Mold Experts Recommend Preventative Medicine

Awareness of the subject heightened shortly after Sept. 11, when the shuttered Deutsche Bank building near Ground Zero became so mold-infested that a decision has yet to be reached on whether to attempt remediation or simply tear it down. But a much more recent event really brought home mold's potential fiscal ramifications.

When it was discovered that one of the city's most luxurious condo buildings, 515 Park Ave., had a mold fiasco on its hands, tenants sued. And it wasn't just the owner of the self-proclaimed "most expensive address on Park Avenue," that got hit. The developer, investors, brokers, sponsors, construction manager, architects, building manager, mechanical and structural engineers, electrician, plumbers, and every member of the condo board were also among those included in the litigation.

Allegations include toxic mold infestation, deficient design, deficient construction, mismanagement and recklessness, among a long list of complaints. Including punitive damages, experts estimate the lawsuit could be worth as much as $2 billion, though such a massive payout is considered highly unlikely.

So it would seem logical that Sitomer's "Mold Mania" seminar would focus on getting the right coverage. But principal Daniel Sitomer's advice didn't focus on the insurance issue. "Insurance policies are written by experts who want to deny coverage," Sitomer said. "But they don't want you to figure it out." Policies must be fine-combed for exclusions that could leave you vulnerable. "It's not unusual to have the entire coverage [nullified] in an exclusion," he added. "You can't survive without reading."

Of course, building owners should seek out mold insurance, and while available coverage is becoming scarce, it's still available. But rather than concentrating on filing claims that are unlikely to be paid, Sitomer recommends treating insurance as a necessary evil while targeting the formulation of a proactive strategy that includes both preventative maintenance and damage control measures.

If you've already got a mold problem, by all means bring in an expert team to deal with it, Sitomer states. But realize from the get-go that not all experts are created alike. And because there are no testing standards, or remediation regulations, figuring out the right people for the job of rendering your building mold-free is pretty much left up to you. If your consultants don't know how to recognize the various mold species, if they don't understand current technology and if they haven't assessed precisely what's going on in the environment, take a pass.

But a more palatable scenario is avoiding the problem altogether. "You can absolutely avoid mold problems," Sitomer says. "But you have to manage it." Giving tenants a role in the prevention process is crucial, he notes, and educating them about where to look and what to look for is the first step. "It's all about water, growth and leaks."

Lease provisions requiring certain housecleaning measures, particularly in bathrooms, can keep mold from ever becoming an issue. But if it does, communication and quick action by management can mean the difference between an easily handled maintenance chore and years of litigation and remediation.

"If you don't have a management plan in your building, your values are going to zero" if a serious mold infestation occurs, Sitomer states. "Ownership has to take the lead position. You have to have openness in management. You must diffuse secrecy and fear."