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The Worldwide ERC® Real Estate and
Mortgage Forum has been following the issue to ensure members are aware of the
problem before taking a potentially affected home into inventory or being
considered for purchase by a transferee.
On 1 August, the Senate passed by 92
to 6 the FY2019 Department of the Interior, Environment, and Related Agencies
Appropriations Bill (H.R. 6147) which included language of the FY2019 Financial
Services and General Government Services (FSGGS) Appropriations Bill. The first
provision related to crumbling foundations falls under the FSGGS section of
H.R. 6147. The language would direct the Government Accountability Office (GAO)
to conduct a study to examine the financial impact of pyrrhotite in concrete foundations
and provide recommendations on regulatory and legislative actions to help
mitigate the financial impact of such foundations on homeowners and other
The second provision relates to the
Interior and Environment portion of the bill under the United States Geological
Survey and provides $100,000 in funding for the development of a map depicting
pyrrhotite occurrences in the United States. There are hundreds and perhaps
thousands of home foundations which have an excessive amount of pyrrhotite,
which is the root cause of the crumbling. The Connecticut counties most
affected are Hartford, Tolland and Windham. These circumstances are creating
unsafe and, in some cases, uninhabitable dwellings.
The houses in question all have
concrete provided by one concrete vendor and material obtained from a
Willington, Connecticut quarry. The time period of the affected homes is hard
to definitively identify but appears to run from the very early 1980s to well
into the 2000s. Of course, relocation professionals should also keep in mind
that additions, garages or other repairs may have been made to homes outside of
this time period with the concrete in question.
This specific concrete mixture has
high levels of pyrrhotite, an iron sulfide mineral that can react with oxygen
and water to cause swelling and cracking. The concrete vendor denies
responsibility, asserting that the problems arise from improper installation. To
further complicate matters, records where the concrete mixture was used were
destroyed in a fire a number of years ago.
The chemical reaction that causes
crumbling home foundations can lead to catastrophic home collapses. At the
present time, the best remedy once cracks start to appear is a total foundation
replacement, which presents daunting financial and logistical challenges for
Related: U.S. CFPB Concludes RESPA Investigation of Zillow Co-Marketing
While not a guaranteed indicator of a
future problem, prior to accepting a home into a relocation program, a thorough
inspection of the foundation should be completed. Additionally, in-bound
transferees should be made aware of this issue and encouraged to have a
thorough foundation inspection to reduce the risk of purchasing an impacted
Hershman is Chair of the Worldwide ERC® Real Estate and Mortgage Forum and
Senior Partner, Baillie and Hershman
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