Tax Breaks

Rob Wittman, a Virginia Congressman, is doing what he can to help consumers who have been affected byChinese drywall. He recently filed a bill that would help these homeowners get some tax relief. If the bill is passed, it will allow homeowners to deduct the costs of not only getting rid of the problem, but also the expenses associated with finding another place to live.

If this were to pass it would be great news. the cost of remediation borne by the homeowner would go down dramatically. I doubt that it would go away completely since most people don’t pay enough in taxes to offset the cost of total remediation. But boy what a great start.

Talk about economic stimulus! A ll the taxes rebated would go directly into the hardest hit sector of the economy – construction. And of course, the contractors who receive the money would be responsible for paying taxes and so would their suppliers and their workers.  It could also shorten or eliminate a lot of the ongoing litigation and serve to keep insurance rates down.

This is the type of bootstrap program that makes sense for average Americans saddled with a problem that no one anticipated.

Here’s hoping that this is some light at the end of the tunnel.

Chinese Drywall – hidden winners

Help for homeowners with Chinese Drywall (CDW) does not seem to be coming fast enough. And where there has been help such as local property tax breaks, the amounts are minimal compared to the cost of removal.  And yet there are some people out there who are betting that they can benefit from the Chinese Drywall situation.

Investors are no longer waiting on the sidelines. They are lining up when subdivisions with Chinese Drywall are identified. At this point it looks like the investors are primarily looking at vacant new construction properties owned by distressed builders or banks who have foreclosed on the properties. Bought cheaply enough these houses can be completely gutted to the bare walls and put back with new HVAC, plumbing, electrical and finishes. Then with the curse of Chinese Drywall hopefully removed the remediated houses can be resold for a substantial profit.

Are there downsides and risks associated with this process. Yes, there sure are. There is no agreed protocol for removing CDW. Done wrong the house can revert back to it’s distressed stage and begin to smell like rotten eggs again. In some cases the whole process of discoloration, pitting and deterioration of finishes, wires and HVAC can come back. No matter how profitable the project looks, there is no way to remediate it twice and still make money. Not only that, but if the problem returns after the property is sold to a new owner and the new owner has received full disclosure about the remediation, there are a whole new bundle of legal problems for the would be investor. A careful investor will therefore go overboard and leave no stone unturned in completing the remediation of each house.

While some remediators will save and clean at least some of the hard goods in the house, such as doors, cabinets and countertops. Others won’t even take that much risk. They remove everything and start from scratch with all new components except for the concrete, masonry and framing. Even these remaining members can be vacuumed with special HEPA filter vacuums and then sealed or encapsulated prior to re-installation of finishes. Some contractors will flush the house with forced fresh air or chlorine dioxide gas. And some contractors have started using ozone as a post removal treatment.

Of course the plan of attack is up to the owner and contractor. There are no official standards. At this time Judge Fallon in New Orleans has announced a recommended protocol for those house involved in litigation over CDW. His recommendations include power washing the inside of the structure. Most contractors that I have spoken to are leery about introducing water and therefore potentially mold into an already compromised indoor environment. But, these recommendations don’t apply to investors who are looking to turn a profit on the re sale of the property. Each investor is deciding what approach they are going to take one property at a time.

If you are planning to buy a house that has been remediated, I would go carefully over the protocol that was used and get as many assurances as possible that the problem has been solved. Also, if there are problems in the future what  is the remedy and who is going to be financially responsible.

Overall, I think the best strategy right now is for a potential buyer to work with an investor and remediator right from the beginning. Hire an independent 3rd party inspector to review the remediation plans. The inspector should visit the property while the remediation is underway and offer independent assessments that all of the work that is agreed upon is being done up to professional standards.

In a field where there are no agreed methods of disposal it may seem like an impossible criteria to meet. But there are similar situations in construction such as mold removal, asbestos abatement, radon and other chemical contamination situations. Inspectors who have extensive background in treating contaminated buildings will have a common sense approach to CDW removal as well. Everything should be clean. Workers should be protected. Permits should be obtained. Debris should be disposed of according to state and federal guidelines. Avoid cross contamination. Have a written work plan and daily reports showing how it was followed. Have photo documentation of the entire process.

Buyers should look for a clearance standard that they are comfortable with. In my last post I mentioned an air filtration test that can be sent to an independent laboratory for confirmation that there are no CDW compounds still in the air prior to re installation of new drywall. There is another company which is leaving drywall in place, chemically treating the structure and then testing the drywall for any residual traces of active CDW compounds. The more stringent the clearance protocol is the better for both the investor, the remediator and the eventual purchaser.

Of course, non of this helps the homeowner who bought a house and is now saddled with all of the CDW issues. Somewhat like the rest of the countries problems, it’s not Joe homeowner who is catching a break on this one.

Chinese Drywall Testing in Florida

I have just returned from Parkland FL where I spent three days with various remediation contractors, builders, scientists and engineers testing removal methods for Chinese drywall (CDW) from a 5000 sf house. When I arrived the house had been tested for the presence of CDW 3 ways. First the original contractor listed the house as containing CDW. There was a visual inspection for corrosion of wiring AC coils etc. The final verification was use of Xray florescence. Supposedly this technique can identify the presence of CDW and actually pin point it to specific boards if used properly. All Drywall and fixtures were removed from the house. Anything that is going to be put back in the house was stored in containers off site. The house was ventilated and all surfaces were double HEPA vacuumed.
Generally, this is as far as most remediators go. The source of the problem has been removed – start with the put back of new drywall.
However, there have been reports of such remediation failing and the rotten egg smell coming back. Therefore additional steps were taken to assure that they got it right the first time.
First the inside of the house was heated. I am not a scientist, but one of the scientists present explained that porous material such as masonry block, wood or light weight concrete can trap vapor which is escaping from CDW. I cannot speak for the science, but there did not appear to be any odor when we were in the house, but there was a rotten egg odor after the heating process was underway. After 12 hours there was no residual odor and the process was deemed to be complete.
The remediator then began to re vacuum the house after which he intends to spray first an anti microbial product and then a chemical fog that contains particles which would bind with sulfur gas and render it inert. Again, I am not a scientist, I’m just reporting what went on.
The next step scheduled for next week is to use an air scrubber with a special accordion pre filter. The pre filter is impregnated with the same chemical mentioned above. As indoor air is pulled through the scrubber it passes through the pre filter. Any residual sulfur gas should then be captured. The accordion filter will be sent to a laboratory for analysis. If there are sulfur compounds found on the filter, the remediation will be deemed a do over. If there are no compounds the contractor will start reinstalling new drywall.
I liked that there may be a definitive non invasive test for CDW (the Xray florescence). I also like that there was a testing methodology to see if remediation was successful. Now if we could find someone to pay for all this…