Chinese drywall remediation rights not a slam-dunk

Feb.February 19, 2010 11:52 AM

As South Florida Chinese drywall lawsuits head to trial in federal court, local construction companies are rushing to market with offers to remediate properties affected by the material.

But legal experts debate whether or not homeowners are signing their legal rights away in exchange for a property that can never be truly remediated.

In late December, Homestead residents Jason and Melissa Harrell saw movement in their lawsuit against Palm Holdings, Banner Supply, South Kendall Construction and Keys Gate Realty over Chinese drywall issues that forced them out of their home in 2006.

Their victory could open the door to a wave of new suits — if
homeowners don’t let builders attempt to remediate, according to
Allison Grant, a member of the commercial litigation and construction litigation practice groups at the law firm Shapiro, Blasi, Wasserman & Gora in Boca Raton.

Grant said builders pressured homeowners into contracts to remediate their home from Chinese drywall. Now, she warns homeowners not to buy into the remediation hype — and speaks from personal experience. Her $200,000 investment property was diagnosed with Chinese drywall. She can’t rent the unit, and the property is now appraised at $17,000. Remediation wasn’t the answer.

“If you sign a release with the builder, you can’t file a lawsuit
unless the remediation fails,” Grant said. “Most people are never
going to be happy even when their homes are fixed. They are always going to think it smells. And who is going to buy the house from them? And where are they going to get insurance?”

Grant makes a strong point. Homeowners submitting insurance claims for Chinese drywall issues are being declined because the Florida Department of Health, U.S. Consumer Product Safety Commission and U.S. Centers for Disease Control and Prevention have not formally associated Chinese drywall with health issues.

Although few insurance companies cancel homeowner policies after reports of Chinese drywall issues, major insurers aren’t covering claims, either, calling it a manufacturer’s defect that should be covered by the builder. And there is no pending legislation in Florida regarding Chinese drywall as it relates to homeowner insurance.

Chuck Hartz, a Miami attorney who represents homeowners affected by Chinese drywall, disagrees with Grant. He advocates for proactive remediation, and advises clients to follow a strict protocol along the way.

Beyond carefully documenting the remediation process, Hartz recommends alerting the original drywall installation company before construction begins to offer an opportunity to inspect the property in order to preserve the right to legal claims.

“It appears that getting a head start on the remediation process makes sense for homeowners, so long as they hire a qualified contractor and keep detailed records of the process,” Hartz said. “A well-managed, well-documented project leaves the door open to litigation or an insurance claim.”

Still, Hartz said, taking legal action and filing an insurance claim
is a worthwhile course of action for Chinese drywall victims, but
those processes take time, cost money and may not yield
compensation in the end.

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