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."

Published: May 14, 2001

Use of this article without permission is a violation of federal copyright laws.

Blanche is a renowned author of five real estate books. Her newest, Bubbles, Booms and Busts: Make Money In Any Real Estate Market, McGraw-Hill, was rave-reviewed by The New York Times. She was also selected from hundreds of real estate experts to contribute to Donald Trump's book, Trump: The Best Real Estate Advice I Ever Received: 100 Top Experts Share Their Strategies, Rutledge Hill Press, and is featured on page 68. Order Now Review - Honors In 2006, Blanche was selected among scores of candidates to author two consumer real estate guidebooks for the National Association of Realtors: The NAR Guide to Home Buying, and The NAR Guide to Home Selling, Wiley & Sons. She is currently planning two new books for the NAR and its members.       Known for her keen insight into real estate industry issues and for her ability to make complex subjects easy to understand, Blanche is a sought-after keynote and continuing education speaker. Real estate organizations from MLSs, to brokerages, to franchisors, to associations hire her to provide up-to-the-minute analysis of real estate industry news and advice on how to improve revenues. Her passionate delivery, peppered with stinging wit, is a huge hit with audiences and fans. Don Klein, CEO Greater Nashville Association of Realtors, Blanche Evans, Richard Courtney, president 2007, GRAR "The GNAR membership meeting last week featured Blanche Evans as the keynote speaker. Her comments and insights resonated extremely well with those in attendance and we have had many requests for copies of her PowerPoint Presentation. She was a terrific part of the membership meeting and convention program!" - Don Klein, CEO Greater Nashville Association of Realtors Coverage from WSMV, Nashville - 8-14-2007 That Interview Guy - Get Inside The Head Of Today's Generation 2007 AE Institute Session - To purchase 2006 AE Institute Session - Parts 1 2 3 4 5 6 7 8 9 HouseValues Mastermind call - Parts 1 2 Blanche's fireside chat with Jeremy Conaway, HAR - Click here. For more articles by Blanche, click here.