Dry rot: what you need to know
Serpula lacrymans – commonly known as dry rot and often referred to as a “building cancer” – is a destructive fungus that attacks timber in residential buildings, leading the wood to decompose and decay. Dry rot tends to develop in common types of woods. It is most often found in damp, unventilated areas such as basements and crawl spaces.
Dry rot also has the particularity of infiltrating masonry joints and of carrying water and humidity over long distances, and therefore attacking dry materials located elsewhere in a contaminated building.
Dry rot is a concern primarily because of the extent of the damage it can cause to a building, usually requiring major repair work. However, there is currently no study linking exposure to this fungus to harmful effects on human health. For now, the only discussion is about the risk of respiratory allergies in people already affected with such issues.
Although dry rot is not considered mould as such, the conditions in which it develops (dampness, poor ventilation) contribute to the formation of mould in the same areas. Thus it is possible for a building to be contaminated by both dry rot and mould (and other types of fungi), and for that reason caution should be used, as the potential harmful effects of mould on human health are well known.
How to detect it?
Telltale signs that generally point to the presence of dry rot in an immovable include:
- a strong fungus smell;
- wood that feels cottony to the touch, is soft and fragmented;
- wood that is brownish in colour;
- fibrous, whitish cushions;
- warped walls and baseboards.
The real estate broker's duties
To protect the interests of all parties to the transaction, the real estate brokerage professional should, among other things, know how to recognize the presence of Serpula lacrymans in an immovable, commonly known as dry rot. He may also recommend that the parties seek expert advice on the matter.
In order to carry out his ethical obligations, particularly his duty to advise, inform and disclose, the broker must “take steps, in accordance with accepted practice, to learn of any factors that may adversely affect the transaction.” Where necessary, he must also inform the parties to a transaction of the presence of dry rot.
Therefore as soon as the broker has reason to suspect the presence of dry rot in an immovable, here is what he should do, depending on the situation:
A) If the seller’s broker already knows, or learns after signing the brokerage contract, that the property is or has in the past been affected by dry rot:
- He must ask the owner to disclose this in writing on the form Declarations by the seller of the immovable. If the information was learned once the contract was in effect, the broker must use an Amendments form to modify the Declarations by the seller of the immovable.
- He must recommend to the seller to have the air quality tested on the property in order to detect the presence of mould, and determine the degree of air contamination and its impact on the health of the property’s residents. If the test is positive, a mould test may also be necessary.
- He must inform the seller of the impacts of selling this type of property, including the major work that may be required. The broker may recommend that the seller obtain written quotes to evaluate the cost of addressing the issues identified.
- If the seller refuses to allow the broker to disclose this fact, the broker must refuse to list or to continue to list the property, and must purely and simply terminate the brokerage contract to sell.
B) If the buyer’s broker learns that the property is or has in the past been affected by dry rot before submitting a promise to purchase:
- He must inform his client in writing of the potential problems that purchasing this type of property entails. Among other things, he must inform his client of the major renovation work that this may require.
- He must also recommend that his client have the air quality tested as part of a more in-depth inspection. Clause E2.1 of the form Annex – Expert report may be used to this effect. This is in order to detect the presence of mould, and determine the degree of air contamination and its impact on the health of the property’s residents. If the test is positive, the broker should recommend to the buyer to have a mould test done.
- He must also recommend that his client get an expert assessment of the scope of the work needed.
C) If the buyer’s or seller’s broker learns that the property is or has in the past been affected by dry rot once a promise to purchase is in progress or has already been accepted:
- He must immediately inform all the parties, preferably in writing, of this new development. If the buyer wants to go ahead with the transaction, an Amendments form indicating that the buyer has been informed that the immovable is affected by dry rot must be completed and signed by the parties. The broker must also send this form to the buyer’s mortgage lender.
- If the promise to purchase is in progress but has not been accepted, the seller’s broker may, if this is possible, ask his client to submit a counter-proposal stating that the property is affected by dry rot.
- If the promise has already been accepted, the broker must, as in the previous scenario, inform the parties in writing of potential problems and the options available to them with regards to the transaction in progress.
Financial aid to fight dry rot
In July 2021, the Minister of Municipal Affairs and Housing announced an investment of $2 million from the Government of Quebec to extend the Residential Intervention Program - Serpula lacrymans until March 31, 2024. The aim of this program is to reduce the financial burden of homeowners whose homes are contaminated by dry rot by reimbursing a portion of the costs pertaining to decontamination and rehabilitation or demolition and reconstruction work.
For full details, read this article (in French only).
If you have any questions, feel free to contact our information centre Info OACIQ.
For more information
CMHC (PDF): Fighting Mold - The Homeowners’ Guide