human health and most experts agree that even the "toxic" varieties are dangerous only to (1) persons with a prior history of allergies; (2) persons with a compromised immune system; and (3) small infants. For most of us, the presence of mold, even in toxic forms, is of little significance. In those rare cases where an otherwise healthy person is affected by mold, the symptoms generally disappear when one leaves the environment where the mold is present.

Notwithstanding the above, there are experts who contend and will testify to the contrary. For this reason, in recent years juries have awarded multi-million dollar awards against property owners, property managers, developers, and others in mold cases. Currently, juries have been less sympathetic to plaintiffs in mold cases. One of the difficulties is that State and Federal governments have been very slow in establishing standards by which property owners may be guided in dealing with the possibility of mold within buildings and in establishing standards for prevention and remediation of mold conditions.

What is universally agreed upon is that the cost of becoming a defendant in mold litigation is crushing, and more and more insurance companies are refusing to provide affordable coverage to property owners in mold related cases. In my opinion, there is no doubt that in the next few years the mold "frenzy" will subside. The government will establish standards based upon scientific investigation, which will place the human health danger to mold exposure in a proper context. Standards will be established by which property owners can regulate themselves and deal with mold issues, the public will become informed and, as the result of such information, will learn that the real danger to human health presented by mold is very limited. The public will understand that, while mold has existed since the beginning of time, it only became a serious health concern when fueled by the motivation of large jury verdicts.

In the meantime, however, property owners can do certain things which will limit their exposure to the dangers of mold litigation. Some of these preventative measures are as follows:

i) Require tenants, as a condition spelled out in their leases, to report immediately to the owner any water intrusion into their premises from roof leaks, plumbing leaks or other sources. The report should be in writing. Mold does not form without the presence of moisture. Place the burden upon your tenant to report to you, in writing, anything which could cause the beginning of mold growth.

ii) React immediately to any reported water intrusion. Fix the cause of the water intrusion without delay. Remember that the danger for a property owner is not necessarily the presence of mold, but rather, the contention that the property owner failed to act reasonably to prevent the development of a mold condition. If visible mold is detected in an area involving more than a few square feet, an environmental expert should be consulted for testing and recommendations for remediation.

iii) Have provisions inserted into new leases which not only require the tenant to report water intrusion, but to be responsible financially for any repairs, testing, and remediation which the landlord is required to perform in order to eliminate the condition. The tenant is much less likely to expand the problem where the tenant has a first obligation to spot the condition and thereafter, the financial obligation to remediate it.

iv) Building maintenance personnel should keep careful written records of all tenant reports concerning water intrusion, the landlord's response time to such reports, and all steps taken to remedy the problem. These records, if carefully prepared, can be the landlord's best defense against litigation claims that the landlord was indifferent to the tenant's concerns about the existence of mold.

v) The lease should contain provisions that exclude the landlord from any requirement to relocate the tenant during the remediation process or from damages arising out of business interruption or from damages occurring to third persons other than the landlord or tenant. The landlord should be indemnified by the tenant against third party claims. The tenant should be required to carry insurance for any of these possibilities to the extent that such insurance is available.

The suggestions set forth above will impose a greater financial burden on the property owner in dealing with "toxic mold," however, they will reduce the likelihood that a landowner will be sued by his tenant in situations where mold is detected. If the tenants are made a participant in the obligations to discover and eliminate mold, they will be much less likely to become a plaintiff in mold litigation. If the tenant has failed in its duties with regard to the detection of mold, pursuant to well-drafted lease provisions, the tenant will also become exposed to attorney's fees and costs incurred by the landlord in defending mold litigation. These fees and costs are often the most serious consequence of mold litigation.

Jerry K. Staub is a real estate attorney based in Glendale. For more information please e-mail [e-mail]