The recent concern about energy consumption and the rising cost of home heating reminds many of us of the 1970s, the last time energy conservation was a hot issue.

In Canada, a federal government program that was intended to save homeowners money by cutting their heating bills, turned into a fiasco that lowered property values and created lawsuits that continued for years.

In the late 1970s, the Canadian government offered financial incentives for homeowners to increase the insulation levels in their houses. Many people responded by having urea formaldehyde foam insulation (UFFI) pumped into hard-to-reach cavities in house walls.

The product was installed in about 280,000 Canadian homes from 1975 to 1980. Formaldehyde is described by Canada Mortgage and Housing Corp. (CMHC) as a pungent, colourless gas used in water solution as a preservative and disinfectant. It occurs naturally in the human body and also outdoors. Small amounts of the gas are harmless, but in significant concentrations, it is irritating and toxic.

Although there were no substantiated problems clearly attributable to the foam, some owners of small, well-sealed houses insulated with UFFI complained about respiratory problems, eye irritation, running noses, nosebleeds, headaches and fatigue. As a precaution, UFFI was banned in Canada in 1980.

Since then, many studies have been done. Toronto-based home inspectors and consulting engineers Carson Dunlop say that although UFFI is one of the most thoroughly investigated building products ever used, it has not been shown to be a health concern.

The longest and most expensive civil lawsuit ever held in Canada ended with no basis for a settlement, and the homeowners who launched the lawsuit were obliged to pay court costs.

CMHC confirms that UFFI is not a source of over-exposure to formaldehyde. The only concern about living in a UFFI house, says CMHC, is if the material comes in contact with water or moisture and starts to break down -- then it should be removed by a qualified specialist.

Building inspectors Carson Dunlop say: "We believe that those who have urea formaldehyde foam insulation in their homes should enjoy their houses and sleep well at night. The owners of properties with this type of insulation should not be penalized financially, and no stigma should be attached to these homes."

But there is a stigma.

In 1988, the Ontario Municipal Board ruled that a stigma remained attached to a building that had been insulated with UFFI, even if the insulation had been removed. The Board said in its ruling: "The public reaction is not related to whether the readings of gas level are proved dangerous to health. It is related to a total negative mystique surrounding the substance and its possible negative effect."

Since 1993, a UFFI declaration has not been required for mortgage insurance that is guaranteed by CMHC.

However, that same year, an Ontario Court of Appeal found a broker and her firm liable for $55,000 in damages for selling a UFFI home without informing the purchasers that it contained the insulation. Similar cases have occurred in other provinces that have voluntary disclosure rules. That's why, even though most experts now agree that UFFI is in no way a health problem, the Ontario Real Estate Association still recommends that real estate agents and vendors protect themselves legally by including a clause that reads, in part:

"Vendor has not caused any building on the property to be insulated with insulation containing urea formaldehyde, and that to the best of the Vendor's knowledge, no building on the property contains urea formaldehyde..."

It may not be that easy to tell if your home has UFFI insulation. Some houses have tell-tale marks on the outside of the house where holes were made to pump in the insulation, then plugged up. If you're in doubt, the best idea is to call in a professional home inspector and have them take a look.

And in the meantime, don't hold your breath waiting for another Canadian government incentive plan for insulation. UFFI was a costly lesson for everyone involved.

For more articles by Jim Adair, please press here.

Published: June 7, 2001

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Jim Adair is editor of REM: Canada's Real Estate Magazine, a business publication for real estate agents and brokers. He has been writing about Canadian real estate, home building and renovation issues for more than 30 years. You can contact Jim at .