Claims News Service, Nov. 9, 12:45 p.m. EST — Sixty percent of builders and real estate lenders have heard of a party backing out of a real estate transaction because of the fear that mold problems exist on the property, according to a new poll conducted by Environmental Assurance Group (EAG).

Seventy-six percent of executives acknowledge that they are concerned about mold liability on properties in which they have invested. In addition, respondents familiar with a specific mold-related incident in a real estate transaction said it would have taken an average of more than $300,000 to fix the problem.

The survey of 75 real estate building and banking executives was done to assess mold's financial impact on the real estate market. Developers, architects, construction executives, and mortgage lenders are taking precautions to protect themselves because of the mold exclusions recently written by the insurance industry on property and business policies.

“Our latest survey shows that mold fear is growing exponentially among the major stakeholders in the real estate business in a post-insurance world,” said Charles Perry, principal of EAG. “It's clear that without the emergence of a new risk mitigation method, doing a real estate deal nowadays is just a roll of the dice, which is why the insurance industry bowed out. Mold is now excluded across the country on property-casualty coverage, business risk insurance, and Directors & Officers policies. Who is going to pay for mold-related cleanup and rebuilding on a contaminated hotel, condo, affordable housing complex, or hospital/health-care facility? If property owners decide to default, how much is the mold-ridden loan collateral worth? From a financial standpoint, we're in new and terrifying territory.”

When asked if they believe mold can revalue a real estate transaction, 99 percent of respondents said yes. Sixty percent of builders and lenders said they were aware of a real estate deal where a mold problem negatively affected the transaction.

“It's been three years since most insurers cut the cord on traditional mold coverage, yet the building and lending industries cannot seem to find a consensus on dealing with mold risk mitigation,” said Perry. “Unfortunately, mold cannot be simply scraped away like asbestos or lead paint. As more stakeholders acknowledge the scientific fact of mold's resilience, we will see a groundswell begin to form for a new mold prevention protocol, which focuses on removing the possibility of mold entering a structure.”

For more details on the survey, contact EAG at 860-521-4747 or perry-eag@earthlink.net.

Special Reports /

Poll Reveals Concerns Over Mold

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