ONE THING YOU CAN COUNT ON IF YOU BUILD IN SOUTH Florida is mold. “Open the window in your home and mold starts growing in your purse and on your shoes,” says George Casey Jr., president of mid-Atlantic operations at Boca Raton-based Arvida. Casey is only half kidding.

An ordinarily harmless fungus that grows on damp or decaying matter, mold has always been a pervasive presence in the humid, soggy southeast of the United States. But for Arvida—a developer and builder of about 1,500 homes a year, primarily master planned communities in Florida and the Carolinas—and other builders in humid climates, the threat of mold has become anything but harmless. Last year, insurers paid out about $2.5 billion in mold-related claims, double what they did in 2001, according to the Insurance Information Institute in New York City. This year, 60 mold-related bills are being considered in 25 states in response to thousands of lawsuits, according to Aerias, an online company that handles indoor air quality information and education.

Casey is one of a growing number of builders who decided to attack mold at the same intensity with which it spreads in the humid, heavily air-conditioned southeast. “We wanted to be proactive with respect to potential water infiltration and mold” beginning in 2002, he recalls. Although he is based in Charlotte, N.C., Casey says he was motivated by the lawsuits he saw coming out of California and Texas. In the wake of a 2001 Texas-sized verdict—$32 million—in a mold-related lawsuit, Ballard v. Farmers Insurance Group, Casey recalls how mold, water, and indoor health issues started attracting the class-action attorneys. In 2002, the Ballard verdict against the insurance company was later greatly reduced on appeal to $4 million, but the publicity given to the trial verdict had raised the public's and the plaintiffs' awareness of the issue—and even prompted some home buyers to “play the lottery” with their homes, says Casey.

MOLD BUSTERS: SkyTec's (left to right) Nicholas Cain, Justin Smith, Adrianna Stewart, Matthew Garner, and Jesse Cuss. Casey, who has worked for more than six years with Arvida following 10 years with Toll Brothers, saw third-party inspections as part of the solution. But he also had a larger vision. “We could use the proactive inspections first to help us build better homes, and second, to provide a methodology to certify to the customers that their homes were sound when we turned them over to them,” he says. “Third, we could provide an educational piece for customers” so that they could maintain their homes to prevent mold. Fourth, there could be follow-up: a re-inspection after a year would catch any problems and provide extra customer service. The challenge for Casey was finding an outfit that could meet that vision.

It's not that there was a shortage of firms. A cottage industry of mold remediation companies had sprung up almost as quickly as new mold cases. However, shoddy workmanship and even shakier business practices soon sullied the reputation of many mold service companies, creating doubts about their expertise. One of those skeptics was Richard R. Dostie, division vice president of a Jacksonville, Fla.-based unit of Toll Brothers that builds about 250 homes in northeast Florida and southeast Georgia. Dostie recalls being approached by very persistent salespeople offering mold inspection and remediation services. “I was skeptical,” recalls Dostie. “Mold was a hot-button issue, and there were a lot of companies coming out of the woodwork” with solutions.

But the persistence of one company—SkyeTec, an indoor environmental science firm—convinced Dostie to grant the Jacksonville, Fla.-based company an audience. He was glad he did. “I was extremely impressed with their background, their methods, their [scientifically] objective positions,” he says, ultimately agreeing to pay SkyeTec $350 a house for a pre-closing mold inspection and annual follow-up.

Who Ya Gonna Call? It was about that same time when SkyeTec also impressed Casey and Arvida's Jacksonville staff. Arvida needed a specialist to diagnose mold problems occurring in some of its houses during 2002. “We've got a problem, who you gonna call?” joked Casey, quoting the tag line from the film “Ghostbusters,” which featured a trio of aggressive ghost hunters.

When SkyeTec's crew showed up, recalled Casey, the “Ghostbusters” metaphor seemed apt as the equipment used to detect mold resembled some of the bizarre ghost-fighting tools featured in the movie. “They can literally take a device with tiny cameras in it, point it at the wall, and see inside the wall. All these guys are mold busters, like ghost busters,” marvels Casey. The equipment and SkyeTec's strict regimen of checklists, inspections, and re-inspection after a year got Casey excited about what was possible when it came to mold. The fact that SkyeTec was working in a number of communities well outside of Jacksonville also impressed Casey. He began to see how “the company could help our superintendents and our trades to build our houses with environmental issues in mind,” he says. It wasn't long before he too agreed to use SkyeTec to inspect and certify Arvida homes for $300 to $500 a house, including an optional review a year after closing.

Eliminating mold in homes was not SkyeTec's original mission. Founded in 1999, SkyeTec had focused primarily on health problems in commercial buildings, or “sick building syndrome.” But in the year 2000, insurance companies started approaching SkyeTec asking for help with residential claims.

Christopher Uhland, SkyeTec's CEO and co-founder, began investigating claims filed by homeowners asserting health complaints. “We would go out and evaluate the house from a health perspective,” he explains. He found an opportunity. “There were no standards,” he discovered, when it came to mold and other indoor environmental health issues. So his company developed its own 182-point inspection system encompassing plumbing, HVAC system, doors, windows, and interior and exterior sealants. Based on its inspection for moisture, humidity, air quality, and mold growth, which is conducted four days to a week before closing, a certificate is issued when the house is turned over to the buyer, indicating that the house when it closed was free of mold. “Every failure is corrected so every home that closes is fixed,” he says. About 5 percent to 10 percent of houses inspected have an active water leak, he says. Eleven months after closing, SkyeTec conducts an additional home inspection at no cost.

SkyeTec's model is business-to-business, emphasizes Uhland, so the company quickly found its focus: home builders. “We started to evaluate what we could do to help builders. We could develop an encompassing, uniform process for them and they in turn could educate the consumer.” SkyeTec has 36 employees and is on track to inspect 12,000 to 15,000 homes a year. “Not one of the homes has come back with a mold problem,” asserts Uhland. SkyeTec has developed a “mold warranty” recognized by the Florida Department of Insurance.

The White Glove SkyeTec would appear to be on the leading edge of an emerging service sector for the home building industry. As the science develops, there will be a greater need for educated trade partners. Training the people who must educate those on site is the responsibility of companies like Pittsburgh's Build IQ. President Michael Dickens, who works with SkyeTec, offers online courses “to train the trainers,” he says, at about $150 per seat license. While insurance is a primary driver toward increased education and training in mold remediation and other areas, good training has other benefits, he notes. “You increase customer satisfaction and relationship with the builder,” he says, by training sales and customer service personnel in the issues. An educated workforce reduces the risk to the builder, says Dickens, which benefits the builder's brand, reputation, and legal exposure.

SkyeTec provides a quarterly summary to the builder listing the problems discovered in a house. The problem that shows up with the highest frequency, says Casey, is that the pipes and wires coming into the house were not sealed correctly. “Usually the caulking isn't put in correctly,” Casey believes. “If it's raining outside, water could seep in very slowly.”

One test Arvida was failing involved the bathroom sinks. The inspector would fill up a sink with water and then move the stopper up and down repeatedly. A few drops of water would seep out of the valve connection under the sink. “We discovered that 50 percent of the pivot valves weren't working,” says Casey. “We saw thousands of these.” This is not something that would have been detected though ordinary inspection, he emphasizes, since the sink stopper did work. Arvida contacted the manufacturer, who came out to examine the sinks. It turned out there was a defect in a part from one of the suppliers. “We caught a defect in a product that was ISO 9000 certified, the highest level,” Casey says. “It hadn't showed up in any lawsuit. That was a level of quality we were starting to get.”

Casey sees a deep-seated benefit from the tests and the reports. “I know just from talking to our guys that they know more now than they did a year ago. They're very sensitive to this issue now,” he says.

Toll Brothers' Dostie agrees. “They've educated our guys and raised our level of attention to mold,” he says. Dostie credits SkyeTec trainer Michael J. Munn, who once worked for Dostie 20 years ago as an assistant superintendent, for the job he does now training Dostie's construction managers as well as for the savings he's produced. Since retaining SkyeTec about a year ago, says Dostie, the company found five or six homes out of 200 that needed extra attention. Three of the homes ended up having a mold issue, though the mold was benign. SkyeTec cleared up the problems promptly. “We might have spent $400 to $500” on remediation per house, notes Dostie, and incurred “a ton of bad will.”

Perhaps of equal importance, adds Dostie, is how the awareness now extends to the homeowner. Many buyers have unfounded fears about the fungus and are ignorant of routine maintenance that could help prevent mold. “To me, that's the whole key,” says Dostie. “If the customer feels that they're getting the right attention from a qualified professional, then they will have no issues with mold.”

The Buyer Problem Talking about mold prevention with home buyers, though, remains a topic few marketers or sales agents enter into enthusiastically. As a result, third-party inspection and certification is not a feature that is marketed strongly, if at all, to home buyers. That, however, is slowly changing.

“Customers assume that they're going to get a house that doesn't leak and doesn't have mold, so inspections are usually based around structural or cosmetic issues,” explains Casey. But SkyeTec's routine inspections seem to confront the issue without alarming the future homeowner.

More than half of the problems related to mold are caused by customers, says Casey, who sums up the people problem bluntly: “People are just pigs,” he says. He recalls one house where the bathroom had not been cleaned in a year. “There was mold growing in the shower, clothes all over the place. We took photos.” Armed with a certificate saying that when the home was turned over to the buyer it was mold free, any lawyer, judge, or juror would see that the home buyer had caused the health problem, says Casey.

“There are a lot of builders doing a lot of things right,” says SkyeTec's Uhland. “We legitimize things that they're doing right.” The company is helping builders and their customers through the use of its brochures, CD-ROMs, and DVDs aimed at home buyers. They explain the causes of mold, how it can be prevented, and how a house should be properly used.

Dostie had concerns at the beginning about some aspects of these materials. “We thought their handouts could be more attractive. They were very open ... to taking input from us,” he recalls.

Dostie is also educating himself about the legal protection that an independent third-party inspection can provide. “The more you document and the more you can educate the consumer on his responsibilities, the better off you are,” he says. “What really got me [about SkyeTec] was that their video really laid out the level of responsibility of the homeowner,” he says. “The customers sign at closing that they've received the CD or video and that the home is now their responsibility.”

But the customers also get an extra inspection a year after purchase, says Dostie, plus they feel well cared for by their builder. Dostie says SkyeTec earns its $350 just for the inspections alone. But then he stops. “I don't want to say too many good things about them. They might raise their prices.”

If consumers bear the brunt of responsibility for learning how to maintain their homes to avoid mold-breeding conditions, says Casey, builders have a responsibility to take the initiative. “We've got to understand how water and temperature work inside a building,” says Casey. “Most builders are not thinking about that, but you've got to. It's not your grandfather's building company [anymore].”

How Builders Can Beat Mold Michael J. Munn, SkyeTec's director of Environmental Building Solutions, keeps a list of the most important things builders should do to minimize environmental hazards that breed mold during construction.

1. Update the scope of work to clearly identify responsibility for caulking and sealants.
2. Do not use shower pans on second-floor showers. Use pre-fabricated fiberglass/acrylic showers or shower bases.
3. Use oversized wax rings on second-floor toilet flanges.
4. Never install vinyl wallpaper on an exterior wall.
5. Always install a drainage plane and window taping.
6. Run stucco all the way to the footing, or stop it 8 inches above grade and use a termination bead; seal the termination bead to the foundation wall.
7. Complete the building envelope before installing drywall.
8. Avoid exterior finishes that do not “breathe” when building in hot/humid climates.
9. Document all moisture issues during construction from occurrence to resolution.
10. Educate your buyers on how they can properly maintain good conditions.