Mold found during purchase inspection and Seller won't negotiate

28 Replies

We have a 3 unit under contract in the Cleveland Ohio area and found mold in the basement (unoccupied common space) and the 3rd floor (occupied space).  We brought in our mold remediation contractor and had an assessment performed and a remediation estimate written up.  The cost was just over $1500.  We sent over the test results, assessment and remediation estimate and asked the seller to split the cost with us.  The seller stated they would not, indicating they were not putting anymore money into the deal.  

My questions are:

  1. Does the landlord have an obligation to disclose to the existing tenants?  I know in Ohio you do not have to disclose Mold to potential tenants when they apply, but the law is unclear on existing tenants.

  2.  If we choose to proceed with the purchase what kind of protection or hold harmless do we need to put in place to make sure we are not liable for any tenant recourse.

  3.  It seems to me as a landlord you can not ignore material information about the condition of your property, particularly an item like mold.  Further, I would think they would need to address the mold regardless of the sale, so why not work with us and split the cost?  I even asked if they had a less expensive contractor to try to keep things moving.

Thanks in advance.

There are no standards for mold like there are for radon. All air has mold in it including the air you are breathing now.

Most mold is harmless to most people. Most people simply over react to it.

if you backout, they would have to disclose that the house has mold in it to other buyers.

also, im not sure about OH but a lot of states say that if you are the homeowner you can remediate the mold yourself (which would save you a hefty bill) 

It all depends on how much you want the property.  

Mold is fixable and for $1500 you might look at the upside down the road and weigh your options.  In a hot market the seller may feel like she/he can find another buyer who's not worried about the mold and remediation expense.

@Lincoln Coverdale . If the numbers are right on the deal - I wouldn't blow it off over $1500. You can propose - but Seller does not have to agree to any changes to the agreed contract.  

@Russell Brazil - You are correct.  For those reasons we do air sampling with an outdoor control.  The mold was high and not the good kinds you find in natural environments.

@Chris C. - Yes, they would definitely have to disclose to another buyer.  I'm wondering about the current tenants?  

We can do the remediation ourselves.  We typically do another air sample test when done to establish a clean start. 

After inspections you can request they fix whatever you'd like to request. The seller can either state they will not fix anything or agree to fix some or all. Then you can choose to accept or reject what seller offers and get out of the contract or continue with it. The seller must disclose any material fact if it goes back on the market but that's up to them. I would either buy and move forward or withdraw and not concern myself what the seller does with the information, just look for your next deal. Just run your numbers and see if they still work with the additional $1,500. All the best to you and your next investment!

Bleach and a pump up sprayer. If your trying to get the seller down on the price I understand, but to smear a property over something fixable is bad biz. 

@Aaron Howell - Long term it is not a big deal, but there is already about $4500 in Cap Ex to be done immediately.  The payback just keeps getting pushed back.

@Jim Cummings - As stated above, the payback is getting pushed back quiet a bit.  It's not just the $1500.  It's going to take more than 3 years to make back the initial Cap Ex items.

I am IICRC certified in mold remediation. To clear up a few things:

@Lincoln Coverdale - There are over 100,000 species of mold that scientists have identified, and they estimate there are hundreds of thousands more species they have not identified. Mold is nature’s method of breaking down dead organic material. It needs organic material for food. The color of the mold means nothing. Unless the contractor sent the mold to the lab to identify the species (I.e. aspergilus, penicillium, etc.) there would be no way to tell what the characteristics of the particular mold would be.

Account Closed - well done! Your statements are all true re: mold toxicity and most people as well as the lack of an accepted/mandated mold protocol. A few states have adopted their own protocols, but they mostly mirrored asbestos and lead protocols because they didn’t know what else to do. The problem is no one knows which species of mold any one person may have a reaction to. 

@Joe Canfield - thanks for the input. Aspergilus was found in both locations. In the basement it was found on the exposed joist for the first floor. This is not our first encounter with mold. I am familiar and comfortable with remediation. Still baffled by the lack of response/action from the seller.

@Lincoln Coverdale - Glad you have what you need in place to deal with the problem. Seems crazy to me as well the seller will not work a deal. For many people real estate transactions are emotional activities, so common sense/logic does not always prevail. Mold scares away a lot of buyers. The fact you know what you are doing and willing to split the costs of the remediation (a solid price on the remediation for what it is worth) seems like a no brainer.

The seller is under no obligation to open back up the contract and discuss new prices/costs. He most likely knows you will not let this deal die over $750. You most likely spent close to that on the inspection of a multi-unit when you factor in your time, the time to discuss it with others and get quotes. He knows your numbers were not so tight that $750 is now a deal killer. So he is doing the smart thing, letting you make the choice. It's a tactic he has employed and it is a calculated one at that. 

@Lincoln Coverdale I know this is a bit aggressive, but, if they are really playing hardball (and have done so from the start)...what stops you from now telling them they need to foot the bill for the entire cost of the remediation otherwise, now that the mold testing was made known to them, they must disclose when re-listing? I know, I know, it’s tough, but if they ask for it, they shall receive.
@Kyle Schlosser - that's how I felt about it too. From the start we have made it work for them. The existing tenenat didn't want another inspection (they had a deal fall through previous to ours), so we accepted the previous inspection report for that unit. Agreeing to buy having never seen one of the units. Another unit was vacant and we requested no occupancy before transfer unless it was on our lease, theirs is very minimal and not comparable to ours. They had an applicant and proceed with the lease with the new tenant moving in the week before closing. This morning I sent the mutual release over and all of the sudden they are willing to split the cost of the remediation. Weird how that changed so quickly.

I have been a licensed mold remediation contractor for almost 20 years and still active in my day job.  Both in Florida and Texas which have state mold regs.  Just a couple thoughts to add.  Not trying to be argumentative here, just hoping to bring some value to the conversation:

  • Mold is a symptom, not a problem.  Address the water/moisture problem first, then remediation.  Otherwise the mold will return.
  • It is unclear in the original post so apologies in advance if I am mistaken here but it sounded like the remediation contractor also performed the initial assessment and will do the post remediation testing.  If so, thats a huge no-no.  Not only a blatant conflict of interest but also a big liability if the situation worsens and ends up in litigation.  A reputable remediation contractor would never perform their own assessments or clearance testing.  And is actually against the law where mold activities are regulated by the state.
  • @Joe Canfield is correct.  Once the "cat is out of the bag" the type of mold is almost futile at that point.  The goal of remediation is to remove, not to kill.  Most spore trap (air sample) tests do not distinguish between viable and nonviable spores.  Elevated dead mold spores will still result in a "fail".
  • $1500 for remediation activities seems extremely cheap.  I don't know the size and scope but you might consider a second opinion.  Check out the ACAC for contractors and consultants in your area.  
  • @Russell Brazil is correct.  Most people do over react.  I am no alarmist, far from it.  The biggest liability we face as investors with regards to mold is the threat of litigation from tenants.  Unfortunately it usually requires CYA measures which cost a lot of money.

My 2 cents, hopefully helpful.

@Brandon Hobbs - Great input and much appreciated.  

  • You are correct, we suffer from damp basements in this area and without proper preventative measures and regular maintenance, almost all basements are wet to a concerning level.  In this case the moisture content in the block was as high as 30%.
  • Initial samples were collected by our general inspector, who is not affiliated with the remediation company.  The Remediation Contractor would collect the samples for the post remediation baseline, but all results are run through Pro-Lab.  I've never considered it a conflict of interest because the lab is independent, but a valid point to keep in mind.
  • Your point is on target.  The visual assessment in the basement found plenty of mold on the floor joists above.  However, on the 3rd floor (under the roof line, with only baseboard heating) there were no obvious signs.  Making it very hard to pinpoint the source or viability of the results.
  • The costs of the remediation  is on par with what we find in our areas and is for surface treatment only.  We are responsible for the bigger project of getting and keeping the areas dry.
  • It is the CYA that has me concerned.  The lackadaisical response from the seller does not instill confidence that they will take the right measures and notify the tenants and start corrective measures.

Thanks again, great input.