Chinese Drywall: Fix is Coming, But Who Will Pay?


Chinese drywall and electrical wiring should be replaced -- that's the consensus opinion of both the Consumer Product Safety Commission and the Department of Housing and Urban Development. With tens of thousands of homes potentially affected, the big question is, who will pay for what will likely be billions of dollars in repair costs?

The two Federal agencies say that decision will be left up to Congress... and we know how fast they act. In the meantime, some builders and communities are already taking action. But some think China should pay.
Residents of Lake Ashton, a retirement community located in Polk County, Florida, were told last Thursday by their management company, Lakeland-based Century Residential, that their homes would be stripped of the tainted material and fixed within months at no cost to those affected. The management company even agreed to provide funds for temporary housing.

Lennar Corp., a major Florida builder, has also been fixing homes for its customers.

That pattern is likely to continue as Congress ponders its next move. "Our scientific investigation now provides a strong foundation for Congress as they consider their policy options and explore relief for affected homeowners," CPSC chairwoman Inez Tenenbaum said in a press statement.

HUD and CPSC not only concluded that drywall must be replaced, but also recommend the removal and replacement of wiring, electrical components and gas-service piping, which can be damaged by gasses given off by the drywall. These repairs will likely cost billions. No one has identified every home at risk, but the government does know that enough drywall was shipped from China to the U.S. to build 60,000 homes. Contractors expect the costs of replacement will be $85 per square foot. So the expense to do the work in a 2,000 SF home could be about $170,000 --- and that doesn't include the cost or rewiring, according to Gannett.

States most affected include Florida, Virginia, Mississippi, Alabama and Louisiana, but the CPSC says it has received about 3,000 reports in 37 states as of February. Some estimate that Chinese-made drywall, which emits a pungent sulfur smell and corrodes metals, was used in about 35,000 homes in Florida and 100,000 nationwide. Homes built between 2004 and 2008 are at risk of Chinese drywall being used. You can find out more information about the issue at ChineseDrywall.com.

HUD has announced financial help for housing insured by the Federal Housing Administration (FHA) to fix affected properties. HUD officials also indicated that Community Development block grants could be used by communities to help fix problems stemming from corrosive drywall.

On March 10, Florida Governor Charlie Christ asked the Federal Emergency Management Agency for help, but the request was rejected just two days later by FEMA's regional director, on the grounds that it is a product safety issue and not a natural disaster. Wonder if FEMA may be asked to change its tune by Congress?

Senator Bill Nelson (D-Fla.) thinks the Chinese government should step up and take responsibility. He's already traveled to China as part of his investigation to ask the Chinese government to help U.S. consumers. He told Gannett: "The way I see it, homeowners didn't cause this. The manufacturers in China did. That's why we've got to go after the Chinese government now."

I agree with Bill Nelson. Why should the U.S. government or builders be responsible to fix a problem caused by defective drywall from China. Isn't it China's responsibility to pay for the fix? Toyota is shouldering the cost of its defective autos; Chinese drywall manufacturers should do the same.

Lita Epstein has written more than 25 books including The 250 Questions Everyone Should Ask About Buying Foreclosures.

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