Mold lawsuits swell legal reserves at major US homebuilders

Some mold suits seek damages beyond the home’s full value

D.R. Horton and Lennar, two of the country’s largest home builders, have sharply increased the money they set aside to cover lawsuits as mold-related claims from homeowners multiply, according to company filings and lawyers involved in the cases. D.R. Horton’s reserves for legal claims — which the company bases on expectations for future claims, including those involving mold — rose 57% to $1.1 billion from the end of fiscal 2022 to the end of fiscal 2025. Lennar’s self-insurance reserve, earmarked for liabilities that insurance will not cover, climbed 21% in fiscal 2025 to $336.9 million.

The litigation adds to the financial pressure on major builders already coping with a stagnant housing market. The litigation comes as tighter energy-efficiency codes have reduced the margin for moisture-management errors, particularly in humid regions.

D.R. Horton, the country’s largest home builder, faces litigation involving thousands of Louisiana homeowners who allege that construction defects allowed moisture intrusion, leading to widespread mold growth. Separately, the Seminole Tribe of Florida is alleging in litigation that Lennar built more than 450 homes with allegedly improperly installed roofs and walls the tribe says harbored mold, causing health problems.

The case of Ashley Frazier, who bought her home from Lennar in 2021, illustrates the financial stakes for individual homeowners. Less than two years after moving in, she said, she began having daily asthma attacks, headaches, dizziness and rashes while her walls sweated and her windows fogged up from humidity. A mold assessment company she hired told her the home was uninhabitable and reported mold levels as high as 2.2 million spores per cubic meter. Just days before, Lennar had brought in its own assessor, who found levels of around 500 spores per cubic meter. By the end of the case, Frazier will likely have spent $75,000 on experts, and her home was recently assessed at $117,000, down from $318,700. “It’s a total nightmare,” she said.

D.R. Horton did not respond to requests for comment. Lennar declined to comment. Builders have argued in court that contracts and warranties signed with homeowners shield them from liability and that mold problems often stem from poor maintenance rather than construction defects. In Texas, as in many states, sellers must disclose the presence of mold to potential buyers.

Tighter energy-efficiency standards may be making builder errors more consequential. Codes designed to keep homes well insulated and to prevent air from escaping also limit a home’s ability to dry, increasing the likelihood of mold growth if builders make mistakes — especially in the humid Southeast. “The industry standard of care needs to evolve to be better,” said Christine Williamson, an architecture professor at Virginia Tech. “We really need to be attentive about how we’re installing windows.”

Home builder lawyers contend that plaintiff attorneys are leaning on flawed testing methods and mold assessors with questionable qualifications while capitalizing on a growing public anxiety about mold’s health effects. “Some of these claims are really tangential at best,” said Ian Faria, a construction defect defense attorney in Texas who is currently defending against about 20 mold lawsuits. “Litigation like this is making [houses] really unaffordable because builders are having to spend a lot of money on experts and on lawyers.”

Lawyers on both sides often use tests that measure the number of mold spores in the air, but those tests can produce vastly different results depending on how they are performed, and there are no standards for how many spores are too many. Mold experts hired by plaintiffs and defendants frequently reach opposite conclusions about what is required to remediate a problem. “One will say it will cost a million dollars, the other will say it costs $50,000,” said Clay McCullough, a lawyer in South Carolina. “The mold litigation isn’t going away,” said Tom Curran, a partner at law firm Duane Morris.

The lawsuits have been propelled in part by a wider public conversation about the health effects of mold. Medical researchers say mold has been linked with exacerbating asthma and other respiratory issues. Online communities and functional-medicine doctors have connected mold to a wider range of symptoms — including “brain fog” and emotional disturbance — under the banner of “Toxic Mold Syndrome.” Health Secretary Robert F. Kennedy Jr. has suggested that mold may be a cause of autism. Mark Mendell, a former air pollution research specialist at the California Department of Public Health, cautioned that mold’s effects are not fully understood and that reactions vary by individual. “People will often attribute things they don’t understand to dampness and mold,” he said.

“There’s a frenzy of building activity, and everyone is in a hurry,” said Ernest Freeman, a Houston-based lawyer who represents homeowners suing builders.