Real Estate Appraiser Tips » Chinese Drywall

Dave Towne: Latest Chinese drywall court decision

http://realestateappraisertips.info/ — Tue, 08 Jun 2010 07:17:46 +0000

http://www.realestateappraisertips.info/ – Real Estate Appraiser Update! Dave Towne: Latest Chinese drywall court decision

“Appraisers…………

For those of you following the Chinese Drywall saga in this country, the latest (and former) court decisions involving this product are attached. This latest was provided to me by a Seattle appraiser … thanks Barry!

The difference is the latest decision involved a homeowner who sued a homeowner’s insurance company, and lost. The former first decision involved a group of individuals who sued the product manufacturer, and won.

On the surface (jeesh…bad pun!), it appears that hauling an insurance company into court may not work well when the goal is to seek reimbursement funds to repair the damage caused by the defective product. Too many exclusions may exist in the policy.

Dave Towne”

Photo Source: Alabama Jury Attorney Blog

U.S. District Ct Chinese Drywall Ruling Sets Legal Standard At A Little Over $80 Square Foot

http://realestateappraisertips.info/ — Thu, 29 Apr 2010 10:47:51 +0000

http://www.realestateappraisertips.info/ - Real Estate Appraiser Tips! U.S. District Ct Chinese Drywall Ruling Sets Legal Standard At A Little Over $80 Square Foot.

The link to entire articel is here: http://www.wafb.com/global/story.asp?s=12394620. Snippets of the article are below.

“NEW ORLEANS, LA (WWL) – A Mandeville couple said it was “a huge sense of relief” after a judge ruled in their favor in a landmark Chinese drywall case.

Tuesday, U.S. District Court Judge Eldon Fallon ruled for Tatum and Charlene Hernandez in their suit against Knauf Plasterboard Tianjin, or KPT. Knauf is a German company that manufactured the toxic drywall in China, which has now contaminated the Hernandez’s home off Highway 59 between Mandeville and Abita Springs.

Judge Fallon awarded the Hernandez family $164,000 plus attorney’s costs, which continue to mount. That money is to cover the cost of ripping out the walls and replacing damaged wiring and appliances.

“Because of the Hernandez family,” attorney Russ Herman added, “we now know what you’re entitled to.”

The ruling set the legal standard at a little over $80 a square foot. Attorneys representing the Hernandez family said at a press conference Wednesday, they believe that number can be applied to others with Chinese drywall.

“We believe that this is a solid decision and could be and should be predictably and reliably applied to other properties,” attorney Steve Herman said.

The question now, when will the Hernandez family get the money they need to re-mediate their home? For now, they are living in the home with their two small children. “This drywall manufactured by KPT has stolen so much from us, and we’re just dealing with it the best that we can,” Tatum Hernandez said.“

Dave Towne: Verdict On Chinese Drywall

http://realestateappraisertips.info/ — Tue, 13 Apr 2010 17:03:17 +0000

http://www.realestateappraisertips.info/ - Real Estate Appraiser Tips! Dave Towne: Verdict On Chinese Drywall

My Comments: Sure, there’s a verdict, but will they be able to collect? Bill Cobb

Appraisers……

This is the latest info about ‘problem drywall’ – a court decision:

Federal Judge in Louisiana Hands Down First Chinese Drywall Verdict

A Louisiana federal judge awards seven families $2.6 million for home
damages caused by defective drywall; Chinese manufacturer ordered to pay
total remediation costs, including repairing interior damage to wires and
appliances.

April 9, 2010
HousingZone

“A federal judge in New Orleans has ordered a Chinese manufacturer to pay
seven Virginia families a total of $2.6 million for damages to their homes
attributed to drywall problems. The decision is certain to impact pending
lawsuits filed by thousands of homeowners around the country whose
residences were badly damaged by leeching sulfur from inferior-grade drywall
imported from China.

The Chinese drywall – used by many builders in recent years as a cheaper
alternative to American-made product – has been linked to a host of problems
by homeowners around the country, including corroded electrical wiring,
appliance outages, rotting walls and personal belongings, as well as ill
health caused by the acrid sulfur fumes. Many of the damaged homes are in
Florida, Virginia and throughout the Gulf region, where builders used the
cheaper Chinese drywall to construct new homes following Hurricane Katrina
and other storms.

U.S. District Judge Eldon Fallon of the Eastern District of Louisiana
apportioned damages to seven Virginia families and is expected to rule again
on another case involving a New Orleans homeowner whose post-Katrina
residence was badly damaged by Chinese drywall. Another trial is scheduled
to begin in early June on behalf of additional homeowners in the Gulf
region.

In his 108-page ruling, Judge Fallon noted that Chinese drywall has a
“significantly higher concentration of strontium and significantly more
detectable levels of elemental sulfur” than drywall manufactured in the U.S.
He further wrote that the “level of corrosive sulfur gases emitted by
Chinese drywall exceeded the safe level established by recognized
standards.”

In addition to manufacturers, lawsuits have been brought against a number of
firms associated with the faulty drywall, including developers and
homebuilders, along with suppliers and distributors. Cases have been brought
in both federal and state courts.

The Consumer Product Safety Commission recently issued an interim report on
drywall issues that recommended many of the remedies proposed at trial.

Law firm Seeger Weiss represented the plaintiffs. Seeger Weiss partner
Christopher Seeger was appointed by Judge Fallon to the Plaintiffs’ Steering
Committee and chairs a committee of national trial teams pursuing Chinese
drywall cases. Seeger Weiss partner Jeff Grand worked with Mr. Seeger on the
drywall case.“

Dave Towne, Appraiser Education Service

Dave Towne: US Consumer Products Safety Commission Issues Chinese Drywall Guidance

http://realestateappraisertips.info/ — Mon, 05 Apr 2010 14:42:17 +0000

http://www.realestateappraisertips.info/ - Real Estate Appraiser Tips – Dave Towne: US Consumer Products Safety Commission Issues Chinese Drywall Guidance

Appraisers……..

On 4/02/2010, the US Consumer Products Safety Commission released information about their recommendations for the repair of dwellings with suspected ‘problem drywall’ … commonly known as Chinese Drywall.

In simple terms, the recommendation is to totally gut-to-studs the interior of affected dwellings including drywall, electrical and plumbing, and re-build.

The web site below has more information, including symptoms and history of the issue:

http://www.cpsc.gov/info/drywall/index.html

Dave Towne: ‘Problem Drywall’ assistance from HUD/FHA

http://realestateappraisertips.info/ — Thu, 31 Dec 2009 19:08:43 +0000

http://www.realestateappraisertips.com/ - Dave Towne: ‘Problem Drywall’ assistance from HUD/FHA

Appraisers……

In mid-2009, problems with a particular ‘overseas made’ drywall were discovered. HUD/FHA has taken steps, per the info below, to help families with those associated problems:

HUD TO ASSIST (FHA-insured ) HOMEOWNERS FACING PROBLEM DRYWALL
Temporary relief available to make home repairs affordable for at-risk borrowers

WASHINGTON – On December 22, 2009, the U.S. Department of Housing and Urban Development announced that FHA-insured families experiencing problems associated with “problem drywall” may be eligible for assistance to help them rehabilitate their properties. In addition, HUD’s Community Development Block Grant (CDBG) Program may also be a resource to help local communities combat the problem.

FHA is reminding its approved lenders that they are to offer special forbearance for borrowers confronted with the sudden effects of damaging drywall products in their homes including the financial hardship associated with related home repairs.

“We’re instructing our FHA mortgage lenders nationwide to extend temporary relief to allow these families time to remove problem damaging drywall and repair their homes,” said FHA Commissioner David Stevens. “We want to remove additional pressures for these families as they find solutions to allow them to return to a safe, decent and sanitary home.”

FHA Type 1 Special Forbearance (noted in Mortgagee Letter 2002-17, available at: http://www.hud.gov/offices/adm/hudclips/letters/mortgagee/files/ml02-17.doc ) provides relief that is not typically available under an informal forbearance or repayment plan. This relief provided can include one or more of the following:

suspension or reduction of payments for a period sufficient to allow the borrower to recover from the cause of default;
a period during which the borrower is only required to make their regular monthly mortgage payment before beginning to repay the arrearage; or
a repayment period of at least six months.
HUD is instructing lenders that no late fees are to be assessed while the borrower is making timely payments under the terms of the Special Forbearance plan. The total arrearage for a Type 1 Special Forbearance cannot exceed 12 months of delinquent payments. Lenders can review borrower applications and make a determination as to the most appropriate loss mitigation tool including loan modification, partial claim, or FHA HAMP. Any questions or clarification regarding the Type 1 Special Forbearance should be directed to the HUD National Servicing Center at 888-297-8685.

Read the entire press release at http://portal.hud.gov/portal/page/portal/HUD/press/press_releases_media_advisories/2009/HUDNo.09-237

Happy New Year everyone…and thanks for allowing me into a small corner of your world!

Dave Towne

Dave Towne: Chinese Drywall & Homeowner’s Insurance Update

http://realestateappraisertips.info/ — Sat, 17 Oct 2009 07:56:11 +0000

http://www.realestateappraisertips.info/ – Dave Towne: Chinese Drywall & Homeowner’s Insurance Update

Washington Appraiser, Dave Towne, offers an update on the Chinese Drywall Situation And Homeowner’s Insurance Issues. Below is what Dave sent out in its’ entirety.

Appraisers…..

Earlier this year, I sent a series of articles about Chinese drywall. This is the latest bit of sad news for homeowners, in an article by the Associated Press:
Insurers dropping Chinese drywall policies

AP – In this Wednesday, Oct. 14, 2009 photo, a sign posted by the developers of Boynton Waters housing development …

Slideshow:Chinese drywall leading to insurance problems

Play Video Video:Homes in Jeopardy Over Toxic Drywall ABC News

Play Video Video:CPSC, lawmakers look at homes with Chinese drywall 13 News, WVEC Hampton Roads

AND, this Article By By BRIAN SKOLOFF, Associated Press Writer Brian Skoloff, Associated Press Writer – Thu Oct 15, 10:45 am ET AS DIRECTLY QUOTED

“WEST PALM BEACH, Fla. – James and Maria Ivory’s dreams of a relaxing retirement on Florida’s Gulf Coast were put on hold when they discovered their new home had been built with Chinese drywall that emits sulfuric fumes and corrodes pipes. It got worse when they asked their insurer for help — and not only was their claim denied, but they’ve been told their entire policy won’t be renewed.

Thousands of homeowners nationwide who bought new houses constructed from the defective building materials are finding their hopes dashed, their lives in limbo. And experts warn that cases like the Ivorys’, in which insurers drop policies or send notices of non-renewal based on the presence of the Chinese drywall, will become rampant as insurance companies process the hundreds of claims currently in the pipeline.

At least three insurers have already canceled or refused to renew policies after homeowners sought their help replacing the bad wallboard. Because mortgage companies require homeowners to insure their properties, they are then at risk of foreclosure, yet no law prevents the cancellations.

“This is like the small wave that’s out on the horizon that’s going to continue to grow and grow until it becomes a tsunami,” said Florida attorney David Durkee, who represents hundreds of homeowners who are suing builders, suppliers and manufacturers over the drywall. “This is going to become critical mass very shortly.”

During the height of the U.S. housing boom, with building materials in short supply, American construction companies imported millions of pounds of Chinese-made drywall because it was abundant and cheap. An Associated Press analysis of shipping records found that more than 500 million pounds of Chinese gypsum board was imported between 2004 and 2008 — enough to have built tens of thousands of homes. They are heavily concentrated in the Southeast, especially Florida.

The defective materials have since been found by state and federal agencies to emit “volatile sulfur compounds,” and contain traces of strontium sulfide, which can produce a rotten-egg odor, along with organic compounds not found in American-made drywall. Homeowners complain the fumes are corroding copper pipes, destroying TVs and air conditioners, and blackening jewelry and silverware. Some believe the wallboard is also making them ill.

The federal government is studying the problem and considering some sort of relief for homeowners.

Meanwhile, the AP interviewed several homeowners who, like the Ivorys, were unlucky enough to purchase properties built with Chinese drywall, and are now being hit with a second and third wave of bad news: Their insurers are declining to fill their claims, then canceling the policy or issuing notices that policies won’t be renewed until the problem is fixed. The homeowners have little recourse since neither the Chinese manufacturers nor the Chinese government are likely to respond to any lawsuits or reimburse them for the defective drywall.

In each instance, the insurer learned of the drywall through a claim filed by the homeowner seeking financial help with its removal.

The Ivorys have sued, but it could take months for their case and hundreds like it to work their way through the courts. In the meantime, they have moved back to Colorado because their three-bedroom ranch home two miles from the Gulf of Mexico is unlivable and soon will be uninsured.

“It’s been an emotional roller-coaster,” said James Ivory, who is still making mortgage payments on the house. “It was all in our heads, nice weather down there, calm life, beaches. Now I don’t know what to do.”

John Kuczwanski, a spokesman for the Ivorys’ insurer, Citizens Property Insurance Corp., said their claim was denied because the drywall is considered a builder defect, which is not covered under the policy. It also considers the drywall a pre-existing condition that could lead to future damage, which is why the company won’t renew the policy unless the problem is fixed.

“If someone were to have bought a new car and there was a defective part, would that person go to their auto insurance to get that fixed or would they go back to the manufacturer?” Kuczwanski said. “We provide insurance, not warranty service.”

Citizens, a last-resort insurer backed by the state of Florida for people who can’t find affordable coverage elsewhere, has received 23 claims about Chinese drywall, and has so far denied five. Citizens could not immediately say how many policies had been canceled or not renewed because of the drywall.

Robert Hartwig, president of the Insurance Information Institute, agreed that homeowners policies were never meant to cover “faulty, inadequate or defective” workmanship, construction or materials.

Tom Zutell, spokesman for the Florida Office of Insurance Regulation, said the cancellations are troubling, but legal. No law prevents insurance companies from canceling policies because of Chinese drywall.

“We are staying out of the fray at the moment,” he said.

Even if a homeowner does not file a claim over the drywall and remains covered, they could later be denied a claim for a fire or another calamity if insurance investigators determine the home contained undisclosed Chinese drywall.

“If you think that by not telling your insurance company about the drywall that you’re protected, you’re sadly mistaken,” Durkee said.

A newly married couple in Hallandale Beach, Fla., saved up for five years to buy their first home only to later discover it had Chinese drywall. They filed a claim with their insurer, Universal Insurance Co. of North America, and were denied.

Universal then sent the couple a letter, stating their policy was being dropped because “the dwelling was built with Chinese drywall.”

The couple then signed on with Citizens, but didn’t divulge the drywall issue, and hasn’t filed another claim. The 31-year-old man requested anonymity because he’s afraid of losing his insurance policy, and thus his home.

“I honestly don’t know what I’d do if that happened,” he said. “All this has basically taken us back five years. We saved money to buy this home.”

Universal did not respond to requests for comment.

Louisiana lawyer Daniel Becnel Jr., who represents more than 200 owners of homes containing Chinese drywall, is advising his clients to avoid filing claims with their insurers or they could lose their houses.

“I really believe everybody should have an insurance claim with this,” Becnel said. “But it’s hard to tell somebody to go make a claim, then they lose their policy … This is a nightmare for people.”

“I tell people flat out if you file, you may lose your insurance,” agreed Mississippi attorney Steve Mullins, who has about 100 clients with Chinese drywall in their homes.

One of Mullins’ clients, Chris Whitfield, a 29-year-old tire repairman in Picayune, Miss., says he moved out of his house because the drywall was making his family sick. His claim was then denied by his insurer, Nationwide, which followed up with notice that he would be dropped because his policy didn’t cover unoccupied dwellings.

Nationwide spokeswoman Liz Christopher declined to comment on Whitfield’s case and could not say how many drywall claims had been submitted or how many policies had been canceled or not renewed.

Whitfield offered to move back into the house, but he said he was told he’d first have to replace the drywall.

“I don’t know what I’m going to do,” he said.

___

Associated Press Writer Damian Grass in Miami contributed to this report.”