Homeowners Advised to Gut Homes Built with Chinese Drywall

Federal safety officials are advising homeowners with Chinese drywall to completely remove the tainted product and replace all electrical components and wiring, gas service piping, fire suppression sprinkler systems, smoke alarms and carbon monoxide alarms.

The advice comes from the U.S. Department of Housing and Urban Development (HUD) and the U.S. Consumer Product Safety Commission (CPSC) in a report intended to help homeowners struggling to rid their properties of problem drywall linked to corrosion of metal in their homes such as electrical components.

“This guidance, based on the CPSC’s ongoing scientific research, is critical to ensuring that homeowners and contractors have confidence that they are making the appropriate repairs to rid their homes of problem drywall,” said Jon Gant, director of HUD’s Office of Healthy Homes and Lead Hazard Control.

Removing all possible problem drywall from homes, and replacing electrical components and wiring, gas service piping, fire suppression sprinkler systems, smoke alarms and carbon monoxide alarms should help eliminate both the source of the problem drywall and corrosion-damaged components that might cause a safety problem in the home, according to the agencies

“Our investigations now show a clear path forward,” said CPSC Chairman Inez Tenenbaum. “We have shared with affected families that hydrogen sulfide is causing the corrosion. Based on the scientific work to date, removing the problem drywall is the best solution currently available to homeowners. Our scientific investigation now provides a strong foundation for Congress as they consider their policy options and explore relief for affected homeowners.”

The remediation protocol is being released before all ongoing scientific studies on problem drywall are completed so that homeowners can begin remediating their homes, according to the CPSC. Studies completed thus far show a connection between certain Chinese drywall and corrosion in homes. CPSC said it is continuing to look at long term health and safety implications.

CPSC has also released a staff report on preliminary data from a study by Lawrence Berkeley National Laboratory that measured chemical emissions from samples of drywall obtained as part of the federal investigation for CPSC.

The top 10 reactive sulfur-emitting drywall samples were all produced in China. Certain Chinese samples had emission rates of hydrogen sulfide 100 times greater than non-Chinese drywall samples. The patterns of reactive sulfur compounds emitted from drywall samples show a clear distinction between the certain Chinese drywall samples manufactured in 2005/2006 and non-Chinese drywall samples. Some Chinese drywall samples were similar to non-Chinese samples. Finally, several Chinese samples manufactured in 2009 demonstrate a marked decrease in sulfur emissions as compared to the 2005/2006 Chinese samples.

CPSC has also released a study by the Environmental Health & Engineering Inc. that tested whether sulfur-reducing bacteria are present in Chinese drywall. Eight out of 10 drywall samples tested showed no bacterial growth including Chinese samples that emitted high levels of hydrogen sulfide in the LBNL study. One sample of Chinese drywall and one sample of U.S. drywall showed very low levels of sulfur-reducing bacterial growth.

The Federal Trade Commission (FTC) has warned consumers to exercise caution in hiring contractors who claim to be experts in testing for and removing problem drywall.

In addition, HUD has made block grants available to some communities for drywall remediation and encouraged FHA mortgage lenders nationwide to consider extending temporary relief to allow families experiencing problems paying their mortgages because of problem drywall, to allow the homeowner time to repair their homes.

Drywall manufacturers, home builders, product installers, suppliers and distributors are being sued, but insurers’ payments related to Chinese drywall have been minimal, according to a recent report from Moody’s Investors Service.

Commercial insurers could potentially face liability for property damage and claims under the products liability portion of the commercial general liability (CGL) policy. In terms of construction- defect liability, Moody’s said most insurers have modified their policies in order to address past construction defect claims and reduce exposure to Chinese drywall liability.

One of the suits, targeting 14 insurance companies in U.S. District Court in Louisiana, involves claims for the development and sale of homes allegedly containing defective Chinese manufactured drywall.

Homeowners insurers are generally denying coverage based on the standard pollution exclusion in the homeowners’ policy.

However, a Louisiana court recently rebuffed an insurance company’s use of the pollution exclusion and two other exclusions in an “all risk” homeowners insurance policy to deny claims resulting from so-called Chinese drywall.

Last November, CPSC released results of a 51-home study which shows a strong association between homes with problem drywall, the levels of hydrogen sulfide in those homes and corrosion of metals in those homes. In addition, CPSC’s General Counsel provided guidance to Congress and the Internal Revenue Service (IRS) on the possible applicability of the casualty loss provision in the Internal Revenue Code for affected homeowners.