It's the case from hell. Nobody is to blame, yet everyone is ducking for cover because a buyer is likely to be out over $60,000 on a problem that is no fault of her own.

An Arizona buyer, represented by her own agent, pays over half a million dollars for a home from a seller who was not the home's occupant. She accepts a buyer's inspection offered to her by the seller which was performed at the request of a previous buyer. The buyer's agent does not recommend that the buyer get her own inspection. After moving in, the buyer ripped out the kitchen cabinets to start a remodeling project, revealing a huge, virulent mold stain. Suddenly the buyer's allergies were inflamed. Upon learning that the mold would take about $50,000 to $60,000 to remediate, she went to her homeowner's insurance to cover the expense. The homeowner's insurer denied coverage calling it a preexisting condition. She went to the seller, who tried to get his insurance company to cover the damage, but coverage was declined because no one could point to an event such as a flood or a crack in the foundation which caused the mold to grow.

So the buyer sued the listing agent.

That's when real estate defense attorney Robert N. Bass stepped into the case.

"I am beginning to see an increase in court cases regarding mold," says Bass. "What concerns me most about this subject is the number of alarmists who are running around saying the sky is falling. There are people in the business of suing over mold, or remediating it. They have an interest in making this a huge issue."

That's why Bass says brokers and agents had better get used to the idea of hearing more and more about mold. "I read reports from environmental people that make you think you have to abandon the property or you are going to die. They are hysterical in tone, sometimes," says Bass. "I view mold and fungus as basically just another critter. The environment is full of critters from termites to scorpions to spiders to ants."

What is mold and why is it a danger to you and your E & O insurer? "Mold is an opportunistic creature that likes wood as its feeding ground, and it also likes wet drywall," explains Bass. "There are all kinds of mold with varying levels of potential toxicity. Similarly, people have varying degrees of sensitivity to various types of mold. I could live in a home with mold and have no problems and someone else could walk in and immediately have trouble breathing."

That's what happened in Bass' case. He happened to personally know the hapless buyer who bought the moldy home, and knew her to be a woman of character who would not sue anyone frivolously.

"This case is a textbook example of a latent defect," says Bass. "The plaintiff happens to be very allergic to it and she wants someone to pay, but who is really at fault? The seller, real estate agents, home inspector, insurance companies, who?"

"This lady has a huge problem and may wind up with no recourse at all," he adds. "But it wasn't the listing agent's fault."

The case has yet to be settled, but there are still clear lessons for the real estate community - get used to discussing mold with every buyer and seller, pronto. "I recommend that when something is an issue, and it can be a major problem in a house, it's time to add it to the list of things we talk about. Let's recommend an indoor air quality inspection to every buyer," says Bass.

In addition, Bass says to:

1. Educate yourself about these types of problems

2. Include some basic information about mold along with other information you provide a buyer or seller

3. Find local service specialists who can perform indoor air quality tests for buyers and sellers. Add air quality tests to the recommended list of pre-purchase inspections to be performed.

4. Look for evidence of water leakage in the past. Pay attention to musty, mildew smells.

5. Add basic disclosures about molds to your standard documents.

"Unless an agent knows there is mold, it is hard to understand how they can be held responsible," muses Bass, "But it still costs a lot of money to defend a claim."