Mold changes dream house into nightmare

Homeowners, builders and insurance companies increasingly are wrestling in court.

By Chris O'Malley
chris.omalley@indystar.com Mary McKinstray (left) and her sister, Joan, were forced to abandon this $250,000 Carmel home. They say the house is infested with mold due to shoddy building practices.
The kitchen calendar reads January 2003. The clock on the stove perpetually flashes 12:00.
The day Mary McKinstray fled her $250,000 Carmel home and her possessions is frozen in time.
"My doctor said, 'If you value your life, never go in that house again,' " said McKinstray, a former Merck drug saleswoman who has moved into a spare bedroom in her parents' house.
In a lawsuit filed in April against Precedent Homes and the home's builder, Robert W. McKinney, McKinstray alleges her house in Precedent's Ashbury Park is contaminated with toxic mold that sickened her for months. The worst was a seizure that put her in the hospital overnight.
Precedent counters that environmental tests did not find any harmful levels of mold. McKinney "disagrees with the buyers' allegations that there is a mold problem in the home, or that the home presents any risk of harm," said his attorney, Joe Wendt.
Increasing public awareness of health risks from mold has homeowners checking baseboards and crawl spaces for signs of moisture. Some, like McKinstray, are filing lawsuits against builders who, they say, are unresponsive to homeowners' concerns.
One of the area's largest builders -- Trinity Homes -- and parent Beazer Homes Investment Corp. face at least two lawsuits from homeowners this year over mold concerns. The companies are tearing out and replacing brick in dozens of their newer homes.
Nationwide, the insurance industry estimates that 10,000 mold-related lawsuits are pending, up 300 percent from 1999. In 2001, a Texas jury awarded a couple $32 million for mold in their home, though the amount was later reduced to $4 million. Television personality Ed McMahon won a $7 million award from his insurance company over mold.
In Indiana, where insurance companies are not required to cover mold in homeowner's policies, builders often become the focus of litigation.
Homeowners, attorneys and home inspectors blame mold on sloppy construction -- particularly involving homes with brick walls.
Some point to the home-building boom that tempted busy builders, desperate for labor, to hire bottom-of-the-barrel masons and other subcontractors. Those crews often failed to allow for a sufficient air gap between brick and the outer wood sheathing. Overwhelmed municipal building inspectors couldn't keep pace with the construction frenzy.
Whether construction quality is worse than ever is debatable. But experts agree that mold-related health problems may be more common today because of tighter, energy-efficient designs that reduce ventilation.
"The mold issue -- every jurisdiction in Central Indiana is experiencing it," said Jeff Kendall, building commissioner of Carmel.
Who should be held responsible for mold and what health danger it poses increasingly are being fought over in court, as attorneys see mold as gold.
Precedent Homes, which arranged the sale of the home to McKinstray but did not build it, said an environmental testing service it hired determined that the mold was isolated and not hazardous.
"In addition to our own analysis, we received a copy of the mold assessment report by another reputable environmental firm hired by the homeowners, which concluded the indoor mold spore concentrations were in an acceptable range," Todd Fenoglio, president of Precedent Homes, said in response to the McKinstray suit.
McKinstray said it's just the opposite -- that the tests showed dangerous levels of the microtoxins aspergillus and penicillium.
Her suit in Hamilton Circuit Court alleges elevated levels of toxic-producing fungi in the air, on attic framing and on crawl space framing.
Problem starts with brick
The suit attributes crawl space mold to loose fiberglass insulation that transferred moisture onto floor joists. It cites an improperly installed vapor barrier and poor ventilation in the space.
The lawsuit also alleges inadequate caulking around windows and says mold in the attic probably stemmed from wet wood during construction.
While wood has allegedly caused problems in McKinstray's home, many mold complaints come from residents of new homes with brick exterior walls.
Not long after Frank Bireley and his family moved into their new home last year in Williamsburg Villages in Hendricks County, their 10-month-old daughter developed a persistent cough. It grew worse, and she was hospitalized. A specialist at Riley Hospital for Children made a link to mold.
Bireley's builder, Trinity Homes, hired a firm to assess the house for mold.
The problem was traced to bricks that were butted tight against a moisture barrier covering sheathing that is nailed to wall studs.
Bireley grew impatient this fall when he could not get an idea of when Trinity would make the repairs. "I also threatened to put a sign in my yard," he said. His home is near a new Trinity development.
He received a call from Trinity's law firm, which he said had sought his daughter's medical records. Bireley, who works in the legal department of a large insurance company, refused. He argued that the builder was placing itself in a precarious legal situation.
About a month ago, workers showed up at his house with hand-held jackhammers and tore out bricks where an environmental testing firm found moisture problems. "It looks like you could pick up our house and move it to Afghanistan," Bireley said.
So far, Trinity has been helpful. "We love the house," he added.
Hundreds of homes involved
Trinity, which builds 500-600 homes a year and is among the city's 10 largest builders, is facing mold complaints at several other developments in the area.
Last month, Christopher and Mary Colon filed a lawsuit in Hamilton Superior Court against Trinity and parent Beazer. The suit, seeking class-action status, alleges that improperly applied brick caused mold infestation at the Colons' 2-year-old home at Prairie Crossing in Noblesville.
The moisture problem potentially involves hundreds of Trinity homes in Indiana, said the couple's attorney, Richard Shevitz of Cohen & Malad LLC in Indianapolis.
The suit complains that Trinity has not offered to buy back mold-damaged homes in Prairie Crossing, despite doing so in its Brittany Chase development, where Trinity said it has bought back four homes.
The builder has not made buyback offers at other developments, including Arapaho Point, Huntington Woods, Spring Farms and Plum Creek, the complaint states.
Trinity responded in a statement Friday that there have been a number of refinements in its remediation plan, which it said was developed by a national expert.
"Remediation has been our goal and our practice from the beginning," the company said.
Meanwhile, Noblesville building inspectors responding to consumer complaints have sent Trinity a letter. It states that the company's homes under construction are subject to additional inspections -- both when bricks have been applied in the initial stages and again later, said Noblesville Planning Director Steve Huntley.
Residential building codes adopted by cities must be at least as stringent as those adopted by the state.
Generally, if the sheathing nailed to the outside of studs is "water-repellent," Indiana requires masons to maintain a 1-inch air gap between the brick and the sheathing. If the gap is less than 1 inch, a "weather-resistant" membrane -- such as asphalt paper or Tyvek wrap -- must be applied to sheathing that is deemed to be weather-repellent.
The codes were written because brick is porous and can become saturated with water.
But enforcement has been difficult because of the speed at which brick goes up and the limited number of inspectors.
"What sometimes happens is they have masons with varying degrees of skill that do not always maintain that air space. It's very difficult to camp an inspector out at a project when the brick is going up," said Carmel building official Kendall.
"You can go there one day and there's no brick at all. And then three days later, it's all covered," said Jerrold Hochstedler, a seasoned home inspector for CW Schnepf & Associates.
No state standards
When Hochstedler finds moisture problems, it's often because masons have not left an air space or don't wrap the wood sheathing in a barrier.
Another problem is when an air space becomes clogged with mortar, said Doug Wehr, president of Clear View Home Inspections. Mortar can pull moisture from brick into wood and drywall, especially if a vapor barrier is missing or damaged.
When inspecting a house under construction, Wehr takes a flashlight and looks for debris in the gap between the brick and the house. Conscientious masons will keep a rope laid horizontally in the space to catch falling mortar and pull it out, but hardly anyone does that anymore, he said.
Unless the problem is caught during the inspection process, homeowners might not notice it until they become ill.
Indiana has no legislation to set standards for mold exposure in homes. A House proposal to create a mold task force died last year in the legislature.
California's "Toxic Mold Protection Act," which became law in 2001, includes a study on adopting exposure limits for indoor mold. The law requires that guidelines be developed for removing mold and disclosing its presence when renting or selling property.
At least 10 other states have enacted or are considering mold legislation, according to the National Association of Mutual Insurance Companies.
One problem legislators and industry experts have encountered is that there are hundreds of types of molds, and they affect people differently.
"We've seen it . . . where it doesn't bother the husband, and the wife is having seizures," said R. Ross Williams, president of Artec Environmental Monitoring, an Indianapolis company that tests homes.
McKinstray said she didn't have breathing problems -- let alone asthma -- before moving in December 2001 from a rural area near Mount Vernon, Ill., to Carmel to be closer to her parents. At one point when she lived in the Carmel house, her doctor said she lost nearly 40 percent of her respiratory capacity.
"I had a bad respiratory infection within weeks. I always joked that in the drug industry, we never got sick," she said. At one point, McKinstray said, "I couldn't get out of bed for almost two weeks."
The first visual clue to a problem came when she and her sister, Joan -- also a plaintiff in the lawsuit -- were decorating. "The first picture we tried to hang, we sunk a molly bolt, and the drywall crumbled."
They also noticed shell fungi growing on a wood-siding wall in the back of the house.
Health hazard
McKinstray won't re-enter the house, and others also have been cautious. McKinstray shows a photo she took of a dry-cleaning company employee who arrived to assess the condition of her clothing. He was suited up in a chemical suit and respirator.
Last Christmas, McKinstray had another seizure. She said a serious sinus condition followed in January.
That was the last straw.
"Within a week of moving out of the home, my coughing disappeared."
Meanwhile, she continues to press Precedent to fix the home, which she estimates could cost $70,000.
McKinstray said Precedent has refused to buy back the house. She purchased the home through Precedent and argues that she didn't know until closing that McKinney built the house. She alleges that Precedent agreed to provide a warranty and should be held responsible.
Precedent's Fenoglio said his company corrected a number of problems with the house and "made numerous good-faith efforts to rectify any and all legitimate concerns presented by the buyer."
But McKinstray won't go inside. Peering through the windows is as close as she now gets to a dream home she thought would be the last place she'd ever live.
"I almost think of it as having a fire or tornado, except what we own is still sitting in it."

Top 10 States at Risk for Mold

Western Real Estate in Danger Despite Dry Climate

Atlanta/July 10,2006/PRNewswire/—Contrary to popular belief, climate is not a good gauge for mold risk, according to a ranking of states at risk for mold contamination on commercial and residential property. Areas with dry climates like Nevada and Arizona made it to the top 10 while some Gulf States did not come close. Because mold damage is now excluded or severely limited on standard property insurance, concerns about the financial impact of a mold outbreak in a home or business continue to rise.
In the relative hazard ranking model developed by American Risk Management Resources (ARMR) and now being used by http://www.greenguard.org/ (GEI), "dry states" (Oklahoma, Kansas) intermingle with predictably high-risk mold zones (Florida, South Carolina) as high risk. But Texas beat them all:

Top 10 Relative Hazard Mold Ranking 1. Texas 2.95 2. Florida 2.50 3. Oklahoma 2.45 4. South Carolina 1.91 5. Nevada 1.90 6. Arizona 1.90 7. California 1.73 8. South Dakota 1.47 9. Tennessee 1.33 10. Kansas 1.25
Bottom 5 Relative Hazard Mold Ranking 1. Wisconsin .06 2. West Virginia .07 3. Alabama .13 4. Massachusetts .18 5. Minnesota .19
The GEI/ARMR relative hazard ranking model was developed by comparing mold losses on insurance claims with premiums paid on property and liability coverage in each of the 50 states. The hazard ranking model does not yet reflect claims associated with 2005 hurricanes that struck the Southeastern US. Wisconsin has the lowest relative mold loss rate, which is one-50th the loss rate in Texas based on the relative frequency of insurance claims.
"Mention mold right now, and the Gulf Coast comes to mind first, but the contamination on real estate hit by hurricanes was generally less significant overall than mold growth caused by inferior building materials or poor construction," said Carl Smith, CEO/Executive Director of GEI, a non-profit organization working with lenders and developers on mold risk mitigation techniques. "It's counterintuitive to think of shopping centers in Phoenix or casinos in Las Vegas as being at risk for mold, but it makes sense when you examine the causes of mold and problems often caused by modern building practices and materials."
According to Smith, many buildings and houses in dry climates develop mold issues when moisture is nurtured within walls and windows that are tightly sealed off from consistently hot conditions outside.
"Think of a glass of ice water sitting on your porch in 95-degree heat," said Smith. "Condensation quickly forms on the outside of the glass, but unlike your drink, condensation in a home or business has nowhere to run off so it builds up in the cavities of the structure, creating an ideal climate for mold contamination."As mold decreases property values, it could force many owners into default, forcing mortgages into a "non-performing loan" category, the worst-case scenario for lenders. That classification causes a negative chain reaction from ratings agencies, regulatory authorities and shareholders. "In the age of universal mold exclusions on insurance policies, everyone involved in real estate needs to diligently manage the mold risk," said David J. Dybdahl, head of ARMR, an insurance brokerage and consulting firm specializing in environmental insurance covering mold.
GEI recently announced a mold risk reduction program, based on a compilation of best practices that GEI has proposed as an American National Standards Institute (ANSI) standard. The proposed standard has been preliminarily reviewed by the Environmental Protection Agency (EPA) and piloted with several building owners. Building consultancies review and assess properties based on the standard; once this is successfully completed, property owners can apply to GEI for certification under the Greenguard Mold Protection Program. Once a property is certified, it can be promoted to lenders, insurers and prospective tenants.
"Who is ultimately holding the financial bag for construction and permanent mortgages along with business loans to builders? The lender," said Smith. "The bank typically holds 80% or more of the risk in these loans (since 20% is typically invested by the borrower). Therefore, the smart lenders will work even faster to protect themselves."