Virginia Real Estate, Land Use & Construction Law : Virginia Construction Lawyers & Attorneys : Bean Kinney & Korman Law Firm : VA Real Estate, Land Use & Zoning

We've got two new provisions to the Code of Virginia as of this last legislative session which create a perpetual, non-reverting fund to facilitate the remediation of property impacted by the use of "Defective Drywall" in residential construction.  This fund will be administered by the Virginia Resources Authority and the Department of Housing and Community Development ("DHCD"). 

According to the bill's summary, the DHCD will "...develop guidelines for the distribution of loans or grants from the Fund to particular recipients. The grants and loans may be used to pay the reasonable and necessary costs associated with: (i) the remediation of a contaminated property to remove hazardous substances, hazardous wastes, or solid wastes, ( ii) the stabilization or restoration of such structures, or (iii) the demolition and removal of the existing structures or other work necessary to remediate or reuse the real property" due to the effects of "Defective Drywall." Kind of makes you nostalgic for underground storage tanks, doesn't it?

So what is considered "Defective Drywall?"  Well, it's defined at length in the bill's definitions section, so I won't bore you with all the details, but basically it must have been installed during new construction or renovation between 2001 and 2008 and meet the technical requirements of the definition (i.e. sufficient strontium, sulfur or hydrogen sulfide levels, etc.). 

Who can receive loans and/or grants from the fund?  Eligible entities for grants appear to only include local governments (who appear to be able to then use these grants to create incentives for remediation), while loans may also be made to local governments, public authorities, corporations, partnerships, or individuals for the remediation purposes.  The Virginia Resources Authority will get to determine the rates.

So the legislation is in place creating the fund.  What I've learned about government funds though, is that the most important question about any fund is: Is it funded?  Well, I don't know yet.  But I did shoot the bill's patron,  Delegate Oder, an email to see if he could shed any light on how the fund will actually operate for us - we'll let you know when we hear back.

Want to know more about Chinese and other defective drywall from a product liability standpoint?  Check out Tim Hughes' string of posts here.

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Last week we discussed the first Chinese drywall case going to trial in January involves Virginia plaintiffs.  We have two interesting reports that may constitute both shoes dropping at once.

First, Engineering News Record reported on November 25, 2009 that a federal study, "found 'a strong association' between imported wallboard made in China and metal corrosion in U.S. homes in which the drywall has been installed." (subscription required).  These tests results appear consistent with prior testing finding the presence of corrosive chemicals in the Chinese drywall.  Other experts claim that the chemical levels are too low to cause injuries.  The Proskauer Rose firm has analyzed the federal testing results released by the U.S. Consumer Products Safety Commission (USCPSC) and found that, "Indoor testing ... detected little or no indications of various sulfur compounds[.]"(free sign-up required)

The real potential bombshell is that some homeowners have raised similar complaints of sulfur stench and corrosion, but they have no Chinese drywall ... they have American made drywall.  Scott Wolfson, spokesman for the USCPSC, is quoted in the Washington Post on November 25 as saying, "We are not limited in the scope of our investigation to just Chinese drywall."  One homeowner complaining of problems similar to those alleged in the Chinese drywall cases had testing performed on their drywall which was purely American manufactured.  The tests revealed the drywall was comprised of 50% cellulose.  A report from an MIT professor in the matter indicated that the cellulose compound in the US manufactured drywall was releasing sulfurous gases leading to causing corrosion.  University of Florida tests comparing US and Chinese drywall have found in some instances that US drywall released higher quantities of sulfurous gases than the much derided Chinese drywall.

Where does this leave us?

• Proof of causation of personal injuries on products liability cases is very difficult
• The pending Chinese drywall cases are apt to be hotly contested, but even with proof difficulties, any defendants with means should be scared to death of jury trials
• The focus on Chinese drywall may be obscuring a broader risk in the US manufactured drywall markets that has yet to full materialize

Image by Steevven

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