REALTORS® in Ohio need to be proactive about mold in real estate contracts. Media attention, public perceptions, and the growing number of organizations now shaping mold science include the U.S. Environmental Protection Agency, the Centers for Disease Control, and the National Institute for Occupational Safety and their focus is generating greater attention on the issue. Many REALTORS® already know the basics—mold is a fungus and reproduces by releasing spores into the air, onto objects, and through water. In homes, mold can flourish on materials such as drywall, ceiling tiles, and wood. Excessive moisture or humidity caused by a defective roof, a leaky pipe, ductwork or cracks in the foundation are source points of mold growth. Mold may be most problematic for people who are unusually sensitive to mold or if the mold is toxic like “black mold.” Several informative articles have appeared in this publication in the last year.
A combination of these factors can result in a lawsuit. In Ohio, a REALTOR® should consider being proactive and this starts with the property disclosure form. Ohio Revised Code 5302.30 (D) requires that the seller of residential real estate disclose certain conditions and information about the property prior to sale. This includes known water problems—a primary source of mold growth. A buyer may establish a seller’s knowledge of latent (concealed, hidden, or dormant) conditions or problems in a home where evidence is presented that anyone living in the home would have had notice of the problems discovered by the buyer.
Ohio Revised Code 4735.67 holds that a real estate agent “is not required to discover latent defects in the property or to advise on matters outside of the scope of the knowledge required for real estate licensure, or to verify the accuracy or completeness of statements made by the seller, unless the licensee is aware of information that should reasonably cause the licensee to question the accuracy or completeness of such statements.” Furthermore, the disclosed information has to be “materially inaccurate” and the disclosure must be made in “bad faith” or with “reckless disregard for the truth.”
In one Ohio appellate case (Duman v. Campbell) involving water leakage and mold, real estate agents fraudulently misrepresented the true condition for problem areas in the listed home and violated the duty required under R.C. 4735.67. In this example, the water damage was severe between the first and second floor bathrooms. In the basement, black mold was growing under the basement carpet and subsequent removal of the basement paneling revealed a major crack in the basement wall. The paneling was wet, warped, and dry-rotted suggesting relatively severe water problems had existed for years in the house. There was evidence that the seller’s REALTOR® knew of the extensive problem and should have questioned the seller and/or the REALTOR® proceeded to share the information with the buyer knowing of the inaccuracy of the seller’s representations.
In another Ohio appellate case, a purchaser attempted to back-out of a home purchase agreement based upon the “discovery” of mold in the basement after they closed on the property. In this case, the mold had not been covered up or otherwise concealed by the seller and was discoverable “upon reasonable inspections.” The buyer was not permitted to use mold as an excuse to rescind their contracts.
The case of Broida v. McGlumphy, supplies a good example of how this issue involves both the seller’s disclosure and the buyer’s inspection. The facts included the following:
“Do you know of any current water leakage, water accumulation, excess dampness or other defects with the basement/crawl space?”
The sellers responded “yes” and further elaborated that it was “very slight at basement door if heavy rain blows in[.]”
The buyers contended that the water leakage was not “very slight” as mold had begun to grow under the carpeting and behind the drywall in the basement and, therefore, the sellers had acted fraudulently.
In that case, the Court noted that the buyer had an inspector examine the area and ruled that the disclosure and inspection warranted dismissing fraud as a matter of law.
Be proactive—the lessons for real estate agents include the following: educate yourself on the issue and pay particular attention to water leakage or damage. As a REALTOR® for the seller, be sure to advise your client that if they are aware of a water problem—disclose it. If a mold inspection has been conducted—disclose it. As a REALTOR® for the buyer, be sure to explain water leakage or damage, mold, and its ramifications.
by Stu Harris, 
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