UFFI – The Stigma Lives On?

Posted on: Tuesday, February 19th, 2013

Typically every residential real estate sale agreement contains a clause concerning urea formaldehyde foam insulation (UFFI). This clause warrants that the vendor has never caused the house to be insulated with UFFI and to the best of the vendor’s knowledge the house does not contain UFFI.

First I will set out a brief history of UFFI use in Canada to set the stage.

1960 UFFI was introduced to the building industry. It has been estimated that 100,000 homes, mostly in Eastern Canada, were insulated with this product.

1977 CMHC approved use of UFFI under certain conditions.

1975-1978
Period in which most homes had UFFI installed under a government assisted program called Canadian Home Insulation Program.

1978 Health complaints arose from occupants of UFFI homes.

1979 Health and Welfare Canada set exposure guidelines for homes at 0.10 parts per million.

1980 UFFI was banned in Canada. No number was considered acceptable.
United States banned UFFI in 1982 and the sale prohibited. In 1983 the Court of Appeal struck down that law on the basis there was no substantial evidence linking UFFI to health complaints. UFFI is not widely used in the US but is not banned.
Interesting to note, UFFI is still used in Europe and considered one of the better retrofit insulations.

1981 Federal Government created removal assistance program.

1981 Ontario Government reduced property assessments on homes with UFFI by 35%.

1995 Test case in Quebec Court of Appeal against UFFI manufacturers concluded there was no basis for fear of health risks and no justification for removing UFFI.

As you can see from a review of the background, even though the health claims could not be substantiated, there was clearly a reduction in the value. The fact that removal was costly and there was a stigma associated with a home known to have ever been insulated with UFFI prompted the warranty and full disclosure that exists to this day.

UFFI has been the most thoroughly investigated building product to date and the result is that UFFI is simply not the problem it was feared to be. Anyone who researches this subject will come across many articles and positions authored by people with the credentials to properly provide an opinion on this subject stating that owners of homes with UFFI should not be financially penalized and no stigma should attach.

That said, I was retained to act for a purchaser of a home in which the standard agreement had the UFFI clause stroked out. The deal was firm when it came to me but the removal of this clause caused me concern. I made enquires of the agent who referred the transaction and was informed the vendors just would not confirm there was no UFFI and therefore they were unwilling to include this clause. I was also advised that this fact was brought to the attention of the home inspector and the home inspector confirmed after his investigation that there was nothing to lead him to believe the property contained UFFI. I quickly reviewed the caselaw in this area and it is clear that the courts have accepted that there is no clear link between health effects and UFFI and damages have not been awarded. But what is also clear is that there is a stigma caused by the ordinate amount of media attention surrounding when there was health claims made and there was in fact a government funded removal system.

There does not need to be a basis for fears for the existence of fears to amount to a stigma and the resulting reduction in the purchase price on homes. The fact that this clause remains in the standard agreements supports the concerns of purchasers. In this situation the real estate agent cannot do anything more to assist his purchasers with determining for sure that UFFI does not exist. An acknowledgement can be used to set out the facts at the time of the purchase and confirm the position of the purchasers to proceed to close the transaction based on the information known. Below, I have set out an example of an acknowledgement that was used in the transaction I have explained.

While I would include myself in the long list of people calling for the removal of the UFFI clause I do believe until it is standard to be removed it should be respected. To remove the clause and not take any precautions to find out the reason for the removal, lawyers and real estate agents are leaving themselves open to liability.

UREAFORMALDEHYDE INSULATION ACKNOWLEDGEMENT

FROM: [NTD: enter purchaser’s name]
TO: [NTD: your name and broker]
RE: [NTD: * purchaser from * enter address]
______________________________________________________________________
THIS WILL CONFIRM THAT:

We, [ENTER PURCHASERS NAMES], acknowledge that the vendors, [ENTER NAMES] removed from the agreement of purchase and sale the standard clause with regard to ureaformaldehyde insulation. We were informed it was removed because the vendors were not comfortable with making this representation because they did not know whether there was or was not ureaformaldehyde insulation.

We acknowledge that this matter was brought to the attention of our home inspector, [ENTER NAME]. We further acknowledge that our home inspector concluded after his inspection that there was no evidence to lead him to believe the property is or has ever been insulated with ureaformaldehyde insulation.

We have been advised by our real estate agent, [ENTER NAME], that he has no information to lead him to believe the vendors removed this clause for any reason other than that which has been stated. We have decided to complete this transaction even though there is a possibility that the buildings may contain UFFI.

Dated at _________, Ontario this ____ day of ________, 20__

__________________________

__________________________

The content of this article is intended to provide a general guide to the subject matter. The information does not constitute legal advice and a solicitor and client relationship is not created.

2 Responses to “UFFI – The Stigma Lives On?”

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