Mold - Mold Disclosures in Real Estate and Lease Transactions

02/27/2003

Introduction

In light of the increase in mold awareness and litigation, attorneys, property owners, and real estate professionals involved in real estate transactions often face the issue of whether to disclose the actual or historical presence of mold.  This paper is intended to be an introduction to what is already a voluminous and well-developed body of real estate law regarding fraud and disclosure in the context of real estate transactions.  Further, this paper discusses disclosure issues generally, and does not provide an in-depth analysis of the distinctions between commercial transactions, residential transactions and “builder-vendor seller” transactions, although distinctions do exist.  This paper is drafted for the experienced real estate professional and assumes an understanding of the basic legal principles of fraud and the duty of disclosure in real estate transactions.

Mold, fungi and mildew  have affected our lives as homeowners, renters and occupiers of buildings for a very long time.  Because mold has recently become a focal point of media coverage, resulting in hundreds of lawsuits and literally thousands of insurance claims, its presence simply cannot be ignored, whether the affected structure is a single-family home, multi-family complex, commercial building, or public facility.  Moreover, mold has captured the attention of personal injury lawyers, resulting in a wave of bodily injury claims, despite the ongoing disagreement within the medical community about the effects of mold on human health.  Whether or not mold adversely affects human health, businesses and individuals have begun to view mold as a genuine legal and financial threat.  Indeed, as people purchase and lease homes, apartments and commercial space, they are increasingly concerned about mold impacting their health, personal property, financial well-being, property values and resale prospects.  As a result, individuals and businesses in the residential and commercial real estate community must take heed of the “mold crisis” and its impact on business practices.

Currently, no Texas environmental statutes or regulations require sellers and lessors to disclose the presence of mold.  However, Texas common law and the agreements between the parties to a real estate transaction may require such disclosure.

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