Chinese Drywall is Here

I would like preface this correspondence by making it understood that I do not put forth any information as facts that are not supported by solid documentation.  When I interject any information in these updates that is based upon speculation or professional extrapolated conclusions I make it clear that the information is my professional and educated opinion.

Even so I still have some who have labeled me as an alarmist with regard to Kitec.  My retort to these people is, "I don't write the music, I just play in the band."  I don't create the issues, but when material issues exist that affect the Las Vegas real estate community my job is to make the real estate sales professionals and consumers are aware of the issues and to provide them with the facts and references so that they can further review and research the information to draw their own conclusions.  Caveat Emptor.

Chinese drywall is well documented to exist in several states.  In my previous flyer on this subject the Consumer Product Safety Commission (CPSC) had received complaints about Chinese drywall in 27 states.  Nevada was not one of the states where the defective product was deemed to exist.

The CPSC has recently updated their information where Chinese drywall is now verified to exist in 30 states.  Nevada is now included in the list of states where the CPSC believes Chinese drywall has been used in residential home construction.  It's here.

That said; allow me to shed some light and provide you with insight on the Chinese drywall issue.  It won't take long for you to understand why the consumer advocacy groups Americas Watchdog and the Homeowners Consumer Center are calling Chinese drywall "the absolute worst environmental disaster ever faced by US homeowners."  (Their words, not mine).

Chinese drywall is an extremely complicated issue and if I were to try to fully educate you on all known aspects of the subject I would be writing for months.  It is still a developing issue and no one has all the answers.

Chinese drywall is a product that has been found to be emitting atypically high levels of a number of different gases.  The product is usually found to produce a peculiar smell most commonly associated with the smell of rotten eggs.  But the majority of the homeowners who have Chinese drywall describe the smell to be more of a chemical nature.  It has been determined that the release of these gases is affected by heat and humidity.  The lack of humidity in our arid region of the country is thought to be one reason why the problem has been slow to develop.

The CPSC has several studies being conducted on Chinese drywall.  In studies conducted by the CPSC of the elemental and chemical composition of 17 drywall samples the results demonstrated higher concentrations of elemental sulfur and strontium in Chinese drywall than in non-Chinese drywall.

Preliminary results of ongoing testing to detect gases emitted from drywall in sealed laboratory chambers show higher emissions of total volatile sulfur gases from Chinese drywall than from non-Chinese drywall. 

Indoor air testing by the CPSC of 10 homes in Florida and Louisiana was conducted to identify and measure contaminants and to inform a drywall home indoor air testing protocol.  This data from a small sample of homes allowed preliminary observations of certain chemicals in the indoor air. The tests did not detect the presence or found only very limited or occasional indications of sulfur compounds of particular interest - hydrogen sulfide, carbon disulfide, and carbonyl sulfide. Concentrations of two known irritant compounds, acetaldehyde and formaldehyde, were detected in both homes with and without Chinese drywall, and at concentrations that could exacerbate conditions such as asthma in sensitive populations. The levels of formaldehyde were not unusual for new homes, however, and were higher when the homes were not air conditioned.

While the studies have discovered certain differences between Chinese and non-Chinese drywall, further studies must be completed by the CPSC to determine the nexus between the drywall and the reported health and corrosion issues. The conclusions of each study are preliminary and may be subject to change with the results of later studies.

Many of the professionals studying the issue seem to be focusing on the gas sulfur dioxide (SO2).  A consensus seems to be forming that SO2 is causing premature and accelerated deterioration of components in the home that contain copper.  Homes containing Chinese drywall are experiencing premature failure of components that contain copper.  Most notable is the premature failure of air conditioner evaporator coils.  The copper coils in relatively new air conditioners are found to be severely blackened and corroded.  In the majority of newer Las Vegas homes these coils are located in the attic where they are an integral part of the HVAC system forced air unit (FAU) (more commonly know as the system blower).

Homes with Chinese drywall are also experiencing premature failure of refrigerator coils, microwave circuitry, televisions, audio equipment such as DVD and CD players, even coffee pots.  It is causing damage to the electrical system of the homes.  When electrical receptacle faceplates are removed from the walls and the wiring of the receptacles is inspected the bare copper ground wiring is found to be blacked and corroded.  Although no one has mentioned it yet it is logical to assume the sensitive circuitry in smoke detectors may also be affected and these highly critical safety devices may not operate as intended when needed.  (Extrapolated professional conclusion) 

There are other indicators of Chinese drywall.  Many plumbing faucets and other finished metal surfaces in the home develop a spotty mottled appearance.  Mirrors delaminate prematurely.  And then there are the health aspects of the situation.

SO2 can cause pulmonary problems and respiratory conditions to develop in otherwise healthy people.  Another gas that is found in atypically high concentrations in homes with Chinese Drywall is Strontium.  Strontium is a heavy metal.  Strontium sulfide may be dangerous to developing children; it affects bone growth.  Chronic exposure to these gases may affect the central nervous system (including visual and sensory changes), cardiovascular system, eyes, kidneys, liver and skin.  Infants, children, the elderly and infirm (particularly those with heart and lung disease and diabetes) may have an increased vulnerability to these gases and the particulates that are released from the drywall.  The particulates from Chinese drywall may invade and adhere to other building materials in the home's structure and personal objects within the home.  Cross-contamination is a real concern.

Although Las Vegas has two sheetrock manufacturing plants; one in APEX and the other off Blue Diamond Road, the Las Vegas community may be affected because of drywall shortages that occurred in the Southeast region of the country.  After hurricanes Ivan, Charlie, and Katrina hit the Gulf regions and repair and rebuilding efforts got underway there was a severe shortage of drywall in the country.  In New Orleans alone more than 200,000 homes needed various levels of drywall replacement.  As available U.S. supplies were sent to the hurricane ravaged regions of the country and inventory of the product began to deplete drywall suppliers began to look elsewhere for additional supplies of the product.  Enter China.

Because of the APEX and Georgia Pacific plants here in the Las Vegas area supplying home builders and the time frame when the shortage began the speculation is that homes built in Las Vegas between 2004 and 2007 will be the ones to contain Chinese drywall.  Lennar is the second largest home builder in the U.S. and many Lennar homes in Florida were found to contain Chinese drywall.  Consequently all eyes have been upon Lennar and they have been scrutinized closely.  Sure enough, the first Chinese drywall class action suits filed in Southern Nevada have been filed against Lennar. 

Currently there is no defined remediation protocol defined for addressing Chinese drywall.  Without question all the drywall in the home will have to be removed.  But the gases may have permeated other porous products in the home such as drapery, carpeting, even the structural wooden frame members of the home.  In some cases it may be necessary to raze the home to the ground and start over again new.  Because there is no defined remediation protocol no one knows exactly what must be done to address the issue. 

Spectrum Inspection Group Inc. is attempting to be proactive in our identification of homes that may contain Chinese drywall.  We are incorporating identification procedures into our normal home inspection scope and there is no additional charge for this service.  While we have incorporated this procedure into our service we do not offer a service that provides this procedure outside of the normal home inspection process (our insurance does not allow us to do this).

One sure fire way to identify whether the home has Chinese drywall installed is tor our inspector to go into the attic area and remove the insulation installed over the ceiling sheetrock.  If the words stamped on the back of the drywall are "Made in China" we have a problem.  But not all Chinese drywall is labeled "Made in China" and in some cases it may be impossible to gain access to the back side of the sheetrock. 

Our inspectors will also be removing the faceplates on a limited number of electrical receptacles in the home to see if the ground wiring is blackened or corroded.  We will also be closely scrutinizing plumbing fixtures in the home to see if atypical pitting or corrosion is present.  If we observe these conditions to exist it is not a definitive conclusion that Chinese drywall is present.  The inspector will recommend further indoor air quality testing be accomplished by a licensed and qualified Industrial Hygienist.

Our firm is also actively working with a homeowner in the Lone Mountain area whose home has all the indications of Chinese drywall.  The home was built in 2005 and the builder of this home is not Lennar.  The homeowner recently vacated the home because both he and his wife have developed unexplainable health issues since moving into the home.  They took up residence in another home in the same neighborhood only to discover that the some conditions existed in the rental home.  We will not release the name of this builder or the location of the neighborhood until the home is positively confirmed to contain Chinese drywall.  The homeowner has retained a very large team of attorneys.

We at Spectrum Inspection Group Inc. are working hard to identify neighborhoods where Chinese drywall is purported to exist.  However the information is being closely held because of the enormous economic impact that the entire neighborhood would sustain once the word is out.

We are also working with the CPSC and other agencies hoping that both a testing protocol and remediation protocol will be developed soon.  We will keep you informed as more information develops.  In the mean time there are several links listed below for you to peruse if you wish to further investigate this issue. 

http://www.chinese-drywall.biz/index.html

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

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

http://www.azobuild.com/news.asp?newsID=6388

http://blog.nola.com/kenner/2009/03/toxic_chinese_drywall_sheetroc.html

http://www.lasvegassun.com/news/2009/aug/21/lawsuit-chinese-drywall-causing-health-problems-la/

http://www.lvbusinesspress.com/articles/2009/09/07/news/iq_30953889.txt

I would like to thank the many people who responded to my request for guidance and provided me with input. Most of the guidance and direction recommendations that I received were very similar. However there were a wide array of suggestions that ranged from, "Do nothing; you're just the home inspector," to "you must take this issue to the state legislature to ensure this type of thing never happens again." Some people thought we were over stepping our boundaries as home inspectors while others complimented our involvement.

A great many people recommended that I take the issue to the agent's broker or to the GLVAR or Real Estate Division. During my twenty-one years in the military one lesson I learned was that the proper initial course of action is always to try and resolve problems at the lowest level. This is what I did.

When I called the Listing Agent and spoke about the potential liability he may be incurring by not disclosing material information that he should disclose in accordance with the "Duties Owed" he was very grateful and receptive. He went on at great length about how he is buried with REO listings and appreciated me bringing this issue to his attention. He is a good guy, trying to do the right thing, and did not need to be either reprimanded or incarcerated.

He sent an addendum to the Selling agent disclosing that the home was plumbed with Kitec. He also sent the Selling Agent copies of all the repair orders, documentation of the repairs that were accomplished, and even forwarded the results of the post mold remediation testing that was performed. It appears that his actions to address the damage and the mold were done by the book. The buyers were very grateful that nothing seemed to be glossed over and now feel that they received the level of disclosure they were entitled to receive.

We also discussed with the Listing Agent that because the home was built by Woodside Homes who is in bankruptcy that the presence of Kitec may become an appraisal condition because it affects the habitability of the home, even on a conventional loan program. We suggested the Listing Agent contact the Asset Manager, request that the Kitec replumb be accomplished prior to title transfer at the bank / current homeowners expense, and to have the prospective buyer sign an agreement that assigns any remuneration from the class action lawsuit to the bank that paid to have the replumb accomplished. Everyone involved thought it was a good path of resolution that created a win / win situation and went off to their legal counsel to verify that this was something that could be done.

The buyers are willing to move forward with the transaction once the replumb is accomplished and will have a better than expected 25 year warranty on the plumbing system. All the repairs the Listing Agent had performed were professionally accomplished and this was confirmed during the course of our inspection. The buyers are now looking forward to spending the Christmas holidays in their new home.

For those of you who suggested that we, the home inspectors, should have stayed out of the fray because we were over stepping our boundaries; I disagree. Times have changed and the home inspection industry has advanced remarkably in the last ten years. This means the value of home inspections has increased dramatically.

Gone are the days where if someone wanted to become a home inspector you needed to look no further than the advertisement section in the back of a Popular Mechanics magazine for the "You Can be a Home Inspector" ad that was usually listed right next to the "Truck Master School of Truck Driving" ad. More and more the home inspection industry is becoming populated with intelligent, clear thinking, and conscientious professionals who not only uncover problems but offer solutions to the problems.

That's not to say that the deplorable $99 checklist report style inspectors are not still out there. They are. To ensure that you have the opportunity to meet one of those guys all you have to do is give you clients a list of three inspection companies to pick from. They will shop for their inspector based on price and bring one of those guys to your next inspection.

The age old axiom of "refer no less than three inspectors" is an archaic holdover from a time when literally all inspectors were providing substandard inspections that could be counted on to omit items of significance and agents needed to provide separation in order to limit their liability.

A great home inspection will not only uncover all the significant problems with the home but will provide you with a course of action or path of resolution for addressing the issues.

Our proactive involvement in this situation prevented the buyers from walking away from a home they truly wanted to purchase but did not want to inherit the proverbial Tom Hanks and Shelley Long money pit. Both agents in the transaction were delighted at the level of involvement we provided. The Selling Agent referred her buyers specifically to us without giving them the "list of three" and we reflected well upon her. There is no question that when this new homeowner has friends, relatives, or associates who are looking to buy a home that they will refer these people to this agent.

Don't you love a happy ending?