Posts Tagged ‘Chinese Drywall Blog’

Will Your Insurance Company Cover Illnesses Associated With Chinese Drywall?

On March 22, 2010 Author By Wolfe Guest        

This article was written by Chris Wilson.

Thousands of people across the country have purchased new homes that contain Chinese Drywall. Unfortunately, the result has been devastating financial and health problems. People living with Chinese drywall have had a number of health effects such as breathing difficulties, coughing, acne, asthma attacks, bloody nose, dizziness, irritated eyes, nausea, headaches, fatigue, gastrointestinal problems, rashes, sinus problems, and sore throats. As well, there are concerns that long-term exposure to Chinese drywall could cause cancer due to prolonged contact with radon. The question on many people’s minds is if their insurance company will cover their health care costs.

The claim most insurers are making regarding covering health care costs is that drywall is considered a builder defect which is not covered under a homeowners’ insurance policy. As well, they have deemed drywall a pre-existing condition that could lead to future damage, which is why insurance providers will not pay out for a claim or renew a homeowner’s policy until the drywall has been removed. They contend that it is a warranty issue and not an insurance issue. There are a number of insurers that have denied claims or canceled insurance policies based on this contention. Homeowners insurance is not designed to cover defective construction or materials; and as a result, they are not liable to pay out for the claim. It is their contention that homeowners must seek compensation from the manufacturer or a company associated with the installation of the drywall. As well, property insurance policies also have pollution exclusions; therefore, they will usually deny claims, which include any medical coverage. That is, Chinese Drywall claims involving sickness from inhaling unsafe gas odors will normally be denied because they do not fall under an insurance company’s definition of “bodily injury.”

When it comes to personal health insurance plans, you have to read the fine print of your policy to determine their definition of ‘bodily’ injury. Many insurance companies will consider a situation like this to be pollution caused by a third party so they do not cover the expenses associated with treatment. It is important to check to see if there is specific criteria outline in your health insurance policy that may result in coverage denial for treatment for drywall exposure.

Many homeowners have filed class action law suits against the manufactures, developers, general contractors, distributors, and builders, to seek compensation for their financial loss and health treatment costs. The lawsuits include claims for private nuisance, breach of warranty, breach of contract, negligence, and unjust enrichment. Most claims ask for financial compensation for medical expenses associated with illnesses resulting from inhaling toxic fumes originating from the drywall. If you have suffered the effects of drywall exposure, you need to consult with your homeowners’ insurance provider and health insurance provider to find out if the condition will be covered. If not, you should consult with a trial lawyer to learn about possible options on how to get compensation.

This article was originally posted on Wolfe Law Group’s topic-specific Chinese Drywall Blog.

Posted in:     Chinese Drywall, From The Experts  /  Tags: , , ,   /   Leave a comment

Progress towards LRA Grants for Drywall Victims…But We're Not There Yet

On December 23, 2009 Author By Scott Wolfe Jr        

Those living with Chinese Drywall in Louisiana received good news today about the Louisiana Recovery Authority’s efforts to grant them financial relief.   While the news is good, the program is not complete and the funds aren’t quite ready to be distributed.

A few weeks ago, the Louisiana Recovery Authority set aside $5 million for Chinese Drywall victims in the state.   That set into motion a bureaucratic process to have the funds approved for disbursement and a structure set in place to approve future payments to victims.

The first step in the process was the actual setting aside of the $5 million in funds.

The second step in the process was having the U.S. Department of Housing and Urban Development approve the idea.   This second step was accomplished yesterday, December 22nd.

For those living with Chinese Drywall, it’s like an early Christmas present…but not one quite ready to be opened.   A spokesperson for the LRA said it best in an interview with the New Orleans Times Picayune, when she said “This is kind of like half the equation.”

As we stated in prior posts, local, state and federal governments certainly have Chinese Drywall aid on their minds…its just a matter of how and when.   This LRA program seems to be one of the most advanced in the country, insofar as planning is concerned.

But it’s the same punchline at the end of the day for victims:  more waiting.

Stay tuned.

This article was originally posted on Wolfe Law Group’s topic-specific Chinese Drywall Blog.

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How Bad Are The Damages…And What Does That Mean Legally?

On December 10, 2009 Author By Scott Wolfe Jr        

Chinese Drywall talk is riddled with hearsay.

Is it or is it not bad for your health?   Must the drywall be replaced completely, or can a filtration system solve the problem?   Will the corrosive elements cross-contaminate into other components of the home, or is it isolated in the drywall only?

These questions certainly have practical implications.   After all, the answers to some of these questions will dictate how the drywall is actually repaired.

However, the questions also have implications in the legal arena.

Most notably in Louisiana, the severity of the damages related to corrosive drywall will be a large factor in deciding the question of whether the builder is or is not liable to homeowners for the installed drywall.

In previous posts here at the Chinese Drywall Blog, we discussed the Louisiana New Home Warranty Act and whether it will or will not create liability for builders who installed Chinese Drywall.   Because of the Act’s wording, it may simply come down to how severe the Chinese Drywall damages are.

Under the NHWA, builders are liable to homeowners for any “major strucutral defect” for a period of 5 years.   The question becomes, therefore, are the Chinese Drywall damages major structural defects?

If the damages can be remediated with a simple filtration system, you can count on the builders using this as evidence that the defect was not a major structural defect.  If they are successful, the 1 or 2 year warranty period, as opposed to the 5 year warranty period, would apply, and many of the currently filed claims would be considered as tardy.

If the damages cannot be easily remediated, however, and require the replacement of all sheetrock, and even the replacement of some elements of the framing…the homeowners will argue that this more closely resembles a major structural defect.   Accordingly, the 5 year warranty period would apply.

More specific information about whether the Chinese Drywall damages will be covered under the New Home Warranty Act is found on our blog here.

While knowing the severity of the damages is important to estimate the damage itself, and to understand how to fix the damages….the severity and scope of damages plays an even more important role in the litigation against builders who installed contaminated drywall.   It may be a very important question to answer when deciding whether the 5 year NHWA period applies.

This article was originally posted on Wolfe Law Group’s topic-specific Chinese Drywall Blog.

Posted in:     Chinese Drywall  /  Tags: , , ,   /   2 Comments

Does Chinese Drywall Affect My Obligation To Pay My Mortgage?

On December 8, 2009 Author By Scott Wolfe Jr        

Many folks with Chinese Drywall (clients and non-clients) have contacted our offices with this inquiry.   The logic makes sense:  If the mortgage on a property is x, and the value of the property has since dropped below x because of Chinese Drywall, is there some room for “a break” from the mortgage company?

Legally?   Not Really – At Least Not Yet

For the time being, the legal answer is “not really.”

Unfortunately, when you signed your mortgage agreement, you agreed to pay the amount of the note regardless of the property’s condition.   Therefore, the fact that the property condition is worsening because of Chinese Drywall does not act to modify any obligations under the mortgage note itself.

Now, this is usually not a problem because mortgage companies require the property to be insured.    In the case of Chinese Drywall, as we’ve previously discussed, the applicability of insurance to the loss is a bit complex.

There is some chatter on Capital Hill on this very issue, and a bill has recently passed the U.S. House of Representatives by a margin of 419-1 that would “encourage” banks and mortgage companies to provide homeowners with Chinese Drywall temporary forbearance on their mortgage payments.

What does this mean?

It means that the federal government would likely give the banking companies some incentive ($$$) to allow its mortgage holders with Chinese Drywall (you) to temporary not make mortgage payments.   If the bill passes, homeowners with Chinese Drywall may have some legal recourse to request mortgage forebearance, and avoid foreclosure on their home while actions to recover for the Chinese Drywall losses progress.

Practically Speaking…There May Be Room For Negotiation

While homeowners may not have the legal right to receive “a break” from their mortgage company, the financial realities of Chinese Drywall may open the window for some practical remedies.  Namely, to request a forbearance.

What is a forbearance? Wikipedia defines it as follows:

In the context of a mortgage process, forbearance is a special agreement between the lender and the borrower to delay a foreclosure. The literal meaning of forbearance is “holding back.”

Loan borrowers sometimes have problems making payments. This may cause the lender to start the foreclosure process. To avoid foreclosure, the lender and the borrower can make an agreement called “forbearance”. According to this agreement, the lender delays his right to exercise foreclosure if the borrower can catch up to his payment schedule in a certain time. This period and the payment plan depend on the details of the agreement that are accepted by both parties.

Forbearance is usually for temporary financial problems. If the borrower has more serious problems, for example if it is a variable-rate mortgage and the interest rate becomes unaffordable for the borrower, then forbearance is usually not a solution.

While you are not entitled to a forbearance without the U.S. legislation getting further along (and perhaps even being made stronger)…the realities you face as a homeowner are not lost upon mortgage companies.  After all, if the property is worth less than the mortgage, they really don’t have much motivation to foreclose on the property.

Contact your mortgage company and request a forbearance.  They will likely send you a forbearance application, and depending on the severity of your drywall problems, they may grant the forbearance.  Remember, however, that forbearance agreements are temporary, and interest usually continues to accrue during forbearance periods.

This article was originally posted on Wolfe Law Group’s topic-specific Chinese Drywall Blog.

Posted in:     Chinese Drywall  /  Tags: , , ,   /   2 Comments

Louisiana Landlord / Tenant Law and Chinese Drywall

On September 2, 2009 Author By Scott Wolfe Jr        

Not all victims of Chinese Drywall are homeowners.   Oftentimes, a tenant is living at a property with Chinese Drywall, or a property owner is a landlord to an apartment or home with Chinese Drywall.

Take, for example, a news story from the Baton Rouge’s Advocate about a tenant who was forced to move out of their rented home because of Chinese Drywall.   Or, a news story about a Florida landlord to an apartment complex housing low-income elderly people, who were evicted en mass because the complex had imported drywall.

These scenarios present interesting legal questions:

  • Can a tenant break a lease because of Chinese Drywall?
  • Can a landlord evict a tenant because of Chinese Drywall?
  • Is Chinese Drywall a “breach” of the lease?
  • Should landlords evict / move tenants when properties have Chinese Drywall to avoid responsibility for future health effects?

While the answer to this question will greatly depend upon the terms and provisions with the lease agreement, here is what that Louisiana Civil Code may have to say about the matter.

The Landlord’s Warranties

The landlord makes a number of warranties to its tenants through the Louisiana Civil Code, and it can be argued that the existence of Chinese Drywall at the leased premises is a breach of these warranties.

La. C.C. art 2696, for example, provides that the “lessor warrants…that the thing is suitable for the purpose for which it was leased and…is free of vices or defects.”   This warranty extends to vices “that arise after the delivery of the thing.”    The following code article (2697) indicates that the warranty encompasses vices or defects not known to the lessor.

The landlord may be liable to the tenant for any damages that result from the landlord’s breach in warranty.   These damages may include the cost for alternative accommodations, moving expenses, and sustained personal injury or health damages.

For landlords who are leasing properties with Chinese Drywall, it is important to consider the statutory warranties made to tenants.  The existence of Chinese Drywall may be a breach of their warranties, and if so, landlords are likely liable to tenants for any ensuing damages.

Statutory Termination of the Lease

In addition to the landlord’s warranties, another area of Landlord/Tenant law implicated by Chinese Drywall regards the statutory termination of leases.

La. C.C. art 2714 provides that if a thing is lost or totally destroyed, without the fault of either party, the lease terminates and neither party owes damages to the other.  In the case of partial destruction or “substantial impair[ment], that is not the fault of the lessor, the tenant may dissolve the lease or reduce their rent.   If the lessor is at fault, the tenant may also seek damages.

What’s The Rub?

Chinese Drywall presents some interesting issues for Louisiana Landlord / Tenant law.   Is the existence of Chinese Drywall a vice or defect that breaches the landlord’s warranty, or a partial destruction or “substantial impairment” to the property?    Are landlords entitled to damages, or just dissolution of the lease?    Should the landlord relocate tenants to mitigate its damages?

As is the case with most Chinese Drywall scenarios, as to landlord/tenant laws, there are more questions than answered here.    Landlords and Tenants with Chinese Drywall should seek the counsel and advice of an attorney.

This article was originally posted on Wolfe Law Group’s topic-specific Chinese Drywall Blog.

Posted in:     Chinese Drywall  /  Tags: , , , , ,   /   Leave a comment
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