Jason Rose

Are there laws in the State of Michigan related to mold issues?

It might seem surprising, but the State of Michigan does not have laws that require anyone to cleanup, remove, or report mold in any indoor environment. Also, the State of Michigan does not have a program to address issues related to mold, other than to provide people basic information about mold clean-up. Moreover, the State of Michigan does not certify or license contractors for mold removal.

Since 2002, the Michigan legislature has introduced six separate Bills regarding toxic mold and its disclosure in real estate transactions. Those Bills include:

• House Bill 4182 of 2005: This Bill, entitled “Revised Judicature Act of 1961, was introduced and referred to the Committee on Judiciary on February 3, 2005. It stated that any “person who knowingly rents, leases, or sells improved real property that contains lead-based paint, toxic mold, or asbestosis without disclosing its presence is liable in a civil action” for “3 times the amount of damages sustained by the plaintiff as well as costs and fees associated” with the lawsuit. Thus, this Bill was an attempt to impose punitive damages on sellers who failed to disclose, among other things, toxic mold.

• House Bill 5422 of 2004: This Bill, entitled “Revised Judicature Act of 1961, is similar to House Bill 4182 of 2005, and was introduced and referred to the Committee on Judiciary on January 22, 2004. It stated that any “person who knowingly rents, leases, or sells improved real property that contains lead-based paint, toxic mold, or asbestosis without disclosing its presence is liable in a civil action” for “3 times the amount of damages sustained by the plaintiff as well as costs and fees associated” with the lawsuit. Thus, this Bill was a prior attempt to impose punitive damages on sellers who failed to disclose, among other things, toxic mold.

• Senate Bill 88 of 2003: This Bill, entitled “Seller Disclosure Act,” was introduced on January 28, 2003, and referred to the Committee on Economic Development, Small Business and Regulatory Reform on May 20, 2003. It would have added a new paragraph to the current Seller’s Disclosure Statement that read: “11. TOXIC MOLD: Are you aware of any toxic mold on the property? If yes, please explain.” Thus, it would have specifically required a seller to disclose toxic mold. This Bill is similar to House Bill 6177 of 2002 below.

• Senate Bill 172 of 2003: This Bill was introduced and referred to the Committee on Economic Development, Small Business, and Regulatory Reform on February 11, 2003. It proposed to create a new law known as the “toxic mold disclosure act” that would have applied to “the transfer of any interest in real estate, whether by sale, exchange, installment land contract, least with an option to purchase, any other option to purchase, or ground lease coupled with proposed improvements by the purchaser or tenant, or a transfer of stock or an interest in a residential cooperative.” The Bill included a two page “TOXIC MOLD DISCLOSURE STATEMENT” that would have been used by a seller to disclose toxic mold. This Bill is similar to House Bill 6179 of 2002 below.

• House Bill 6177 of 2002: This Bill, entitled “Seller Disclosure Act,” was introduced and referred to the Committee on Commerce on June 5, 2002. It would have added a new paragraph to the current Seller’s Disclosure Statement that read: “11. TOXIC MOLD: Are you aware of any toxic mold on the property? If yes, please explain.” Thus, it would have specifically required a seller to disclose toxic mold.

• House Bill 6179 of 2002: This Bill was intended “to require certain disclosures by sellers of real property” and was introduced and referred to the Committee on Commerce on June 5, 2002. It proposed to create a new law known as the “toxic mold disclosure act” that would apply to “the transfer of any interest in real estate, whether by sale, exchange, installment land contract, least with an option to purchase, any other option to purchase, or ground lease coupled with proposed improvements by the purchaser or tenant, or a transfer of stock or an interest in a residential cooperative.” The Bill included a two page “TOXIC MOLD DISCLOSURE STATEMENT” that would have been used by a seller to disclose toxic mold.

To date, none of the above Bills have made it through any of their respective committees, and none has become law.

However, laws do exist that cover certain situations that involve indoor mold. The following is a list government agencies that may be able to provide guidance if your house or apartment has indoor mold.

Landlord and tenant relationships: If a tenant is renting an apartment or house, that person has the right to expect certain minimum standards referred to as "warranties of habitability" that provide minimum standards of decent, safe, sanitary housing specified in the state or local housing code. For more information on landlord-tenant relationships go to: http://www.tenant.net/Other_Areas/Michigan/index.html.

Fraud in mold remediation companies: If you believe you are a victim of fraudulent business practices from a company involved in mold remediation, contact: Michigan Attorney General's Office, Michigan Consumer Protection Division, P.O. Box 30213-7713, Lansing, MI 48909, (517) 373-1140

Legal issues related to new home construction and mold: If you have questions about laws regarding new housing construction and contractors actions related to mold, contact: Michigan Department of Labor & Economic Growth, Bureau of Commercial Services/Enforcement Division, P.O. Box 30018, Lansing MI 48909, (517) 241-9202

For more information on mold:

• Michigan Department of Community Health Toxics and Health hotline and website: 1-800-648-6942, www.michigan.gov/mdch-toxics
• Your local public health department, find it at http://www.malph.org/page.cfm/108/
• Centers for Disease Control: http://www.cdc.gov/mold/
• National Center for Housing and the Environment: http://www.stopmold.org/

Seller Disclosure Statement May Apply to Mold

Michigan’s Seller Disclosure Act (Act 92 of 1993) requires sellers of residential property to provide a Seller Disclosure Statement to buyers. MCL 565.951, et seq. Among other things, the disclosure statement includes a provision entitled “Environmental Problems,” which may require the disclosure of mold or mold related issues, depending on the facts and situation. Specifically, that provision states:

Although “mold” is not specifically listed above as an “environmental hazard,” depending on the facts and circumstances, its disclosure may still be warranted. Indeed, a careful reading of the question demonstrates that the environmental hazards listed within it are merely examples. Stated another way, use of language like “such as,” and “but not limited to” leave the door open for mold to be considered an environmental problem or hazard. Bottom line, if the seller (and/or his agent) is aware of mold, and the nature and extent of that mold rises to the level of it being an environmental hazard, then he or she must disclose it. Not disclosing it under that circumstance could expose the seller and the agent/broker to liability.

Most sellers will not know if they have mold problems, so it is important that real estate professionals encourage their buyers to thoroughly inspect a home prior to closing. By inspecting early, there is time to negotiate any corrections. Buyers should hire a professional to check for mold growth in the following areas:

• Heating and cooling systems
• Humidifiers
• Vents
• Duct lining
• Insulation
• Exhaust fans vented to outdoors
• Attic
• Basement
• Crawlspaces
• Downspouts routing water away from the house

Although not required by Michigan law, some agents are using a separate mold disclosure disclaimer form, which is signed by the seller and buyer. A mold disclosure form can be obtained from the National Association of Realtors and from many local boards.

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To learn more about a variety of real estate topics, please visit us at www.123ConEd.com. We are a leading online provider of Michigan real estate continuing education. All of our courses are fully approved and properly certified by the State of Michigan, and are offered online. State Sponsor No. 373.

Copyright © 123 ConEd LLC 2009. All rights reserved.

Ever heard of the Fair Housing testing program, where someone visits rental communities to observe customer service? HUD and local fair housing agencies use such a testing process to assess a specific complaint or to check a random market for fair housing compliance. Any applicant could be a fair housing tester.

Fair housing testing is a tool used to measure the practices of housing providers relating to the Fair Housing Act. Some unlawful housing discrimination practices can only be discovered through fair housing testing. Information gathered through fair housing testing can be used as evidence to support a client’s administrative housing discrimination complaint with the Department of Housing and Urban Development or a private lawsuit against a housing provider. The United States Supreme Court has recognized and affirmed the important of fair housing testing in fighting housing discrimination.

In order to enforce fair housing laws, the Housing and Civil Enforcement Section of the Civil Rights Division of the United States Department of Justice (“DOJ”), brings suit to enforce the Fair Housing Act, which prohibits discrimination on the basis of race, color, religion, national origin, sex, disability, and familial status. The Fair Housing Act authorizes the DOJ to bring suits where investigations yield evidence of a pattern or practice of illegal housing discrimination.

In 1991, the DOJ established a fair housing testing program and commenced testing in 1992. Testing refers to the use of individuals who, without any bona fide intent to rent or purchase a home, apartment, or other dwelling, pose as prospective buyers or renters of real estate for the purpose of gathering information, which may indicate whether a housing provider is complying with fair housing laws. The primary focus of the fair housing testing program has been to identify unlawful housing discrimination based on race, national origin, disability, or familial status.

The DOJ employs various means to accomplish testing in local communities, including contracts with private fair housing organizations, contracts with individuals, and by using non-attorney DOJ employees throughout the country. The DOJ employees are volunteers who have been trained to participate as testers. Since 1992, the testing program has recruited and trained over 1,000 employees from various DOJ components throughout the nation to participate as testers. These are in addition to the numerous individuals retained by private fair housing organizations. The Housing and Civil Enforcement Section conducts numerous investigations simultaneously at any given time.

Testing is a method to determine whether or not a home seeker is treated differently in his or her search for housing. A person’s race or national origin, for example, would be impermissible factors upon which to base a denial of an opportunity to purchase a home. Testing for housing discrimination involves individual testers posing as prospective home buyers or renters. Testers are paired and assigned profiles so that they are equally qualified to rent or purchase an apartment or home in question. They are similar in all respects except for one of the protected classes, such as race, color, religion, sex, handicap, familial status, national origin, age, or marital status. The experiences of testers are used to compare the treatment of one home seeker (protected class) to another (non-protected class). In this context, testing measures the difference in treatment afforded a home seeker as determined by the information and services provided by real estate firms, property management firms, rental agents/brokers and others.

If differences are found that relate to race, color, religion, sex, handicap, familial status, national origin, age, or marital status, a housing discrimination is filed. The vast majority of testing cases filed to date are based on testing evidence that involved allegations of agents misrepresenting the availability of rental units or offering different terms and conditions based on race, and/or national origin, and/or familial status.

In February 2006, the DOJ launched Operation Home Sweet Home, which is a fair housing testing program that employs individuals who pose as renters for purposes of gathering information about possible discriminatory apartment rental practices. The initiative was inspired by the plight of displaced victims of Hurricane Katrina who were suddenly forced to find new places to live. Operation Home Sweet Home, however, is not limited to the areas hit by Hurricane Katrina, but targets housing discrimination all over the country.

So remember that any applicant could be a fair housing tester. And, contrary to what most real estate professionals think, it is not easy to spot a tester. You likely will never know that you were visited by testers unless, of course, a discrimination complaint is filed against you.

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To learn more about fair housing issues (and many other real estate topics), please visit us at www.123ConEd.com. We are a leading online provider of Michigan real estate continuing education. All of our courses are fully approved and properly certified by the State of Michigan, and are offered online.

Copyright © 123 ConEd LLC 2009. All rights reserved.

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Here is another example of a recent Fair Housing Act lawsuit brought by the United States Department of Justice (“DOJ”). I try to post case summaries in order to provide timely updates to real estate professionals about the "dos and don'ts" under the Fair Housing Act, since fair housing is such an important issue.

This afternoon (July 21, 2009), the DOJ filed a lawsuit against the owner and employees of Rolling Oaks Apartments, a 72-unit complex in Clanton, Alabama, for violating the Fair Housing Act by discriminating on the basis of race or color in the rental of apartments.

The lawsuit alleges that the employees told white testers that a selling point of Rolling Oaks Apartments was the lack of African American tenants and that they had adopted rental policies intended to discourage African American rental applicants. The lawsuit is based on evidence generated by the DOJ’s Fair Housing Testing Program, in which individuals pose as renters to gather information about possible discriminatory practices. The complaint also named the owner of the apartment complex.

The lawsuit seeks monetary damages for those harmed by the defendants’ actions, civil penalties and a court order barring future discrimination. The lawsuit is an allegation of unlawful conduct. The allegations must still be proven in court. I will try to follow this case and provide an update when the case is resolved.

Source: U.S. Department of Justice

It is important for all real estate professionals to remember that the federal Fair Housing Act prohibits discrimination in housing on the basis of race, color, religion, sex, familial status, national origin and disability.

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To learn more about fair housing issues (and many other real estate topics), please visit us at www.123ConEd.com. We are a leading online provider of Michigan real estate continuing education. All of our courses are fully approved and properly certified by the State of Michigan, and are offered online.

Copyright © 123 ConEd LLC 2009. All rights reserved.

Here is another example of a recent Fair Housing Act lawsuit brought by the United States Department of Justice (“DOJ”). I try to post case summaries in order to provide timely updates to real estate professionals about the "dos and don'ts" under the Fair Housing Act, since fair housing is such an important issue.

On Friday, June 19, 2009, the DOJ filed a lawsuit against the former owner and managers of Homestead Mobile Home Village, a mobile home park in Gulfport, Mississippi, for violating the Fair Housing Act by discriminating against black tenants on the basis of race or color. The lawsuit also names as a defendant Indigo Investments LLC, the owner of Homestead Mobile Home Park at the time of the alleged discrimination.

The lawsuit alleges that Edward and Barbara Hamilton, the former managers of the mobile home park, unjustly sought to evict a black couple and their five minor children who had moved there after being displaced by Hurricane Katrina. According to the lawsuit, the Hamiltons attempted to evict the family and other black residents for allegedly violating the rules of the park, but did not attempt to evict white residents for as many or more violations. The lawsuit also alleges the Hamiltons harassed and intimidated black tenants and that the defendants’ conduct constituted a pattern or practice of discrimination or a denial of rights to a group of persons.

The lawsuit arose from a complaint filed with HUD by two black residents of Homestead Mobile Home Village. The complainants also sought assistance from the Gulf Coast Fair Housing Center, a private, non-profit fair housing organization which provided additional information to HUD. After investigating the complaint, HUD issued a charge of discrimination and after one of the respondents named in HUD’s charge elected to have the case heard in federal court, the case was referred to the DOJ.

The lawsuit seeks monetary damages for those harmed by the defendants’ actions, civil penalties and a court order barring future discrimination. The lawsuit is an allegation of unlawful conduct. The allegations must still be proven in federal court.

Source: U.S. Department of Justice

I will try to follow this case and provide an update when the case is resolved.

********************************************

To learn more about fair housing issues (and many other real estate topics), please visit us at www.123ConEd.com. We are a leading online provider of Michigan real estate continuing education. All of our courses are fully approved and properly certified by the State of Michigan, and are offered online.

Copyright © 123 ConEd LLC 2009. All rights reserved.