MOLD LIABILITY: PROTECT YOUR RESIDENTS AND YOUR COMMUNITIES THROUGH RESPONSIBLE RESPONSE.

It's important for apartment owners and managers to work with their residents to assess mold risks and respond reasonably to those risks and any instances of mold. Not only will you improve your residents' quality of life, but your response can be your best defense in court.

MOLD infestation and litigation have seize the rental housing industry's attention in recent months. Nothing seems to focus our thoughts like bad publicity and big judgments. Yet many responsible owners and managers have dealt successfully with similar property issues for years. A combination of education, training, risk assessment and reasonable responses will serve us all well in this latest challenge.

Education

Fungus is present everywhere in our environment without a threat to health or property. Even in our homes, mold does not necessarily present a health threat. Molds are common fungi. They are dependent on factors including temperature (above 40 degrees Fahrenheit and below 100 degrees Fahrenheit), a nutrient base (such as wood or ceiling tiles) and, most importantly, moisture. In these conditions, molds thrive and occasionally result in property damage to households and adverse health effects to residents. In certain individuals, exposure to specific molds may result in allergic reactions, asthma and other serious health problems.

There are certain technologies available that can contribute to the detection of mold in residences. One method is to use the air-sampling techniques available, although these do not always result in the most accurate readings. These tests of indoor air quality can detect certain species of mold, but are not foolproof. There are also laboratory-sampling techniques available that may help to determine the level of contamination. These samples are evaluated to identify the particular contaminants within the environment. However, these techniques only identify existing problems. The better course is prevention when possible. Contamination can best be prevented by monitoring the moisture within the environment, and by maintaining clean surfaces and promoting proper air circulation.

NAA/NMHC have been in the forefront of education on this issue. NAA/NMHC's member-only White Paper on Mold has been available since January 2001. (For more information about the mold white paper, please contact Michelle Mathis at 703/518-6141, Ext. 140, or [e-mail].) This paper is periodically revised and it is an excellent resource for apartment managers and owners to learn how to prevent and, if necessary, dean up mold contamination. Some of the best attended seminars and meetings at NAA's 2001 Education Conference and Exposition in Las Vegas were on mold prevention, remediation and litigation. The course materials and audiotapes of the seminars are available through NAA. (Contact Jeremy Figoten at 703/518-6141, Ext. 130, or [e-mail].) NAA has also prepared a Mold Action Kit that contains additional briefing material. Finally, NAA is revising our Certified Apartment Maintenance Technician (CAMT) curriculum to include segments on water intrusion and how to deal with mold.

Risk Assessment

There are certain steps both residents and managers can take to reduce mold. The question is when does the responsibility shift from the resident to the property manager? We have learned from years of premises liability cases that courts will determine owner/manager liability by examining the reasonableness of their responses to a foreseeable risk. We shall begin with an assessment of risk.

As described above, mold needs moisture, nutrients and a receptive temperature range. Leaving aside the problems caused by catastrophic issues like flooding, some properties are more susceptible to mold than others. Roof and exterior wall maintenance becomes increasingly important in these areas. Well-maintained residences are less susceptible to mold infestation than those where cleaning is an afterthought. A failure to dean surfaces will contribute to the growth of mold in these units. Student housing properties are an example where residents may spend less time cleaning their apartments. (EQ: Is there any liability in pointing out a specific group like students?) Therefore mold infestation could be more common.

Similarly, there are certain appliances that may also contribute to the problem. One of the most common are oversized air conditioners, which do not effectively remove moisture from the air. Improperly cycling heating, ventilation and air conditioning (HVAC) systems, which enhance humidity, can also contribute to the problem. Another is the placement of furniture within a residence in order to remove obstructions to vents and air-filtering systems. While these methods are not absolute, they do contribute to the prevention of mold and relate to the evaluation of responsibility that could fairly be placed on the resident as well as the property owner.

Testing indoor air quality is expensive and perhaps unnecessary. Current Environmental Protection Agency (EPA) publications do not recommend testing. A physical survey for visible evidence of mold or potential water intrusion is an appropriate first step. Air quality testing should be considered where intermediate steps have been proven unsuccessful and the property is faced with the need for a comprehensive remediation plan.

The Reasonable Response

I. The Role of the Property Owner

Property managers cannot ignore credible information that a problem exists whether it is mold infestation or building security. Unreasonable responses are the source of the largest verdicts reported in the media. Jurors are appalled and angry when they hear evidence that legitimate health concerns were ignored or minimized. In fact, the type of interaction between residents and managers is the single greatest factor for inflating a claim. No judge has ever found the ostrich approach to be reasonable response to a foreseeable risk.

A Delaware woman with chronic allergies and asthma won $811,000 for injuries suffered, from mold infestation of her apartment in New Haverford Partnership v. Stroot. Although the owner made attempts to remedy the problem, high levels of toxic mold were observed amid conditions of standing water with joists and drywall covered with mold. The woman made seven trips to the emergency room, spent nine days hospitalized as an inpatient and received intravenous steroids 12 times.

A reasonable response is a prompt, professional reaction to resident concerns. According to the EPA, mold growth must be addressed within 24 to 48 hours of the water intrusion. A well-maintained property with trained maintenance personnel is the first defense. Although the appropriate reaction to a complaint will always vary with the circumstances, it is always important to communicate with the residents and document those communications.

Your response options may range from simply cleaning surfaces to contracting for mold remediation specialists. If you believe there is a serious mold problem, (e.g., deteriorated drywall or standing water) relocate the resident or terminate the lease. If the problem is less severe, make repairs, engage in preventive maintenance and educate the resident to prevent reoccurrence.

II. The Role of the Resident

The resident also has a responsibility to maintain conscientious treatment of the property. This duty should be specified in the lease agreement. Some courts have specifically found that residents have a duty to maintain their homes even in the absence of the specific lease provisions.

In Washington, a property owner made an insurance claim for mold damage under the vandalism clause in the policy in Bowers v. Farmers Insurance Exchange. The resident had constructed a makeshift greenhouse to grow marijuana, thereby creating an ideal climate for mold infestation. Both the owner and his agronomist resident made claims for damages. The judge upheld the owner's claim and denied the resident any recovery because his conduct had created the problem. The court awarded the owner insurance costs due to the vandalism of the resident. In this extreme case, the court recognized that the resident's own actions barred his claim for damages.

In a Connecticut case, a resident reported mold damage to her apartment home yet refused to properly clean surfaces or use the dehumidifier supplied by the property manager in Shaw v. Gentry. The court reasoned that the resident's own negligence barred her recovery, and established that a resident has a duty to mitigate damages in certain instances. The court found this to be a risk the resident was aware of, that she contributed to the problem and therefore was denied compensation. Essentially, these instances illustrate situations that help to determine the resident's "property management" responsibility.

Conclusion

Educate and train onsite staff to recognize mold in apartment homes. Pay particular attention to these areas in preparing units to lease. Educate your residents to understand the importance of clean surfaces and ventilation to discourage the growth of potentially harmful mold. This can be accomplished through community newsletters or other communications.

Assess your risk. What is the likelihood of water intrusion on your properties? Do your residents understand the role and responsibility to maintain clean homes? Have them acknowledge this responsibility in your lease. If a resident makes a credible health complaint as a reaction to mold, respond with courtesy and sensitivity. Investigate promptly and take appropriate action.

John McDermott is NAA's General Counsel and partner at the law firm of Hill, Estill and Hardwick in Washington, D.C. Radhika Veerapaneni is a law student at Syracuse University. Special thanks to Eileen C. Lee, Ph.D., Vice President, Environment for the NAA/NMHC Joint Legislative Program for her contribution and review of this article.