Don’t Let Mold Be A Smudge On Your Closing

You’ve just negotiated the labyrinth that is the Residential Contract For Purchase and Sale (the “Standard Contract”), or the AS IS Residential Contract For Sale and Purchase (the “AS IS Contract”), and their various Addenda, Riders, and Disclosures.  Surely, somewhere in there are protections for Buyers against the hazards of mold and mold related issues.

For those not fully informed, mold and mold spores are an ever present fungus (or, fungi as the case may be), that are commonly found in household and workplace dust, particularly in Florida where high humidity (an almost perfect habitat for the growth of mold), is the rule rather than the exception. When mold spores exist in large enough quantities, they can present health hazards to humans, potentially causing respiratory problems and allergic reactions, or other ailments. So, it’s good advice indeed for Agents to recommend that Buyers test for mold as part of their due diligence.

Many real estate professionals presume (wrongfully so), that testing for mold falls within the auspices of the Property Inspection clauses of the Standard Contract and/or the AS IS Contract. Those clauses are generally found in Paragraph 12.  However, a close reading of those clauses reveals that there are no real protections afforded Buyers in the event the presence of mold is discovered or detected.

In fact, the only place in either contract that any mention of mold is made, can be found in Paragraph 10(c):

MOLD: Mold is naturally occurring and may cause health risks or damage to property. If Buyer is concerned or desires additional information regarding mold, Buyer should contact an appropriate professional.

Thanks for the tip; but what does one do with it?

Contacting an “appropriate professional” is certainly the first step if there are concerns; however, what does a Buyer do if mold is actually discovered?  If an inspection determines that mold is present, neither contract allows a Buyer to coerce or otherwise force a Seller to remedy the adverse condition. Furthermore, the Buyer is not permitted the option of terminating the contract due to the presence of mold.  There might be some saving grace if the contract is an AS IS Contract, and the mold discovery is made prior to the expiration of the Inspection Period (the AS IS Contract allows the Buyer to terminate the contract for any reason or no reason), provided the contract termination is timely made.

The good news is that potential mold challenges are easily remedied with use of the Mold Inspection Addendum (Form CRSP-15). Curiously, in our experience, we see very few contracts being prepared utilizing the CRSP-15 Mold Inspection Addendum. It is very simple and provides Buyers with the protections they need:

Mold Inspection: Buyer may, at Buyer’s expense, have a home inspector, licensed contractor, or other licensed professional (if required by law) conduct an inspection of the Property for the presence of mold within ___ days (20 days if left blank) after Effective Date (“Mold Inspection Period”), Buyer will repair all damage to the Property resulting from the inspection and restore the Property to its pre-inspection condition; this obligation will survive termination of this Contract.

Cancellation: If the inspection reveals the presence of mold that requires professional remediation to remove at a cost that exceeds $ _____ ($500 if left blank), Buyer may cancel this Contract by delivering written notice to Seller within 3 days after expiration of the Mold Inspection Period; and Buyer’s deposit(s) will be refunded. If Buyer fails to timely conduct the inspection or fails to timely deliver notice of Buyer’s cancellation, this contingency will be waived; and Buyer will continue with this Contract.

Use of the CRSP-15 Mold Inspection Addendum is highly recommended for ALL transactions. Inasmuch as we are dealing in Florida properties, there really is no situation in which the Addendum should not be used . . . ever.  It’s almost as important as breathing (pun intended). While a reasonable explanation for why these brief clauses have not found their way into the body of the two contracts is beyond the scope of this blog, the solution is nevertheless readily available. Do yourself, and your Buyers, a big favor: use the CRSP-15 Mold Inspection Addendum! “An ounce of prevention is worth a pound of cure.”

The attorneys at Berlin Patten Ebling are familiar with mold, mold related issues, and the CRSP-15 Mold Inspection Addendum.  As always, should you have any questions regarding mold or mold related issues, we urge you to contact us or consult with your local real estate attorney.

 

Sincerely,

Berlin Patten Ebling, PLLC

Article Authored by Mark Hanewich, Esq. mhanewich@berlinpatten.com

This communication is not intended to establish an attorney client relationship, and to the extent anything contained herein could be construed as legal advice or guidance, you are strongly encouraged to consult with your own attorney before relying upon any information contained herein.

All rights reserved. This copyrighted material may not be re-published without permission. Links are encouraged.

www.berlinpatten.com 

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