At a minimum, you are facing some expensive repair and mitigation bills that may or may not be covered by insurance.
You can expect to pay from $1,000 for basic jobs to $30,000 and up for complex or extensive mold remediation services. If your situation requires a HEPA vacuum, your bill will likely run at last $5,000. Flood damage can bring a mold remediation bill of $10,000 and above.
Meanwhile, until you’ve got the issue fixed, you’ve got a unit that may be uninhabitable. Nobody wants to rent an apartment that may have mold issues.
Finally, you may be targeted for a lawsuit, if the tenant believes the mold issues contributed to a health problem and they suffered damages as a result. In some cases, we’ve seen landlords targeted by class action lawsuits for millions of dollars.
Hopefully, your insurance company will take the worst of the economic hit and pay the bills and you’ll only have to worry about the deductible. But that’s not necessarily the case – even if you have a great agent and policy. Most landlord insurance policies do not cover every instance of mold contamination. Mold is also generally excluded under a standard HO-3 homeowners insurance policy form, as well.
In most cases, your insurance will pay out if your mold contamination comes from a specified “covered peril.” That is, an unforeseeable event beyond your reasonable control that is listed as a covered peril on your insurance policy.
For example: If you had a pipe burst all of a sudden, leaking water into the drywall, and have a mold problem specifically traceable to that event, chances are you’re in pretty good shape.
If, on the other hand, your mold problem is simply attributable to the gradual and chronic effects of humidity, seepage around plumbing fixtures and roof joints, leaky and neglected pipes, and the like, chances are good you’re going to take it on the chin. Your insurance carrier will probably deny the claim.
In nearly every case, your insurance policy will require you to take initiative to prevent a mold problem from getting worse. Insurance companies usually plan to cover genuine acts of God and things like catastrophic plumbing failures. They aren’t keen on covering for landlord or property manager negligence or laziness. Be pro-active.
What to do:
If you suspect a water invasion, leak or seepage problem, take care of that first, and without delay. Then turn your attention to the mold itself.
- Clean your air ducts. Moldy air ducts can help cross-contaminate rooms and complicate the mold mitigation and cleanup process.
Note: This usually isn’t a project for your on-site building maintenance employees.
To do it right, they’ll need some specialized equipment and knowledge. It’s also not something you want to entrust to just anybody. HVAC cleaning scammers are legion.
- Get a professional HVAC cleaner, preferably a member of NADCA (The National Air Duct Cleaners Association).
- Keep your air conditioning unit(s) running even when the dwelling is empty.
- Ventilate vacant units regularly.
When cleaning mold, protect your respiratory system and those of your employees by providing a N-95 respirator. Most hardware stores will have these. These are a cut above a simple facemask, and have to fit properly, so be sure to follow directions and OSHA guidelines.
Protecting yourself from scammers
It is true that not all mold is detectable with the naked eye. Mold eradication companies do have specialized equipment that test for mold. To keep your contractor honest, you can have a different companies handle the mold inspection and eradication.
You can also check for certification from the Professional Mold Inspection Institute, the Mold Inspection Consulting and Remediation Organization or the National Association of Remediators and Mold Inspectors.
You can help get ahead of the problem – and hold renters contractually accountable for neglected mold damage – by having each tenant sign a mold addendum or similar document with the lease.
This document specifies tenant responsibilities for mold prevention, mitigation and reporting. Here’s a good example available online.
In this addendum, the landlord/agent is specifically reserving the right to terminate the lease if the occupant does not fulfill his or her responsibilities. The tenant is also signing recognizing that they can be held responsible for mold damage as a material violation of the lease.
For a non-contractual version, you can also download this guide from the Environmental Protetection Agency and distribute it to tenants.
|Author Bio Writing about personal finance and investments since 1999, Jason Van Steenwyk started as a reporter with Mutual Funds Magazine and served as editor of Investors’ Digest. He now publishes feature articles in many publications including Annuity Selling Guide, Bankrate.com, and more.|