Home buyers: Be aware of bad drywall
Six years after the scourge of defective Chinese drywall in Florida homes first surfaced in the public eye, some homebuyers continue to unknowingly purchase homes that have not been fixed and paying the price.
Florida has the highest number of drywall homes among 44 states reporting the problem, along with the District of Columbia, American Samoa and Puerto Rico. Estimates range from about 12,000 to 20,000 homes affected. Lee County is the focal point of the problem in Florida.
About 2,000 homeowners in Lee have asked for property tax relief because their homes have been tainted by the drywall since September 2009, when Ken Wilkinson, county property appraiser, began to offer it. In comparison, Collier County had only about 140-150 homes reported as having defective drywall, according to its property appraiser's office.
The drywall, imported mostly between 2004-08, smells foul and emits sulfur compounds that corrode air conditioning coils, electrical wiring, metal appliances, electronics, jewelry and plumbing fixtures. Residents with the drywall complain of health issues from nosebleeds to respiratory problems.
"My advice to a home buyer is to always ask if the home had drywall problems if built after August '04, which the seller or their agent is required to disclose," Wilkinson said.
There are guidelines for remediating homes set by the Consumer Product Safety Commission, and more stringent guidelines from federal Judge Eldon Fallon, who presided over thousands of drywall cases in multidistrict litigation in New Orleans. Neither protocol is mandatory. As a result, some contractors just fix a home until they believe it is repaired well enough, removing drywall, repainting, but not replacing fixtures or wires that are corroded by sulfur compounds the drywall emits.
Jason Nicko, president of Abisso Remodeling, said most of his business is remediating Chinese drywall. He moved to Southwest Florida more than two years ago and said he encountered homes that "undoubtedly" had drywall when he was looking to buy.
"I know what it smells like. I can tell walking in the front door," he said. The sellers said the homes had been inspected and were clear of the drywall, but wouldn't allow him to test, Nicko said.
Even if the home is sold "as is," a seller by law has obligation to disclose anything that affects value of the property. There is no law a seller has to do an inspection. If something wrong surfaces, the buyer has to prove the seller knew about it.
The average cost of fixing a home with drywall is about $100,000. Homes basically have to be taken down to the studs and rebuilt.
Arthur and Liz Grover of Pennsylvania want to retire to Florida and were looking for homes in Cape Coral. "Several of the homes were suspect," he said. The couple was aware of this because friends Richard and Patti Kampf of Cape Coral accompanied them on their search. The Kampfs' home had Chinese drywall and was remediated. They eventually led a grassroots group of drywall homeowners who advocated for government help.
The Grovers placed offers on two foreclosed homes. The houses were being sold "as is." One fell through, and they are working on the other, Arthur Grover said. "My experience in each instance was that there was a rider on the contract saying there is an issue in Florida with defective drywall, and I have a certain amount of time to have an inspection on it."
He doesn't believe it's a disclosure document, just a "buyer beware document," he said. "The rider basically puts it all on the buyer to discover this and exercise his rights to get out of the contract."
The Lee County list stands at 1,966 who have requested tax relief due to drywall, said Tom Pokorny, county IT and data service administrator. A total of 1,028 homes have been remediated, or 52 percent.
An additional 277 properties did not respond to the annual county query asking whether they continue to have defective drywall, so they have been taken off the list, Pokorny said. Another 18-20 properties are exempt from being listed because they belong to people in law enforcement or the judiciary.
Cape Coral residences made up about 32 percent of the total list.
Homeowners who meet criteria will have their home value dropped to $10. But they have to pay taxes on the value of the land the home sits on. The tax break is not automatic. You have to be able to prove it by meeting county criteria. The verification process and documents needed are outlined on the drywall page of the property appraiser's website.
Condo owners also have reported defective drywall. They get less of a tax break because condos have no land value; the land is owned commonly. The county bases the tax break for condo owners on difference between sale price of a condo without defective drywall, and one with defective drywall. The current tax break is 23 percent, Pokorny said.
Homeowners need to have an inspection for the drywall to protect themselves, said Allison Grant, an attorney who has represented about 1,000 drywall clients across the state, including about 300 in Southwest Florida. Prospective buyers also can search public records to see if the owner filed a lawsuit because of drywall, or see if tax relief was given.
Some investors are looking to flip homes, and banks are ridding themselves of foreclosure inventory, she said. "I think one of the biggest problems is the banks." If the homes aren't inspected, sellers can say they didn't know, she said.
Gloria Tate, a real estate agent with Raso Realty in Cape Coral, said she's sold a couple of homes that were remediated for defective drywall and recertified by the city. The fact was disclosed to the buyers, with no subsequent complaints, she said.
But some homes on the market with drywall are not listed as either having drywall or suspected as having drywall in general disclosure comments in the Multiple Listing Service, she said. The fact may instead be listed in a confidential disclosure only real estate agents can see.
"It's supposed to be up there," Tate said of the general disclosure. The only reason she believes some may hide it is that homes with drywall sell for a much lover price, so people are more apt to inquire about them, she said. The agent can then tell the prospective buyer the home may have drywall, and offer an alternative listing.
Tate said her sister just lost her home with drywall to the bank after living in it for eight years. "I know several people living in them still, taking their shots that it won't kill them," she said.
Two simple Chinese drywall tests
Homeowners can do tests on their own to indicate presence of Chinese drywall.
• Take a piece of copper wire and hang it on the return of the air conditioner, where the air that circulates through your house is drawn back into the unit. Wait about two weeks. If the wire turns black, that indicates possibility of defective drywall.
• Place a piece of copper tubing in a mason jar along with a piece of drywall from an area in your home where you suspect the presence of defective drywall. Close the lid and place it in an area where it is exposed to heat and humidity, such as a garage or lanai. Wait about two weeks and see if the copper turns black.
Source: Zdenek "Zed" Hejzlar, Engineering Systems Inc., Fort Myers