A Growing Problem

Mold, water damage and accompanying litigation hamper building industry

by Melody Finnemore

Building regulations passed during the 1970s that were designed to conserve energy may actually have instigated the mold and water damage that is taking a toll on building occupants.

Mold caused by water intrusion, is so heavy, it looks like the building survived a fire. (Photo courtesy of S.D. Deacon Enterprises)

The regulations during the nation's energy crisis were intended to mandate "tighter" buildings that conserve energy.

"It's that 'tightness,' the effort to seal in heat and energy, that also is sealing in water and starting mold growth," said Susan Eva ns, a Seattle industrial hygienist. "The energy crisis of the mid-'70s is exactly when the problems got worse, compounded by buildings that are more or less mass produced. The leakier buildings from the '60s and earlier generally are not problematic."

Evans has seen plenty of evidence regarding the damage mold can do to both buildings and their occupants. The vice president and principal at MDE Inc. has, for the last 15 years, specialized in designing and monitoring the renovations of large buildings. Her work includes ensuring that toxic material such as mold, asbestos and lead are removed safely.

"I'm not a physician so I can't describe the health impacts on individual people, but both the National Academy of Sciences and the American College of Occupational and Environmental Medicine have published studies that detail the potential health risks associated with mold," she said.

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A report sponsored by the Centers for Disease Control and led by the National Academy of Sciences' Institute of Medicine found evidence linking mold and building dampness to asthma as well as upper respiratory illnesses such as coughing and wheezing in otherwise healthy people. The report recommended that excessive dampness in buildings and homes be eliminated through building design, construction and maintenance.

Lillian Bartha, M.D. of Indoor Health and Diagnostics in Olympia, stresses that researchers are only beginning to learn the affects living and working in a damp building can have. "We always hear about the toxic mold - stachybotrys, but the scientific community is learning that even more common molds such as aspergillus and penicillium can cause problems." Stachybotrys, the toxic mold that causes hysteria, needs paper or cellulose to grow. Others thrive on plant material and are common outdoors or in garbage, but our systems aren't used to them in high concentrations, Bartha said.

The issue grabbed headlines in 2001 when a jury awarded a Texas couple, Melinda Ballard and Ron Allison, $32 million because of mold damage to their 22-room mansion. Farmers Insurance Co. was required to pay the award, along with $1.4 million in remediation costs before the jury verdict.

The growing number of buildings requiring mold remediation and repair led Portland's SD Deacon Corp. to create a division dedicated to the work called SD Deacon Enterprises. The firm had performed mold repair jobs for years but felt the demand justified establishing a group specifically devoted to such work, said Bill Townsend, president of SD Deacon Enterprises.

"We are seeing more projects with mold and water damage," Townsend said. "I think it's important to conserve energy and be more environmentally conscious, but we did it the wrong way. We tried to do it with outdated building systems and materials. We have to be more mindful of penetrations and look at systems that will allow moisture to get back out."

Exterior finish insulation systems (EFIS) garnered a poor reputation for allowing moisture into buildings but failing to release it. Eric Maughan, a manager for Environmental Waste Resources, a division of Nuprecon Inc. in Snoqualmie, Wash., said he's seen his share of abatement projects in which EFIS was the culprit.

"It's such a big problem that a lot of contractors are trying to learn how they can build things differently," Maughan said. "The building products companies also are looking at how to create materials that will withstand their applications properly."

An EFIS failure was the main cause of mold damage at an Oregon hospital that required extensive remediation. Maughan declined to name the hospital, saying mold remediation clients generally prefer to keep the issue confidential.

"There were quite a few problems, but it was basically building defects," he added. "That's usually what it is because of the construction or products. The building products have changed a lot. Buildings used to be made of plaster, and mold won't grow on plaster. Drywall, which has a paper backing, is a perfect food source for mold."

Evans said particle board and similar insulation and sheathing are among the materials that provide a feast for mold.

"Mold also likes to grow on some of the new eco-type materials, such as bamboo or cork, because they are porous and retain water," she added.

Other factors in mold growth are incompatibility among building materials and the improper installation of products.

"In order to keep costs down, for example, the windows may be bid out and the flashing may not be compatible with the building's exterior," Evans said. "I have seen, in many cases, instances where the windows were installed backwards so the flashing is directing water into the walls instead of away from them."

Sometimes Mother Nature causes the problem.

"There are so many things that can go wrong during construction that can lead to these types of problems," Evans said. "Materials may be exposed to the elements and get wet along the way, from the end of manufacturing through transportation and delivery to the site. If they aren't allowed to dry out before they are used, that moisture gets trapped inside the building,"

Hospitals are particularly vulnerable because a mold infection can cause serious problems for patients with lowered immune systems.

Lower Umpqua Hospital in Reedsport, Ore. spent $1.5 million to repair mold damage to a two-story, 15,000-sq.-ft. medical building.

"We removed the stucco and the dry rot was pretty extensive," Townsend said. "The damage was so extensive that it looked like there had been a fire even though there hadn't been. It doesn't take very long for the damage to occur. That building was only 5 or 6 years old."

To be sure, the financial impacts are widespread, particularly when it comes to litigation.

"Darien Loiselle, a construction litigator and shareholder at Portland's Schwabe Williamson & Wyatt, said he is seeing more and more mold cases.

"I've handled everything from small residential structures to large buildings and $10,000 claims to $10 million claims, so it's a problem that spans a broad spectrum," he said. "In Oregon we have a lot of condo developments, so it's going to continue to be an issue here. I do defense, and I think a lot of this is being cooked up because we have aggressive claims counselors out there who are involved in these cases."

Loiselle said, the cost of construction would continue to rise as more people sue because of mold and water damage. "It's going to be a big strain on everyone," he added. "If you buy a house, you're going to pay more because the contractor can't get insurance to cover mold and water damage. And the builder can't get subcontractors because they can't get coverage."

In fact, insurance coverage that once cost a contractor $10,000 or $15,000 now costs $150,000 or $200,000 and doesn't include coverage for mold or water damage, he added.

"There are a lot of architects, engineers and contractors who are out there bare," Loiselle said. "They've said, 'We'll build it for you, but we don't have insurance.'''

Efforts to improve the quality of construction practices and building materials will help ease the financial impacts, as will legislation that limits the litigation of such cases. However, those measures will solve only part of the problem.

"That still won't solve the insurance issue," Loiselle said. "We're going to be dealing with that for many years to come."