California Passes Legislation on Mold Remediation Obligations, Permissible Mold Exposure Levels & Duties to Disclose Mold

The California legislature recently enacted the Toxic Mold Protection Act of 2001 (Cal. Health & Safety Code ß߆26100 -26156; Chapter 584 of the Statutes of 2001), the first legislation of its kind in the United States, addressing some of the many legal and scientific issues surrounding toxic molds in indoor environments. For some building owners, tenants, and insurers, the Act's impact will be delayed, while for others it will be immediate and substantial. The Act raises many potential new problems and may affect industries which, to date, have not felt the financial impact of the rising wave of mold litigation and claims.

Who Is Affected?

The first effects of the Act will be felt by owners and managers of commercial and industrial buildings and commercial and industrial tenants, which is to say most major businesses in California. While many obligations the Act creates are deferred until after a series of guidelines have been developed, the Act appears to impose on commercial and industrial landlords and tenants in the near future obligations to remediate both known mold and known water intrusion conditions. The next impact will be on the property carriers who insure those owners and tenants, to whom they will doubtless look for funding, as well as on developers and managers of commercial and industrial properties (and their casualty insurers). Owners and tenants who have paid significant sums to remediate mold or water problems caused by inadequate construction or maintenance will undoubtedly pursue recovery from those sources as well.

In time, residential landlords, developers of residential real estate, sellers of commercial and industrial real estate, real estate brokers and agents, and their insurers will experience the effects of this legislation. There is a strong probability that hospitals, clinics, schools and nursing homes may suffer particularly challenging consequences as a result of this legislation. Insurers underwriting these risks need to be particularly aware of the potential problems these institutions may face.

The Act does not appear to contemplate the creation of standards for single family residential construction. However, it is certainly possible that developers, insurers and sellers of single family homes will face arguments that the standards are applicable.

What Standards Does The Act Create?

The Act authorizes California's Department of Health Services (DHS) to establish a task force which will work with the DHS to evaluate four issues and develop standards for each.

The standards will address:

Permissible mold levels in indoor environments. As a preliminary matter, the DHS is to consider the feasibility of adopting limits to permissible exposure levels indoors.

Practical standards to assess the health...

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