The Wall Street Journal
11/06/02
By Sheila Muto
Staff Reporter

Four days before the sale of a 250-unit apartment property in the Southwest was finalized, the buyer abandoned the $30 million deal. The culprit? Mold.

"More and more commercial real-estate transactions are not being done" because of mold in the property, says John Craig, a senior vice president at Jones Lang LaSalle Inc. The Chicago-based real-estate services firm is representing the
owner of the Southwest apartment property, who is currently fixing the mold problem to the tune of about $250,000, he says.

To be sure, mold-plagued properties are nothing new. What is new is the "heightened sensitivity" to mold due to some of the big damage awards to plaintiffs, says Mr. Craig, who has written a report on the problem for Jones Lang's clients. More than 9,000 claims of personal injury, property damage or other loss are pending in the nation's courts, and awards for property damage alone typically range from $200,000 to $400,000, he says. While most of the cases involve single-family properties, many commercial property owners have lost insurance coverage for mold, he says.

Mr. Craig can't say exactly how many commercial real-estate deals have been scuttled by fungus, but he estimates there have been "hundreds of transactions that were materially delayed or killed."

Write to Sheila Muto at sheila.muto@wsj.com