July 12, 2001

Construction faces new foe: toxic mold

Oles Morrison Rinker & Baker


When most people think of the word “remediation” they think of hazardous substances like asbestos, lead-based paint or PCBs. They don’t think of “mold.” But that’s all about to change because it looks like mold growth in buildings is going to be the next big environmental concern for the construction industry.

Liability for “sick buildings” is currently being litigated in the courts:

  • Homeowners’ associations and condominium associations are suing contractors for construction defects, breach of contract, breach of warranty and for either inappropriate selection of building materials or improper installation of building materials resulting in mold contamination.

  • Developers are being sued for excessive flooding of streets and yards in subdivisions leading to basement flooding and mold growth under legal theories of breach of contract, breach of warranty, fraud and misrepresentation, negligence and violations of the Consumer Protection Act.

  • Manufacturers of prefabricated homes are being sued for negligence and strict liability in the defective construction of new homes containing mold.

  • Architects are being sued for defective design leading to mold contamination.

  • Insurers are being sued over denial of comprehensive general liability insurance coverage for mold remediation.

  • Home inspection agencies are even being sued for professional malpractice and negligence in their failure to detect mold growth that caused personal injury to the plaintiff.

Damages sought in these types of lawsuits typically include compensation for bodily injury and health risks and the cost of repair, remediation or cleaning of discolored surfaces.

In one case, Centex-Rooney Construction Co. Inc. v. Martin County, Fla., a public owner sued a construction manager for breach of contract when toxic mold was found in a new courthouse. After substantial completion and well into occupancy, the owner complained of excessive humidity and mold growth. The courthouse was evacuated so that remedial action could be taken. The county then filed suit and argued that construction defects were the cause of the courthouse employees’ ailments. The owner attributed the excessive moisture in the building to water infiltration through the exterior insulation and finish system and a faulty heating, ventilation and air conditioning system. The county walked away with a $11.5 million jury verdict.

Why does mold grow in buildings?

Mold and fungi are naturally present in building materials. Upon sufficient exposure to moisture, these microscopic organisms grow and germination occurs. Theories are abundant about what causes the excessive moisture in buildings that, in turn, fosters the mold growth.

These theories include: improper “drying in” during construction, inadequate building envelope or waterproofing that causes exterior wall leaks, improper installation of vapor barriers that causes ceiling insulation damage from condensation within the insulation cavity, application of paint-like sealants that result in discoloration of the exterior of homes, lack of foundation vents in structures, leaky roofs resulting in water intrusion, faulty plumbing, improper dormer flashings or decks that were not sloped to drain. Energy codes that call for air-tight buildings have also been blamed for mold growth.

Why is mold a cause for concern?

Fungal growth in buildings results in the release of millions of mold spores that are inhaled by building occupants. Some species of mold produce toxins and inhaling mold spores from these species may cause allergies or disease. One such species is stachybotrys chartarum or black mold. Other toxic molds include aspergillus versicolor and some penicillium species.

Toxic mold exposure may cause respiratory and sinus problems, chronic headaches, fatigue, painful joints, dizziness, memory loss, hearing loss, bleeding in the lungs or exacerbate asthma. It is also believed that prolonged toxic mold exposure may be fatal to individuals with weaker immune systems such as children, hospital patients or the elderly. It is believed that 29 percent of the general population is also allergic to mold and fungi. Mold growth can also deteriorate and cause the decay of building materials. This is because these organisms eat away at the materials on which they grow.

In recognition of the growing concern over mold or bacteria problems, industrial hygienists and labs are beginning to offer microbial testing and spore counts, air and settled dust sampling, and HVAC tracer gas evaluations. Consultants are also offering building envelope and waterproof building design services, moisture-probes and the use of dye water techniques to confirm the source of water intrusion. Chemistry and bacteriology experts, and mold abatement contractors, are also beginning to offer their services.

Mold remediation may be comparable to hazardous substance remediation. Temporary evacuation of the contaminated building may be necessary, workers may need to use respirators, gloves and goggles and the remediation technique may involve encapsulation, HEPA vacuuming, cleaning, disinfecting, sealing or removal and replacement of contaminated materials such as drywall, ceiling tiles or ductwork liners from air handling units.

New DNA technology developed by EPA scientists is also expected to facilitate mold detection and abatement. Mold prevention may be the next step and already antimicrobial air filters and mold inhibitors for paints are on the market.

Mold liability is an emerging issue for the construction industry and statutes and regulations have not fully addressed the problem. The EPA is currently researching indoor air quality issues. For now, savvy contractors should read their insurance policies to ascertain the extent to which they are covered for mold issues, and request extended coverage or endorsements as necessary.

What caused the mold damage in a particular building may be crucial to whether its remediation is covered under a particular insurance policy. Thus, testing may have to be performed to determine the cause of mold growth. Contractors should also make sure that construction contracts clearly allocate the risk of loss for repairs or remediation necessitated by mold damage among the contracting parties.

In addition to stating which party will be responsible to make repairs or perform remediation, the contract should clearly set out what must be done to remedy mold damage, including which fungicides will be used and what level of mold growth will require that entirely new building materials be substituted by the responsible party.

Jany K. Jacob is an attorney at Oles Morrison Rinker & Baker LLP. She practices in the areas of environmental law and construction law and may be reached at (206) 623-3427 or by email at

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