Landlord Tenant Mold Considerations for the Real Estate Rental Property

Don't panic, as most mold is harmless, but act on it immediately.

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One call that you don’t want to get from a tenant is a complaint about mold. But don’t bury your head in the sand when it happens; take action now and avoid headaches later.

A little background for the uninitiated. The science on mold infestations and the associated health dangers is somewhat vague, with various experts coming to different conclusions about the risk which mold poses to tenants. But what we do know is that mold places landlords at risk of litigation.

The issue peaked in Texas in 2001 when a jury awarded over $32 million to a family whose home was infested with mold (the award was later reduced). This put the real estate community into a heightened state of concern, to say the least. Insurers largely reacted by dropping mold coverage from policies.

So mold concerns have created some work for lawyers. They’ve also created work for environmental services companies, and that’s whom you need to contact when a tenant calls you about a mold concern. I got a call like this from a tenant last year. I went over to the property the following day and was amazed to see that the ceiling in the second bathroom, which was bone white when I leased the property a year ago, was now filmed with a greenish growth.

I called a local company to come and take a look. They ran some tests and took a reading inside and outside of the home to determine if there were any health risks present.

They do this by comparing the quantity and quality of airborne particles in both locations. I got a clean bill of health (which I immediately showed to the tenant) and some advice on fixing the problem. Remediation, in this case, required me to replace the ceiling and remove some of the sheet rock.

It’s worth reinforcing that there is no firm scientific consensus explaining mold hazards, and landlords know that the laws across the country tend to be geared towards protecting the rights of the tenant, not the rights of the landlord. In an area where there are many shades of gray around interpretation, it’s important to show your tenant that you’re taking the complaint seriously, that you’re testing air quality based on environmental guidelines, and that you’re fixing the problem in a timely manner.

Added note from Jim Kimmons

Chris Smith has shared some excellent information here, and toxic mold has largely faded into the background of the news.  However, it's still out there, and in certain areas of the country it is something to be very concerned about.  Though mold can be remediated, the wise investor would probably want to steer clear of the situation entirely.  The key is to do proper inspections and if any mold is present, have an expert take a look.  The costs to remediate are bad enough, but homeowner insurance and resale also can be major investment cost factors.

The Author: Chris Smith is a real estate investor, founder of an online reference for investors and real estate professionals and has published articles in Corporate Finance Magazine, Euromoney, and the Business Journal Network.