HousingZone.com interviews Stan Luhr about techniques and strategies builders can use to protect themselves from mold claims. Luhr, a forensic building consultant, is president of Quality Built, a California-based company that develops quality-assurance and risk-management programs for builders. He has 27 years of experience in the building industry.
Gabrielson: What techniques and strategies can builders use to protect themselves from mold claims?
 |
|
 |
| Stan Luhr |
|
Luhr: There are actually quite a few strategies. The thing we focus on mostly is really prevention, understanding the process of construction, the different levels that it takes to build a good, quality home. Essentially, you have to look at all of the things that often fail. Sometimes buildings fail and leak because of a design aspect. Let's say the building plans might be flawed, a detail might be missing that should give adequate instruction to the specialty contractors. Other times the design is perfectly adequate, and there's a failure on the part of the installing contractor. Or there may be problems with integration of different components, let's say integrating a vinyl window with flashable fins into a brick-sided home, for example. So we look and try to help educate builders on how to look for these types of complexities.
We call them complexities because oftentimes they're not the result of problems with a particular product, but with a product's integration to other components. EIFS, exterior stucco or three-coat stucco all have unique properties that require them to be installed in different ways around windows and door openings, as an example. So we look to try to educate the superintendent to be watchful of these types of issues, problems that result in water getting in through the building skin and having no way of getting back out.
We focus on issues of redundancy where you have highly exposed conditions, let's say a house on the windy side of a lake, and you have a lot of open, multilevel windows facing that lake. We would want to try to convince the builder to add some redundancy into the system that allows for a few mistakes to happen and still not allow water to intrude. Some examples would be the use of double-wrap 60-minute building paper under stuccos and wood sidings in lieu of just a single layer of maybe 15-minute paper. The cost difference is really only a few dollars per house, but the redundancy that you get is significant.
We try to get the trade contractors to understand more about not just their products that they're using, but the products that integrate into their products. For example, a framer needs to understand that waterproofing a building, keeping the water out of the pot shelf, is not just for the person installing the membranes. It's critically important that the framer provides solid backing around the transitions, such that any membrane that does get installed can have full backing and not be damaged during the course of construction.
Other examples would be to avoid difficult flashing conditions. We try to ensure that in valleys and waterways on the roof, crickets, and other areas where water concentrates, we want to obviously avoid any type of penetration in or near those areas. Some of this sounds very, very much like common sense, but it's done time and time again incorrectly out on the job site simply because people don't understand the big picture of how the whole house has to work as a system of different components.
Other examples would be in terms of customer service. Not all houses are perfect, and so when a homeowner does call customer service and complain that they're having a roof leak, but the house may be a year-and-a-half beyond its written warranty, we teach builders that it's very, very prudent to treat these kinds of problems as a claim, and try to be the first responder in most instances. On a fairly new house, it's still more than likely related to a problem with original construction or with a material that's gone bad.
And if a builder ignores these warning signs, they sometimes will face the next call, which is from a plaintiff lawyer or a summons telling them that now that house is involved in litigation, and they no longer have the opportunity to repair. So oftentimes it's a customer service issue. Builders believe that a written warranty is really the sole remedy for any type of claim. And what they need to look at is in most states around the country, there are extended, implied warranties that the builder is obligated to perform under.
In California, it's a 10-year statute for most issues. Arizona and Nevada may be seven or eight years. In some cases it may be 12 years. But each builder around the country needs to really understand: What are they liable for? And to adjust their customer service, training and claims response to be responsive to the legal liability that they may face.
Another issue might be in insurance claims themselves. Many builders are now faced with really, really difficult-to-procure insurance. Some builders have very high self-insured retentions — what we call SIRs — which require them to pay the first, say, $50,000 of a claim. When they're on the hook for a substantial amount of money before an insurance policy begins to kick in, the builder needs to really understand that they've taken on that risk, and they need to act as though they are an insurance-adjusting or a claims-handling type of entity and be able to mitigate these claims before they get out of hand.
Most all of the time we find that time after time after time, when a homeowner has sued a builder, it's a result of that builder never responding to customer service claims, never responding to water intrusion or other significant problems with this person's home, simply because they've occurred after the expressed, written warranty the builder has provided. The bottom line is, you're going to be liable for the performance of that home for a number of years. Understand what that statute of limitations is and really adjust your customer service to be responsive to those types of claims. Go out and collect the evidence that's necessary to be responsive and fix conditions that occur on your housing permanently. Oftentimes we see customer service personnel that may not be adequately trained to go out and simply provide mastic or some caulking to something that really should be torn out and replaced. So putting a Band-Aid on a window leak by simply caulking around the perimeter might not necessarily be the best long-term performance.
Gabrielson: How realistic is it for a smaller builder to put a good customer service system in place to handle these issues that might come up?
Luhr: It's not so much a level of additional manpower, it's really effective training and understanding where the builder should be in terms of their corporate culture and philosophy. For example, if a builder really believes that they're only liable for the one-year period of time following move-in, they begin to take on this belief that it's OK just to ignore people's complaints once they get to that 12-month expiration date. If instead they simply try to address every problem permanently, they wouldn't necessarily spend any more time and effort, [and] they would get back many other rewards and consideration.
People who are dissatisfied with a builder are going to tell quite a few people of their dissatisfaction, but you have oftentimes many, many opportunities to win back the loyalty of a customer. There's a perception in the industry that big builders perform better customer service, and we found that that rule doesn't necessarily apply. We see time and time again the small to medium-size builder — because they know their product so well, because they generally have better communications within the small company, better understanding of the experience and limitations of their employees — that really does a better job, in most cases, of customer service if their corporate culture is geared toward that end. We find that the culture at larger builders that we work with is also excellent because it's mandated, it's a written policy. So there's really no set rule that the smaller builder has his hands tied as a result of having to adopt some more aggressive strategies in dealing with customer claims.
Gabrielson: How overblown do you think the mold frenzy is?
Luhr: I think it largely is an issue that has been greatly exaggerated in the media, and I don't know why, other than to create an element of fear on the part of homeowners. We've lived with mold for hundreds of thousands of years. Mold has been on this planet for a long time. It's going to continue to remain on this planet. Mold serves a very important function in our lives. It's an important element. Where we have problems, and maybe where the press is really misguiding the public, is by focusing specifically on the mold itself.
If the press were to focus on water intrusion, which is really the only way mold can occur, and if the press were to highlight that story, it wouldn't, I don't think, be very sexy. "Window Leaks in Texas" is really not all that scary, but "Killer Mold Invades Home" is more fitting for a grocery store tabloid. I think, when you look at the statistics, when you look at the actual cases, if you really look into each and every case where a jury's awarded a certain claim, it's usually not for the mold at all. It's for some negligent cleanup or some fraud on the part of the insurance company.
We have cases, and have had mold-related cases, for 10 years. They're nothing new to us as forensic consultants in litigation. But instead of focusing on the mold, we always focus on the source of the moisture. If you have mold growing throughout the interior walls of your home, it's easy to be fearful that some sort of house cancer is occurring. But in fact, if that's the case, the trigger is always moisture. So you focus on the moisture, you get rid of the moisture, you clean up the mold, and you don't have the problem reoccur.
As to whether or not mold is a huge problem from a medical point of view, that's way out of my area of expertise. But I have seen many cases where homeowners have alleged they were personally injured and ultimately dropped that personal injury part of the claim. To this date, we have never, ever taken a case — a case has never gone to trial — where the homeowners have continued to allege personal injury. Most of the time, when they receive money from the insurance company or the developer or the defendants to fix their home, they drop the personal injury aspects of the claim. So from our experience, it's a hyped-up story that really doesn't have much foundation or science behind it, and we advise builders around the country to take it seriously but consistently deal with issues related to water intrusion as opposed to focusing on the mold.
When it comes to special cleanup and HEPA filters and special containment of mold, we look to the industry to really justify the need for that. We don't believe that there is a substantial need to spend huge amounts of money trying to isolate small areas of mold within a wall cavity, for example, to the extent that we see these industrial hygienists and so-called mold experts recommending. We don't see the science behind it, we don't see the responsibility behind it, and it just drives the price of any type of moisture or water-damage claim just skyrocketing, but yet that's what seems to be starting to become the standard in the industry. We would like to get a return to just the more common-sense approach to dealing with moisture.
Gabrielson: Do you recommend that your clients get specialized pollution insurance policies, and what role do those policies have in risk management?
Luhr: That whole pollution thing is kind of scaring a lot of builders. At a time when they're having a huge difficulty just trying to get affordable insurance, to have exclusions for mold and other types of water intrusion is really causing a lot of our builder clients a lot of difficulty. What it's doing is, it's forcing the builder, because they can't transfer that risk, it's forcing those builders who previously didn't have a cultural philosophy of quality to really move toward that direction.
"I'm going to build a house that never leaks. I'm going to build windows that will be durable and efficient and allow comfort in the home. So I'm going to put some systems in place which give me a little bit of added insurance to help the homeowner keep the water out." These are things builders are starting to do simply because they have been unable recently to transfer all of the risks around the construction of a home.
If you can't transfer that risk, one strategy is, let's eliminate the risk at the very beginning. Let's try to eliminate it in the design. Let's certainly beef up our supervision on the job sites. Let's improve communication. Let's improve our customer service. Let's find out what the root cause of failure is on our previous work. And let's incorporate solutions into our new work such that those failures don't occur. We have to look at the building industry as an industry similar to any other type of manufacturing of mass-produced products. We have to be able to learn from our mistakes, try to simplify the process of construction such that we can very affordably and reliably build houses that meet the comfort and safety and durability standards of our clients.
© 2009, Reed Business Information, a division of Reed Elsevier Inc. All Rights Reserved.
