|
If you own or manage a hotel, resort or restaurant - or any other building for that matter - you are no doubt familiar with the Eighth Deadliest Sin in Environmental Law: Stachybotrus Chartarum (atra), better known in the plaintiffs' community as "Toxic Mold."
Of course, your guests and patrons are also familiar with mold and it is their perception of that especially evil-looking life form, rather than the extent to which it is actually "toxic," that is likely to be of greatest concern to you. After all, you may say, anything that looks that bad, toxic or not, has to be bad for business, particularly if it happens to be growing on the walls of the Presidential Suite.
But what happens if you buy or sell a property that has invisible mold? Can the unhappy party, the "Mold Holder," rescind the transaction? If you sell a property in which mold is later discovered, can you be held legally responsible if you didn't know it was there? Are you obligated to reveal the existence of mold to potential buyers? Are you required to remove the mold whether or not you sell because it is considered a public health risk?
If you are interested in the answers to these questions, you've come to the right place. Let's start with a few interesting facts about "Toxic Mold": First, it isn't toxic, at least not in the sense that it has been medically proven to cause a "toxic," rather than an "allergic," reaction in humans. Indeed, a recent comprehensive report published by the Institute of Medicine, a division of the National Academies of Science, confirms that there is inadequate and insufficient evidence to support an association between exposure to mold and the litany of "toxic" reactions we often see claimed in lawsuits.
Second, despite this fact, there has been an avalanche of mold-related litigation in this country. Mold has been blamed for everything but the war in Iraq and, of course, everyone wants the Insurance Industry to pick up the tab. Many insurers have vigorously declined to do so, relying on mold exclusions or the more generic "pollution" exclusion. (A recent decision in the California Supreme Court, however, may preclude insurers from relying on the standard pollution exclusion to exclude coverage for "indoor pollution," such as mold.) Moreover, we are seeing many insurers leave the market entirely, citing that the risk-benefit analysis no longer weighs in their favor.
Third, reacting to the public concern and uncertainty about mold, more than 30 states and the United States Congress have introduced mold-related legislation since the year 2000 alone. Despite this flurry of legislative activity, we still have no generally accepted standards governing the identification, assessment and remediation of mold.
California's legislation is an example of a comprehensive but as yet unrealized attempt to provide guidance in this area. The Toxic Mold Protection Act (effective January 1, 2002) may be the most thorough piece of mold-related legislation enacted, or even proposed, to date. It requires the California Department of Health Services (DHS) to convene a task force of health and medical experts, mold abatement experts, government representatives, representatives from California employers and employees, affected consumers and affected industries for the purpose of developing guidelines on permissible exposure limits assessment of health threats, identification and remediation of mold.
The Act provides that at least six months after the DHS adopts these standards, new disclosure requirements will be imposed on sellers of real property who know or have reasonable cause to believe that mold, both visible and invisible or hidden, is present in quantities that exceed the permissible exposure limits or pose a health threat under the DHS guidelines.
As comprehensive as the new law seems to be, there are still substantial problems. The most significant may be the absence of any requirement to conduct air or surface tests, rendering it unlikely, if not impossible, for anyone to "have reasonable cause to know" whether mold levels exceed the permissible limits (especially if the mold is invisible!). It will be interesting to see whether this void in the law actually renders the disclosure requirements irrelevant. Either way, we may be waiting some time to find out. As of this writing, the task force has yet to convene, principally because of a lack of funding. It is unclear when, if ever, the anticipated guidelines will be issued.
As of now, the law governing landlords and building owners in California remains the common law, that is, there is a duty to disclose dangerous or hazardous conditions. Whether obligations under this duty arise in the context of indoor mold growth remains a difficult question to answer and may depend on this circumstances of a given situation. Generally speaking, our advice to clients has always been to err on the side of disclosure, especially when the presence of mold has been confirmed.
As we wait to see how the Toxic Mold Protection Act unfolds, we can count on more litigation, higher insurance premiums and continuing confusion with respect to good old "Stachy" and its cousins.
For a detailed description of all mold-related legislation in the United States and Congress, please click on (link to full text of article posted on the Gordon & Rees website).
|
