Coming unglued over stucco

Damp: Problems with synthetic stucco have led to lawsuits, and some insurance policies now exclude it. Still, many builders say the reviled stucco is a good product if installed correctly.

January 31, 1999|By Robert Nusgart | Robert Nusgart,SUN REAL ESTATE EDITOR

It can go undetected for years, doing devastating damage beneath the skin of a home. The first hint of trouble may come as a water stain on a wall or near a window sill. Or, in Gail Sandager's case, when mold grows on a picture.

"I was cleaning one day and [the picture] was all earth tones. And I thought, `earth tones?' That's not the picture anymore. That's all mold," Sandager said.

So she lifted the picture from the wall, but part of it stuck, taking a piece of the drywall with it. Behind the picture was a large water stain.

"I started to investigate it, and what we found was that the paper backing on the picture was [absorbing] the moisture that was contained in the wall. I hadn't noticed it until [the] poster was full of algae and mold," she said.

What Sandager recently learned was that the Roland Springs townhouse she bought in 1993 had sustained serious damage after water somehow seeped through the home's "synthetic stucco" exterior, got trapped, and eventually rotted the wood interior.

The estimate she got for repairs: $20,000.

But she wasn't the only one with problems. Two of her neighbors who also bought homes built in the final phase of the development by Keystone Homes Inc. in 1989 had damage.

Their only recourse was to do what hundreds of other homeowners in North Carolina, Tennessee and Georgia had been doing for the last five years, take the manufacturers of the synthetic stucco -- known as Exterior Insulation and Finish System (EIFS) -- and the builder to court.

Dryvit Systems Inc. of West Warwick, R.I., and Sto Corp. of Atlanta -- two of the nation's largest manufacturers of EIFS -- along with the now defunct Keystone Homes Inc., were named in the class action suit filed by attorney Gary E. Mason in behalf of the three Roland Springs homeowners.

Mason, a member of the Washington law firm of Cohen, Milstein, Hausfeld & Toll, said the suit he filed Jan. 5 was the first of its kind in Maryland. The suit, filed Jan. 5, does not extend to previous sections of the North Baltimore development constructed by other builders.

But what may really be on trial here is EIFS itself. For the last five years, the system -- used mostly in more expensive homes -- has been under attack as an exterior finish. In a strange way, it is a waterproof system that may work too well.

Builders for years have used EIFS because it is cost-effective, architecturally pleasing and an excellent insulator. In commercial real estate, it has been used widely with little controversy.

The system in question -- called a barrier system -- is generally made of four elements: a foam backing, mesh, an adhesive and a top decorative finish coat. The product is waterproof.

Critics claim, however, if water does get behind the barrier system, through windows or doors, there is no place for it to escape, and the rotting begins.

Who's at fault?

Manufacturers defend their product and claim shoddy workmanship is to blame. Lawyers say the manufacturers never properly instructed workers on how to apply the exterior finish. Others say that the homeowner bears some responsibility, since the system needs periodic checking for cracked caulking and flashing.

"When this problem broke in 1995 in Wilmington, N.C., the immediate reaction from the entire EIFS industry was that this was a very localized problem. And it was the fault of shoddy builders in Wilmington, N.C.," Mason said. "And if nothing else, we have proven over the years that that is a lot of nonsense because this is happening all over the country."

But Joyce Cereto, a paralegal in Dryvit's legal office who has mediated claims, says the company and the product are not at fault.

"Everybody has been engaged in finger-pointing. I come to the table to mediate these cases and I tell you, sir, that the manufacturers of the EIFS are getting screwed, in plain English," Cereto emphatically said.

"We try to make good. We are a good-faith effort company," she added. "We've expended millions of dollars to try to make our product a good product that will endure forever. But if it is not adhered to with special specs and details to follow, pocket guides to follow, application details. If those things are not done correctly, it is not going to work."

And then there are other issues to consider. Could the problem become as significant in the Baltimore metropolitan area as in states further south? What are the disclosure responsibilities for the real estate agent and home inspectors when dealing with an EIFS home? And once disclosed, what might be the effect on property values?

But one thing is for sure -- like some of the affected homes -- the whole issue is a mess.

A history lesson

Synthetic stucco has been in use since the end of World War II. Because it was such a good insulator, it gained favor with contractors during the energy crisis of the 1970s.

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