Developers concerned about the cost of mold-related lawsuits have a new tool to help them manage some of the financial risk such litigation entails.

The nonprofit GreenGuard Environmental Institute in February introduced a mold risk reduction program that will be the first to certify the design, construction and management of multifamily properties. The program requires developers to come up with “moisture management” plans and follow design guidelines and construction procedures aimed at preventing the introduction of unnecessary moisture into their buildings.

About four years ago, many property casualty insurers began to exclude mold coverage from their basic commercial and residential plans, according to GreenGuard. While many mortgage lenders are attempting to require mold insurance on commercial and multifamily housing, there are still few insurers in this market due to the uncertainty of the risk and the increasing size of jury awards. Most of the recent court awards have not been covered by insurance.

“We hear so much about the financial costs of mold, including the loss of rent along with the costly clean-ups that result,” said Carl Smith, CEO and executive director of GreenGuard. Certification from the GreenGuard mold protection program “gives building owners, and their lenders and insurers, the confidence that appropriate preventive measures have been taken to manage potential losses due to mold damage.”

Certification fees include a $3,000 application fee; an administration fee that is based on the number of certification testing categories; and a licensing fee. The administration fee is $1,000 per category the first year and $500 per category for every year thereafter. The licensing fee is based on company size, industry and the number of certified products or product variation.

GreenGuard at press time was negotiating with two multifamily lenders in the Southeast to reduce their premiums for managers that take mold prevention measures.

For more information on the program, visit

PRI partners with GreenGuard

Bruce Gunter, president of Progressive Redevelopment, Inc., is convinced that mold liability will only get worse. He has partnered with GreenGuard on a pilot project to implement the new mold protection program.

Mold has a profound effect on the resale of multifamily projects, forcing significant discounts from sellers and representing a huge liability to bankers, who are holding the properties as collateral, said Gunter.

His pilot project with Green Guard is a $13.1 million acquisition and rehabilitation of the 196-unit Bradford-Gwinnett Apartments in Norcross, Ga., an affordable housing project financed by tax-exempt bonds. The co-owner of the apartments is The IMPACT Group, a housing nonprofit.

At press time, Gunter was determining the costs of the mold protection program. He said that it would likely be cheaper than certification from the Leadership in Energy and Environmental Design green building program. “There are no new products involved,” said Gunter. “Just extra sealant and caulking. That’s it.”