Oh My Lord, Newbie with mold problem and law suit?

Question

This is my second investment property, a duplex, which I purchased in August this year. Similar to my first property, I waived the inspection, and the seller’s disclosure did not report any major issues. At closing, one tenant moved out as part of the agreement, and the other tenant (a single adult who had been living there for about 1 year and 5 months) stayed. We decided to keep that tenant.

After we took ownership, the remaining tenant started making multiple repair requests—bathroom, windows, and also suspected mold. They mentioned worsening asthma and respiratory problems, claiming they now need prescribed medication, and asked us to check for mold. Since we didn’t see any visible mold and the tenant is a smoker, we dismissed it as humidity and did not take action at the time.

Later, while preparing renovations on the vacant unit, we discovered signs of water damage/mold in corners where the ceiling and walls meet. The former tenant told us that when they requested repairs before moving out, the previous owner had only painted over the issue instead of fixing it properly.

Recently, things escalated: the current tenant (who is moving out at the end of this month after we gave notice) said their lawyer would sue the previous owner for exposing them to mold-related health risks. A lawyer has already contacted us asking if we had knowledge of any mold problems. To complicate matters, during renovation we found mold in the attic, directly above the current tenant’s bedroom area, and it seems fairly significant. The tenant claims to have a doctor’s report linking their respiratory illness to mold exposure...

of course, I have shorter version by GPT for you guys.

Facts

• Bought my 2nd investment property (duplex) in August, waived inspection.
• Seller’s disclosure showed no major issues.
• One tenant moved out at closing, the other tenant (1.5 years in the unit) stayed.
• Tenant soon complained about repairs + suspected mold, claiming worsening asthma/respiratory issues.
• Initially, we saw no visible mold and dismissed it (tenant is a smoker).
• During renovations, we later discovered mold/water damage (corners and attic above tenant’s bedroom).
• Former tenant said the previous owner just painted over mold or mildew instead of fixing it.
• Current tenant (moving out end of this month) has a doctor’s note linking illness to mold.
• Lawyer has already contacted us asking if we knew about mold. Tenant plans to sue the previous owner.

Bought my 2nd investment property (duplex) in August, waived inspection.

Seller’s disclosure showed no major issues.

One tenant moved out at closing, the other tenant (1.5 years in the unit) stayed.

Tenant soon complained about repairs + suspected mold, claiming worsening asthma/respiratory issues.

Initially, we saw no visible mold and dismissed it (tenant is a smoker).

During renovations, we later discovered mold/water damage (corners and attic above tenant’s bedroom).

Former tenant said the previous owner just painted over mold or mildew instead of fixing it.

Current tenant (moving out end of this month) has a doctor’s note linking illness to mold.

Lawyer has already contacted us asking if we knew about mold. Tenant plans to sue the previous owner.

Issues

• We may get pulled into the lawsuit as current owners.  (Low chance though)
• Mold was clearly pre-existing, but inspection was waived.
• Previous owner seems to have knowingly concealed the issue.

We may get pulled into the lawsuit as current owners.  (Low chance though)

Mold was clearly pre-existing, but inspection was waived.

Previous owner seems to have knowingly concealed the issue.

•

Question
👉 Has anyone dealt with a similar mold + nondisclosure situation? From experience, what’s the best financial/legal strategy: fight, settle, or pursue the seller? My plan is to sue the previous owner to minimize my financial losses and, if possible, take legal action that benefits us..

Ken M. · Answer

Your comment: "My plan is to sue the previous owner to minimize my financial losses and, if possible, take legal action that benefits us."A lawsuit costs between $25,000 and $50,000. The court is unlikely to award you legal fees.  There is no guarantee you will win. Once you win, you have to figure out how to collect.That being said, small clams court may be the avenue you want to pursue. Once you win, you have to figure out how to collect.Mold problems are hard to prove.

Spend the $400 and have a conversation with a local attorney to see what your options are.

Corby Goade · Answer

Sorry you are dealing with this, but it's certainly not uncommon, you've got a professional tenant on your hands. I love that they are a smoker, but very concerned about their health and air quality....

Probably not the best to have waived your inspection, but here we are, so what I'd do:

-Have a pro test for mold. If it's positve, tell the tenant that the unit is unsafe and unfortunately, they'll have to move out so you can have it professionally remediated.

-If it's negative, inform the tenant that there is no mold, but you understand that they are uncofortable living there and you'll let them out of their lease without penalty as long as they are out by X date.

Start interviewing property managers- a good PM would have dealt with all of this before you even had it on your radar. I know, I know, it's not easy to find a good PM, but get some referrals from people with multiple properties in your market.