Q: I bought a home and am concerned that it has a lot of the symptoms of Chinese drywall. Did the real estate companies that were listing these homes have any responsibility to determine if the house they are selling has this product, either due to a remodel or in the original building of the home?
A: From 2005-07, two severe hurricanes and the housing craze incited a major wave of home construction, leading to shortages of some building supplies that particularly affected the Southern U.S. Some homebuilders — especially in Florida, Virginia and Louisiana — began using drywall imported from China.
Since that time, homes containing defective Chinese drywall have been reported as having all sorts of problems, including corrosion of copper plumbing and electrical wiring, appliance failures, a strongly sulfurous (i.e., rotten egg) odor, and even health problems.
It’s important to note that while the problematic drywall has become generically known as "Chinese drywall," it hasn’t yet been proven that all Chinese-manufactured drywall presents a risk for corrosion and health issues, according to a U.S. Interagency Task Force on Chinese Drywall. (More information is available at: drywallresponse.gov.)
The Consumer Products Safety Commission recently tested both Chinese drywall samples and the air within Chinese drywall-containing homes, and found that high levels of hydrogen sulfide and formaldehyde are the likely causes of theses issues. The Environmental Protection Agency has found elements like sulfur and strontium in samples of the Chinese drywall at issue, elements that are nonexistent in American drywall.
And if dealing with all that weren’t enough, many owners of homes containing Chinese drywall have found that neither their homes’ builders nor their insurance companies will cover their damages. In fact, a number of insurance companies have refused to continue covering homes with Chinese drywall at all.
The media is starting to report instances of homeowners walking away and allowing their homes to go to foreclosure after experiencing health issues from Chinese drywall and feeling forced to rent another place to live.
While this issue is far from over, to say that the existence of Chinese drywall in a home might be a negative in the eyes of prospective homebuyers would be a major understatement.
Real estate brokers’ and agents’ various duties vary somewhat in different states. However, there are a number of clear-duty boundaries, relevant to the Chinese drywall issue, that are nearly universal.
For example, brokers do have the duty to disclose a material fact — something that would be important to a reasonable buyer’s decision-making process — that they know or should have known. So, if the sellers actually told their broker that they knew a property had Chinese drywall "issues," the broker (and the seller, for that matter) would be required to disclose that to you. …CONTINUED
If you’re buying a home in an area or subdivision that has already been impacted by this issue, that fact itself might be material — for this reason, I suspect that many real estate brokerages in affected areas will begin including a form disclosure about the potential for a Chinese drywall problem with every transaction, if they have not already started doing so.
In addition, brokers do have the duty not to lie or deceive buyers. So, again, if it has come to a broker’s attention that a particular property contains problematic Chinese drywall or that the owners moved out of the place because they believed they were suffering adverse health effects from the materials, that too would need to be disclosed to you.
Finally, brokerage firms and individual real estate salespeople do have the duty of competence, which most states interpret to mean that they must do their job at least as well as the commonly accepted standard of practice in this area.
In affected locales, this may mean that in the future you’ll see brokers providing advisories to both buyers and sellers, telling them to get the drywall tested, as the standard of competence evolves to include encouraging this as part of the seller’s disclosure and buyer’s inspection process. For buyers, especially, the potential impact that Chinese drywall may have on the home’s insurability renders this information critical to have.
With all that said, agents don’t have a duty to conduct anything more than a visual inspection, in most states. (Homebuyers in these areas might want to get educated about the visual markers of homes with Chinese drywall problems, like black corrosion on air conditioners and other metals in newer homes — these might be called out by the listing agent.) Brokers are not required to run any tests or obtain any formal inspections on a property.
Even in states where there are ordinances requiring various condition tests be conducted and guidelines be met when a home is sold, the duty to do these things is generally placed on either the buyer or the seller, not the broker. To my knowledge, no jurisdiction has (yet) enacted any sort of Chinese drywall testing mandate.
Because this issue is truly just now coming to light, it is doubtful that the listing brokerage was responsible to make any disclosures to you regarding Chinese drywall issues in your situation.
Unless the sellers both knew about and told their broker or agent about problems with the drywall or other problems that were then concealed from you, it is unlikely that the agent broke any legal or ethical duties by not detecting or informing you of a problem.
Tara-Nicholle Nelson is author of "The Savvy Woman’s Homebuying Handbook" and "Trillion Dollar Women: Use Your Power to Make Buying and Remodeling Decisions." Ask her a real estate question online or visit her Web site, www.rethinkrealestate.com.
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