Synthetic stucco, real damage

When Arnold and Maria Drown selected a stucco exterior four years ago, they thought they were finishing their dream home.

In November, they watched as workers pulled away the wet synthetic stucco, revealing mushy wood that was flaking and blackened with water damage.

“I couldn’t believe how pretty it looked on the outside and how yucky it looked on the inside,” said Maria Drown, a mother of two and a hospital nurse. “It made me angry because we thought we had a nice, beautiful home and we wouldn’t have any problems because it was a new house. I figured we were in a lot of trouble.”

The first-time home buyers are out $21,000 in repairs. An estimated 3,000 synthetic stucco homeowners in Southbridge, Long Point, Georgetown, The Landings, Skidaway Island, Wilmington Island and Richmond Hill may have costly repairs lurking behind their walls and not even know about it.

That’s because the material’s outside hard layer, which looks like stucco, hides a foam that can trap water like a sponge, sometimes leaving homeowners with repairs that can financially drain them.

The most insidious part? By the time the outside stucco begins to show the effects of water damage, it’s too late. And because Georgia offers little or no protection for homeowners, an unsuspecting buyer could still end up with a synthetic stucco home. Meanwhile, homeowners’ insurance won’t cover the cost of repairs, and legal remedies dissolve over time.

At least 23 residents in Bryan, Effingham and Chatham counties have filed suit against various local builders and half a dozen makers of synthetic stuccos. Gene Brooks and Russell Stookey, two lawyers handling the cases, expect many more in the future. They had four homeowners hire them last week alone.

“This is going to do more damage than Sherman’s march through Georgia and nobody knows about it,” Stookey said. “This is going to take citizens out one home at a time.”– Carl Elmore/Savannah Morning News

One of the strengths of the foam-core stucco is its workability. The blocks at right are not blocks at all, but pieces of foam shaped like blocks and covered with synthetic stucco. Although the foam is easily shaped, it is also easily marred. Unhappy homeowners pointed out spots where ladders, tree limbs or even childrens’ toys had poked holes in the walls.

Georgia and North Carolina are the only states to ban the use of non-draining synthetic stucco for residential construction. But synthetic stucco homes can be found just about anywhere, and lawsuits are showing up across the country.

The debate over who will pay for the damage — estimated at $8 billion nationwide and $14 billion by the year 2002 — will probably continue for years to come.

Builders blame the manufacturers of the foam system for not taking more responsibility to inform builders about proper installation, while manufacturers blame the builders for faulty installations.

Meanwhile, the industry has developed a version of the foam system that allows water to drain from the siding.

“Despite these lawsuits, despite the moisture intrusion debate, the industry is still growing 7 to 10 percent a year,” said Bernard Allmayer, spokesman for an association of synthetic stucco manufacturers in Morrow, Ga. “Why? Because architects love to use this product and so do builders. It offers tremendous design appeal. And it has a tremendous insulating benefit.”

The stucco story

Synthetic stucco was born out of need in the years following World War II, when scientists attempting to rebuild Europe came up with a system that could insulate against the harsh European winters and also put a smooth face on the rubble-made buildings that rose in the post-War era.

It was known as exterior insulation finishing system, or EIFS. Pronounced “eefs,” it consists of an adhesive, a Styrofoam-like insulation layer, fiberglass mesh, a base coat and a durable finish coat — all treated with chemicals to make them hard.

In 1969, it was brought to the United States and grew popular as the energy crisis took hold because it was a great insulator. It was also cheaper than traditional stucco — a cement substance troweled on thickly — and it allowed builders and architects to give homes fancy moldings and gingerbread details rather inexpensively.

But it was placed on wood structures rather than masonry, and that, many observers said, is at the core of the problem today.

“If you nail it to wood, it’s like a sponge,” said Stookey, the lawyer. “It’s going to get the wood wet.”

The synthetic stucco system is designed to keep water out. But if moisture does get in either through windows and door frames or at the base, roof line and chimney, it can’t get out and ends up rotting the structural wood that forms the home’s core. In the worst cases, termites move into the foam and hang out, dining on the wood skeleton at their leisure and rotting the home on the inside.

“We were getting claims from people saying they were getting termites in 6-month-old homes,” said Roger Wasdin, a termite field supervisor for Coastal Georgia Exterminating.

No one apparently knew this in the ’70s and ’80s as the exterior siding grew more and more popular. By the early ’90s, a construction bonanza in the Southeast was fueling a synthetic stucco boom from Florida to North Carolina.

Then in 1994, North Carolina’s coastal New Hanover County inspection department in Wilmington began fielding complaints about synthetic stucco homes, six in one week. To date, the department has inspected about 600 homes and found 94 percent had moisture problems.

Lawsuits and liability

Rayford Murray Jr. wishes he had known this when he spent about $300,000 to build his custom home on Bryan County’s Belfast River in 1994.

The retired firefighter, who returned to his native Savannah after almost a quarter century in California, said he asked for stucco because he liked its look. But he had no idea it was going to be synthetic stucco, which is different from the traditional stucco he had on his previous three homes.

“This is a dream home for me, and for things to occur the way they have …,” Murray said. “I call it a nightmare home.”

A year after the home was built, Murray said he came home from an out-of-town cancer treatment and caught his builder’s workers cutting away the bottom six inches of his exterior siding.

Originally, most synthetic stucco was built to the ground, but that was found to cause many problems because the foam would suck up water if it was not sealed properly. Cutting off the portion that touches the ground minimized the damage.

But in hacking away at Murray’s home, the workers left the stucco unsealed, so that water could still get in. Murray has filed suit against his builder, but is not borrowing the more than $100,000 it would cost to fix the problem.

“This (house) was the biggest investment of my entire life,” he said. “I didn’t sweat blood, sweat and tears to lose three-fifths of my assets. They just don’t know who they’re dealing with.”

Clients such as Murray are looking for a solution from lawyers Stookey and Brooks. The lawyers urge homeowners to make haste. In general, homeowners have only six years from when the home was built to seek compensation from their builders in the courts — as long as they have a contract. After that, they’re on their own and the repairs can range from $25,000 to more than $100,000. Lawyers typically take a third of any award.

Stookey began representing those affected after his own law office on Commercial Drive in southside Savannah deteriorated, a victim of water intrusion and termites.

He filed suit and won a settlement to strip the synthetic stucco off the building and replace it with traditional stucco. He would not reveal how much he won, saying the terms of the settlement prevent him from doing so.

Of the 23 cases the lawyers have handled, just three have been completely settled and another three have been partially settled. Again, the lawyers said they could not reveal the terms of the settlements.

But they offered that homeowners for the most part are winning the cost of repairs.

Some Georgia homeowners might also be able to tap into a settlement by one manufacturer in a North Carolina class action lawsuit. Senergy Inc., a company that makes synthetic stucco under the Senergy and ThoroWall brands, has settled and agreed to contribute up to $20 million for repairs. Senergy homeowners in any state, including Georgia, can seek compensation from this settlement.

Gary Shipman, a Wilmington lawyer, is still suing seven other synthetic stucco manufacturers for some 25,000 North Carolina homeowners in the class action lawsuit, which he expects to go to trial this spring. Lawsuits have also been filed against builders and manufacturers of synthetic stucco homes in at least a dozen states.

“States east of the Mississippi and all of the West Coast are going to have the problems with this system,” Shipman said.

Impact on home sales

While the synthetic stucco controversy has reached a crescendo in many states across the country, it has barely gotten a notice in Savannah’s tree-lined streets.

Many homeowners contacted for this story, outraged enough to file lawsuits over the water damage, did not want to talk about it publicly. They said they have invested everything in their homes and don’t want to jeopardize the value should they try to sell. Still other synthetic stucco homeowners don’t even know about it.

“I had an expectation that I was getting real stucco,” Murray said. “This siding was totally foreign to me.”

In North Carolina, Realtors are required to tell potential buyers that synthetic stucco homes have had moisture problems.

Not in Georgia. Synthetic stucco homes are bought and sold all the time, and it’s up to the buyer to beware.

“I know that lots of houses with synthetic stucco get bought and sold every day,” said independent home inspector Andrew Ames. “The problem is that nobody knows about this.”

Judy Nease Ganem, president of the Board of Realtors in Savannah, said she makes it her business to try to find out if a home is synthetic stucco if there is doubt on the part of the seller.

“Because I know if I list your house and it’s stucco, the first thing an agent or buyer is going to ask me is if it’s synthetic stucco, so why not find out this information up front,” Ganem said. “Plus I work in a building that had synthetic stucco and had to be redone, so I’d be real foolish if I didn’t tell you.”

Ganem said in all cases she will recommend that a home inspection be done.

But local Realtors are not required to do this and have not established any policies regarding synthetic stucco homes. Realtors are encouraged to give sellers a disclosure form revealing any potential problems, but they don’t have to.

Meanwhile, a local appraiser said the stucco controversy has not led to as much of a slump in home values as one would expect.

“I think this is a sleeping giant,” said Charles L. Stewart, who appraises commercial real estate. “They’re finding it with home inspections. This leads to the conclusion that a home inspection is a good idea.”

The future of synthetic stucco

In all likelihood, homeowners now building their dream homes will not end up with synthetic stucco homes. Builders have stopped using the product, local building officials said, because they typically can’t get insurance to cover synthetic stucco homes.

“None of the builders are using the product anymore, not because the product itself is a bad product,” said Tony Griffin, president of the Homebuilders’ Association of Savannah. “But they can’t get general liability.”

In fact, many builders, architects and synthetic stucco manufacturers think synthetic stucco is an excellent product.

“It’s a great product as far as weathering the elements,” said local architect Rob Berz. “It’s a valuable product that we use a lot of. But it just has to be used in the right place. Installed properly with the proper control joints, we back it.”

And that’s the issue: Can synthetic stucco be installed properly 100 percent of the time.

“If a (non-draining synthetic stucco) system is put on to absolute protection and the homeowner maintains it absolutely perfectly — they caulk around the windows and the flashing is installed correctly — it can work,” said Marty Duffy of U.S. Gypsum Co., a manufacturer of synthetic stucco. “The problem is you’re asking for perfection in an imperfect world.”

But others think the product is a failure.

“We’ve seen places where it was applied per manufacturer’s specifications, and it’s still damp and has wet spots,” said Joel Wilson of R.V. Buric Construction Consultants in Wilmington, a company that does moisture tests for lawyers Stookey and Brooks. “It’s a system that’s inherently flawed. It can’t be applied 100 percent.”

Manufacturers, such as U.S. Gypsum, have come out with a version that gets rid of any water that might collect in the system. Although its use isn’t overwhelming at this point, it is growing, Duffy said. He said the new version has been tested and is offered with a 10-year warranty.

Griffin said many local builders are even avoiding the new version.

“Most builders steer away from that because it’s too close of a cousin to the other and they wouldn’t want the perception of having that stucco on the house,” Griffin said.

Gregori Anderson, director of inspections for Chatham County, said his office has not received many complaints about synthetic stucco. But he said he knows of many local builders who went back to their former customers and offered to repair homes with moisture problems.

Drown said her builder, Hallmark Homes, offered her and her husband $4,500 to fix a problem that was going to cost her up to $25,000.

Drown thought that was incredible, considering she paid the builder $117,000 for the synthetic stucco home just a few years before. Hallmark Homes’ lawyer, Daniel Cohen, declined to comment on the case.

On a recent trip to the Drowns’ home, she pointed to a pile of wet, moldy wood — the former guts of her home, which had been stripped away and discarded in a corner of her backyard.

“We were caught, we were stuck,” Drown said. “I think our next house will be brick.”

Legal issues reporter Leonora LaPeter can be reached at 652-0311.