With the best of intentions, associations such as the Florida Association of Realtors are creating mold addendums to state-mandated seller's real property disclosure statements, but could the real estate industry be taking on too much responsibility?

Addressing the problem makes for great PR, but it's a little early yet, especially without the cooperation of the states in determining through regulation who can remediate mold and how. Until then, its a free-for-all among carpet cleaners, indoor hygienists, inspectors, and others who want a piece of the lucrative mold prevention/remediation action.

It's also too soon to be shifting decisions about what to disclose and not to disclose to sellers. They are simply not trained to know which moisture intrusion incidents are significant and which aren't. Does overdisclosure kill deals? Is underdisclosure always dishonest? These are unknowns to be explored.

Take the following example.

The well-meaning FAR's addendum lists four questions.

Are You Aware:

Of any instances where moisture/water/condensation/humidity intruded into the structures located on the property as the result of rain, flood, plumbing leak, appliance leak, roof, window or wall leak or any other type of leak or event?

The seller is invited to answer yes, no, and if yes, to explain.

Of any damage to the structures located on the property including the growth of mold that resulted from any type of moisture/water/condensation/humidity intrusion or leak?

The seller is invited to answer yes, no and if yes, to explain.

Of any clean up, repairs, or remediation of the property including clean up of mold because of moisture or water intrusion/condensation/humidity?

The seller is invited to answer yes, no and if yes, to explain.

Of any other problems resulting from moisture/water intrusion/condensation/humidity?

The seller is invited to answer yes, no and if yes, to explain.

On the surface, these questions seem pretty straightforward, but what if your seller had her windows open one day, and a sudden sun shower came along and intruded a little light rain onto the hard wood floors? She cleaned up the sprinkle with a paper towel and forgot about it.

Does she have to disclose that incident now? And if she doesn't, is she being deliberately dishonest, or saving herself from a risk to the transaction over a minor incident?

That's just one problem - putting the seller into the position to decide which incidents are important enough to report to the buyer.

Here's another - relying that the buyer's response will be reasonable.

The form goes on to suggest that the disclosure isn't intended to be a substitute for any inspections or professional advice the Buyer may wish to obtain. An independent professional inspection is encouraged and may be helpful to verify the condition of the property and to determine the cost of repairs, if any.

Really? Since when is there a standard for the mold remediation industry? Who is, in fact, qualified to be an "independent professional" inspector? How many more hundreds of dollars does the buyer or seller need to spend to assure each other that the light shower incident won't throw a wet blanket on the transaction?

Brokers are caught in the middle. They have to use the form, as not using it poses a Catch-22.

"If they don't use the form, and a subsequent problem is found," says Florida attorney Hank Sorenson, "the broker gets accused of negligence for not using commonly-used forms from the state Realtor association."

That's why associations and their legal eagles should think about the scope of activities that could be included within the statements set forth in such addendums.

"Brokers didn't intend for an open window to be included in the mold addendum where the remediation was a paper towel," suggests Sorenson. "I'm not disputing the need for a disclaimer, but it needs to be tightened up."

Why? Sorenson sees forms as they stand up to disputes and to expert witnesses during litigation. But without state-licensed experts, who prevails?

"This is such a sensitive issue, and the language is too broad," says Sorenson. "If you have a worry-wart buyer, and you are close to moving or about to be foreclosed on, the last thing you want to do is endanger the sale because of a spring shower. If you answer the form correctly, 50 percent of the questions point to water intrusion. The Buyer says it will cost this much to remediate, and the seller comes back with, 'Your guy isn't an indoor hygienist and now you are in a duel. It creates more problems than it solves.

"If you don't use the addendum," he says, "then I have to produce an expert witness broker who says 'These forms are garbage,' and it becomes a battle of expert witnesses, and what insurance company is going to want to pay for that? So the Realtors are forced to use these disclosures."

Sorenson advises his broker clients not to worry about mold-related issues unless remediation was conducted on a professional level. He also would like to see states spend more resources toward getting mold testing and remediation certification underway with state oversight.

"In addition to getting the testing under wraps," he suggests, "how about getting rid of the alphabet soup of mold-related certifications, too."

Published: July 9, 2004

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