Update - CT and MA Foundation Issues
1/28/2020Update on Crumbling Foundations Issue in CT and MA
Background
Beginning around 1983, companies Joseph J. Mottes and Becker Construction supplied aggregate for use in
the manufacture of concrete from Becker’s Willington quarry that contains pyrrhotite, a naturally occurring iron sulfide that expands when exposed to moisture. The contaminated aggregate was used for construction of residential poured concrete foundations. Over time many of these foundations began to exhibit excessive cracking and were deemed unstable. In all, an estimated 35,000 homes could be affected, located primarily in north, central and eastern Connecticut, but not limited to these areas. To wit, several adjacent areas of Massachusetts have also reported impacted properties (please refer to the Update below)
At the behest of the governor, in August 2015, the State of Connecticut’s attorney general and Department of Consumer Protection (DCP) investigated the matter and issued a report dated July 7, 2016 (for a full summary of findings, please refer to https://www.cga.ct.gov/2018/rpt/pdf/2018-R-0239.pdf). A few relevant items:
• Provided confirmation that pyrrhotite content is the cause of foundation failures.
• Construction of potentially impacted foundations dates back to 1982-83.
• The sale of aggregate from the Becker Quarry, confirmed as the lone source of contaminated material, was halted in May 2016.
• Established the Connecticut Foundation Solutions Indemnity Company, LLC (CFSIC) - a nonprofit captive insurance company for the public purpose of assisting residential homeowners with crumbling foundations. By law, the captive exists until June 30, 2022, unless extended or terminated early.
• CFSIC is funded through a five-year bond authorization of up to $20 million per year and a $12 homeowners insurance surcharge (PA 18-160). The surcharge applies to residential homes, including condominiums. 85% of the surcharge revenue will be deposited in the Crumbling Foundations Assistance Fund, which CFSIC will use to provide financial aid.
• Residential Property Disclosure Report - by law, a seller must provide a purchaser a written residential condition report or credit him or her $500 at closing (CGS § 20-327c). As of July 1, 2018, the residential property condition form must include:
1. A new statement on concrete foundations suggesting prospective buyers have the foundation inspected by a licensed structural engineer for deterioration due to the presence of pyrrhotite.
2. Disclosures on the building’s structure and any improvements made to it, including
questions on repairs done to the foundation (PA 18-179).
• Testing Program - In February 2017, the State Bond Commission allocated $5 million to provide a grant to the Capitol Region Council of Governments (CROG) to run a foundation testing program. The program generally reimburses eligible homeowners as follows:
1. 50% of the cost, up to $2,000, for pyrrhotite testing of two core samples.
2. 100% of the cost, up to $400, for visual inspections.
For more information, see CROG’s program website - https://foundationtesting.org.
Update – Massachusetts
According to the Massachusetts Special Commission to Study the Financial and Economic Impacts of
Crumbling Concrete Foundations, significant impact has been revealed in western and central areas of the state. The commission has advised the following:
• Initial estimate of 2,000 homes impacted.
• With an average cost of $150,000 to $250,000 per home to mitigate, costs will exceed $350 million.
• Recommends that Massachusetts follow Connecticut’s lead and create a captive insurance corporation to handle payouts for affected homeowners.
• Called for enhanced training programs for home inspectors, town tax assessors and real estate professionals.
• Continued reimbursement by the state for:
1. Up to $400 for visual testing conducted by a licensed engineer.
2. 75% for testing of two core samples, up to $5,000.
• Recommends that lawmakers require that all Massachusetts home sellers disclose any testing, inspection or repairs performed on their foundation, and require, at the time of sale, core testing on any foundation built between 1983 and 2015 within 30 miles of Becker’s Quarry in Willington, Connecticut.
In addition to the above, please be advised that the REALTOR® Association of Central Massachusetts is providing an advisory for the benefit of buyers and sellers. A copy of the advisory can be reviewed at: https://www.realtorscentralma.org/wp-content/uploads/2019/06/CONCRETE-FOUNDATION-ADVISORY-TO-BUYERS-and-SELLERS-In-Massachusetts.pdf.
GlobeSpec’s Findings to Date
GlobeSpec facilitates inspection and core sampling assessments in the affected regions in collaboration with our associate home inspectors and engineers. In 2019, we completed 23 engineering/core sample assessments. Results revealed 3 properties with confirmed pyrrhotite contaminated foundations. With an average repair/replacement cost ranging between $150,000 and $250,000, our clients were able to avoid estimated financial liabilities between $450,000 to $750,000. To our knowledge, there is no database that
pinpoints properties built with contaminated concrete. Testing continues to be the only way to determine which homes are at risk.
Recommendations
GlobeSpec will continue to monitor developments as this issue evolves in both, Connecticut, and
Massachusetts. We recommend the following:
• Visit the additional links included throughout this document and review all available information with your legal advisors.
• Ensure your homeowner disclosure forms are properly updated.
• Consider inspecting all properties in Connecticut and Massachusetts.
We are available, at your convenience, to participate in further discussion regarding policy considerations and inspection logistics.