Chinese Drywall Settlement Could Reach $1 Billion
Homeowners and manufacturers reach historic agreement.
Dec. 15, 2011— -- A historic court settlement may mean relief at last for homeowners who purchased houses built with defective Chinese drywall.
Knauf Plasterboard Tianjin Co. has agreed to create a fund to pay for repairs that could grow as large as a billion dollars. The money would cover approximately 4,500 homes, mostly in Florida and Louisiana, but also in Mississippi and Alabama. Residents of 42 states have reported problems with Chinese-made drywall in their homes.
The defective drywall contained excessive sulfur, which caused metal pipes, wiring and even silverware and jewelry to corrode. Homeowners also reported health effects such as coughs, nosebleeds and headaches. One non-profit home builder, Operation Helping Hands, went out of business because it spent so much money replacing Chinese drywall in homes it had built.
The settlement, announced by U.S. District Judge Eldon Fallon of New Orleans, was complex because it involved American houses built by Knaupf, a German company, at Tianjin, a Chinese plant. It took nearly three years for the parties to reach an agreement.
Another Chinese Drywall manufacturer, Taishan Gypsum, has not reached any sort of agreement with American homeowners.
Homeowners covered by the settlement will be able to choose whether they want the settlement's designated contractor to repair their homes, whether they would like to hire a credible contractor of their own or take a cash payment.
"We have always believed that the drywall problem was best solved through a collaborative effort involving all parties rather than a courtroom," said Kerry Miller, who represented Knaupf.
The settlement is likely a relief to the covered homeowners, many of whom were disappointed that the Consumer Product Safety Commission never recalled the defective drywall. Instead, the CPSC issued recommendations for how to safely remove it and which metal components of homes should be replaced at the same time. Whether some or all electrical wiring must be replaced is still a matter of debate.
Homeowners will also be able to make claims that they have suffered health effects, but they'll have to prove it. As recently as last week, a Senate subcommittee met to consider whether the sulfur gas that Chinese drywall emits causes serious, long term health effects or not.
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