By Matt Williams, Williams Real Estate Advisors and AAGLA Board President

As property managers, we have the privilege of helping navigate some very tough problems for our clients. One of those problems is mold in a rental unit. Ten or even 15 years ago, mold was almost unheard of. Owners would send a handyman with a fan, some Kilz paint, and well wishes for the tenants when addressing water damage in a rental unit. When the damage was bad enough to require opening walls, an owner would offer a rent credit for the nights the tenants had to be out of the unit.

Unfortunately, those simple days are gone forever.

Today, mold is big business for everyone except property owners. First, the typical cost of mold remediation can range from $5,000 to $30,000. This cost varies based on how many rooms are impacted and other factors. For example, mold testing can cost approximately $450 to $1,000; mold remediation, approximately $2,500 to $10,000; a final clearance test, approximately $450 to $1,000; restoration of whatever was removed, approximately $2,500 to $10,000; cleaning, approximately $250; and temporary relocation costs, which can vary drastically based on the location of the property. In my personal experience, it takes an average of 14 to 15 days from start to finish to complete the mold remediation process.

Mold can be big business for tenants and tenant attorneys. One of the best defenses to any lawsuit is to show that the owner responded in a timely manner and took the necessary steps to remediate the problem. The second-best defense is to work with the tenant when addressing their concerns. These two steps will greatly reduce the risk of a lawsuit. That said, even closely following these two steps doesn’t guarantee that an owner can avoid being the recipient of a lawsuit. Lawsuits still happen even when owners exercise the utmost care and thoughtfulness.

The cost to an owner involved in any lawsuit can be exponential. First, most insurance policies do not cover mold claims. This means that an owner can be out of pocket for attorneys’ fees and the cost of a settlement. Second, there is the time commitment and stress of a lawsuit. For owners who have yet to be sued for mold and may have downplayed the issue by not taking timely action, once they realize that they have no insurance to protect themselves and will be paying out of pocket for mitigation and legal advice, they will quickly realize that their flippant approach to mold issues has actually added to their liability.

Once reality sets in for these owners, their entire posture toward future mold issues changes. Rather than viewing other owners as overly fearful because of their “OCD” approach to the problem, they now find themselves being just as vigilant.

As a property manager who has firsthand experience dealing with mold lawsuits, there are a few takeaways that could be helpful to anyone reading this article. First, most tenants just want the water issues causing the mold to be resolved professionally. Resolving a mold issue professionally allows tenants to feel safe in their own homes. A feeling of safety results in a happy tenant and greatly reduces the risk of a lawsuit.

Second, when a mold issue occurs, don’t consider your tenant your adversary—your tenant is not the enemy. This mindset will create negativity that can cloud an owner’s decision-making process. Even if the tenant is a “professional tenant” looking for a payday, approaching them with respect and professionalism greatly helps the situation should an owner be dragged into a lawsuit.

Lastly, should an owner find themselves in a lawsuit, it is not the end of the world. Tenant attorneys know the strength of their cases. It costs a lot of money and resources to prosecute a case and take it to trial, and if there is no insurance money available, a plaintiff will want to settle sooner rather than later.

Finally, mold is big business, but by taking the proper steps, property owners can safely navigate this issue and come out on the other side just fine. Should you find yourself facing a mold issue or lawsuit, the Apartment Association of Greater Los Angeles is here to help. No, we cannot solve your problem, but we can refer you to vendors and attorneys who can help you navigate these issues.

Matt Williams is Principal of Williams Real Estate Advisors, Inc., a Santa Monica-based property management firm overseeing approximately $150 million in multifamily assets across 90 Southern California properties. His experience spans multifamily lending, investment analysis, brokerage, development consulting, and property operations. Earlier in his career, Matt analyzed approximately $350 million in apartment loan requests covering 7,500 units for lenders including Fannie Mae, Freddie Mac, and life insurance companies. Today, he works with rental housing owners to manage and improve the performance of their multifamily investments throughout Southern California.