Mold cited as top environmental issue by builders

A new survey of builders and real estate lenders finds the majority citing mold as the top environmental concern facing the real estate industry.The survey, conducted by Hartford, Connecticut-based Environmental Assessment Group, finds more than 75% of respondents were aware of at least one real estate transaction where a party backed out as a result of mold problems. Part of the problem is the high price tag for remediation, with respondents estimating this at US$11 million for commercial real estate, on average. The other is the lack of insurance coverage since the introduction of mold exclusions by the insurance industry over the past two years. “Since insurers fled the scene, liability claims have escalated and the devaluation of loan collateral has accelerated,” says Charles Perry, principal of EAG. “Now lenders, who hold 80% of the risk on a standard real estate transaction, and developers, who hold the other 20%, are scrambling to mitigate risk from an environmental problem that could surpass asbestos and lead paint in its financial consequences.” In fact, while more than 50% of respondents named mold as their biggest environmental concern, asbestos was a distant second cited by less than 25%. The final issue is the concern over the viability of mold clean-up processes. “Unfortunately, there is no ‘cure’ for mold. It has baffled many builders and remediators with its ability to reoccur just weeks after it has been scraped or sprayed away,” says Perry. “That contrasts sharply with asbestos, lead paint, and other hazards that are considered ‘gone for good’ after the contamination has been removed or contained.”