Publications
Associations and Mold
The current "flavor of the month" issue confronting condominium and homeowner association ‘s today is the discovery of "mold" on building and dwelling unit interiors. Although the mold has been ever present since the beginning of time, it became newsworthy when a local school closed down and when a Texas jury awarded $31 million to a couple on a bad faith claim against an insurance company.
Mold is found in over 100,000 known species, in every color of the rainbow, from very dry to sticky and from harmless to toxic. For a board to properly respond to a complaint about the presence of mold requires nothing short of an emergency response plan.
At first glance, it seems that the appearance and detection of mold would be a relatively easy matter to distinguish responsibility. If it’s in the unit, it is the owner’s problem and outside the unit, it belongs to the association. Right? Not necessarily.
First, the key to mold growth is going to be the presence of moisture. Common sites for mold growth will be foundations, basements, windows, between the walls, bathrooms and plumbing and HVAC fixtures.
Second, the mere presence and detection of mold does not establish a connection to cause and of course, the cause has to be abated before remediation can begin.
Third, even if the cause and effect are confined to within the four corners of a condominium unit, the association may not be absolved of all responsibility.
Fourth, if in addition to property damage the unit owner complains of physical symptoms related to mold growth (from allergic reactions and asthma to pneumonitis), what is the duty of the condominium association to react in a diligent fashion?
The first thing a board of directors of a condominium or homeowner’s association will be required to do is to retain the services of a qualified consultant to do a "due diligence" inspection of the property, prepare a mold report and, if necessary, institute an abatement plan. The second thing is to contact the insurance company for the association.
The courts now expect a board of directors to become proactive and take a more conscientious approach to property inspections, rather than sitting back and waiting for people to complain. Also, as in any emergency, it is recommended that when a complaint is lodged related to the appearance of mold, the board must solve the problem first and then decide who is responsible for paying for the repairs. A board of directors can create a preventive plan of action as follows:
- Periodically have a visual inspection of the property performed by a qualified professional. Close up views of ventilating systems, duct work, filters, ceiling tiles, wallboard, carpeting, window sills, wallpaper and floor ducts may disclose the existence of different allergen sources.
- All condominium associations are required to maintain reasonable amounts of financial reserves for contingencies and capital expenditures. [See Illinois Condominium Property Act 765 ILCS 605/9(c)(2)] A line item can be added for mold detection and abatement.
- For associations that are required to insure the common areas and dwelling units for property damage, fire loss and other casualties, the board of directors should meet with their insurance professional and become knowledgeable about what the policy covers and what is excluded. New policies are being written to respond to changes in the law and many underwriters are now excluding mold as a covered risk. What program did the association put into place to mitigate the effects of mold growth? Does directors and officers insurance cover the board or put the individual board members or the manager in a position of exposure for personal liability?
- If the board or the manager receives a complaint from an owner, they should immediately respond. Since the presence of mold poses a potential health hazard, a board cannot afford to be complacent and should deal with it as any health or safety issue.
- A board policy should be written including perhaps a check list whereby the common places where biological pollutants are present are listed and identified as unit owner vs. association responsibility, for example:
Location Responsibility Authority Central HVAC Association Article __, Sec. __ of the Declaration - Lastly, regardless of whether it is determined to be the association’s responsibility, the board and the property manager have a duty to act conscientiously. Even if a board of directors is clear in its understanding whether the mold problem is the unit owner’s responsibility, it still requires the board to be firm in working with the owner to clean up the mold properly and repair the causative factors promptly. It is the adjoining units that may also be at risk because of an uncooperative owner. If an owner fails to cooperate, the association should abate the problem at association expense and then charge it back to the owner. If the owner refuses to pay, the association has legal rights to recover the out-of-pocket expenses and even costs of enforcement, such as attorneys fees. The association should also periodically remind all residents of their obligation to maintain owner’s (and renter’s) insurance and that they should inquire about interior mold damage coverage.
If an association has established a preventative maintenance program, a financial plan, insurance coverage, rules governing repairs and an abatement plan, the board should be able to keep the residents safe from harm, as well as keep the association out of the courthouse.