Today's Article
'Affected homeowners
may face total
remediation costs of
$150,000 or more and
drops in property
values of 25 percent
or more,' states the
GAO.
The American Spark
New England Homeowners Forced To Pay For Faulty Foundations

By Cliff Montgomery - July 31st, 2020

“In recent years, homes in northeastern Connecticut and central Massachusetts built in 1983–2015 have
begun to exhibit . . . damage” thanks to “concrete foundations containing the mineral pyrrhotite,” which
“expands when it is exposed to water and oxygen and, over time, . . . may crack and crumble,” according to
an eye-opening report just released from the U.S. Government Accountability Office (GAO).

“According to one estimate, 4,000–6,000 more homes in Connecticut could develop crumbling foundations

due to pyrrhotite,” added the study.

But here’s the thing: It appears that much of the cost to replace this shoddy concrete is being forced onto

the homeowners, rather than the businessespeople who sold or used the questionable material to build the
houses.

The result? “Affected homeowners may face total remediation costs of $150,000 or more and drops in prop
-
erty values of 25 percent or more,” declared the report.

Below, the
American Spark quotes major portions of the GAO report:   


Why GAO Did This Study

Certain homes built in northeastern Connecticut and central Massachusetts between 1983 and 2015 have
concrete foundations containing the mineral pyrrhotite. Pyrrhotite expands when it is exposed to water and
oxygen and, over time, concrete foundations containing pyrrhotite may crack and crumble.  

“The Explanatory Statement accompanying the Consolidated Appropriations Act, 2019 included a provision

for GAO to study the financial impact of pyrrhotite. This report describes (1) what is known about the number
of homes affected by pyrrhotite in the region; (2) the financial impact of pyrrhotite on homeowners; (3) the
financial effects on towns, local housing markets, and the federal government; and (4) federal options to
mitigate pyrrhotite’s financial impact on affected homeowners.

“GAO analyzed data from state, local, and private entities about the extent of pyrrhotite in foundations and
associated costs, and federal actions taken in response to pyrrhotite.

“GAO also interviewed federal, state, and local officials; homeowners; and other stakeholders such as banks
and real estate agents.

What GAO Found

“As of December 2019, at least 1,600 homes in Connecticut had confirmed pyrrhotite but the total number of
affected homes is likely higher. According to one estimate, 4,000–6,000 more homes in Connecticut could
develop crumbling foundations due to pyrrhotite.

“Affected homeowners may face total remediation costs of $150,000 or more and drops in property values of
25 percent or more.

“Connecticut established funding to provide homeowners with up to $175,000 towards the cost of foundation
replacement, but affected homeowners are typically responsible for about one-third of total repair costs (which
can include costs for replacing driveways and porches damaged during foundation replacement).  Current
funding is expected to assist 1,034 homeowners.

“GAO found that highly affected towns lost more than $1.6 million in tax revenue in 2018 due to lost
assessment value of the houses affected by pyrrhotite, but town officials told us the losses have not yet
significantly affected their budgets.

“However, officials were concerned that pyrrhotite could have long-term effects on their towns if the number of
affected homes increased or homes were not remediated.

“GAO also found that homes located in highly affected towns and built when pyrrhotite-containing concrete
was used sold for significantly less, on average, than similar homes in less-affected towns. Stakeholders told
GAO that defaults and foreclosures related to  pyrrhotite have been limited to date.

“Some federal funds have already been used for pyrrhotite testing and GAO identified eight additional federal
programs that could be used to help mitigate financial impacts on homeowners. However, most of these
programs have eligibility or funding restrictions that limit their potential for this purpose.

“Stakeholders with whom GAO spoke suggested other federal responses—in particular, declaring pyrrhotite
damage a major disaster or establishing a federally backed insurance product.  However, the Federal
Emergency Management Agency determined that pyrrhotite damage did not qualify as a natural catastrophe,
and a federally backed insurance program may not be feasible since it would serve a small population with

high expected costs.”

Pyrrhotite Damage to Homes in Connecticut and Massachusetts

“In recent years, homes in northeastern Connecticut and central Massachusetts built in 1983–2015 have
begun to exhibit pyrrhotite-related damage. A 2016 Connecticut Attorney General and Department of
Consumer Protection investigation identified J.J. Mottes Concrete Company in northeastern Connecticut as
the only concrete company connected to crumbling foundations.

“The company procured its aggregate from nearby Becker’s Quarry, which is located on a vein of rock that
contains significant amounts of pyrrhotite. Because concrete should not be transported for long periods of
time, it is likely that this company’s product was widely used only in the region.

“However, the company did not have records of the homes for which it supplied concrete.

“In 2016, Connecticut obtained a written agreement from the concrete company and quarry operator to cease
selling products containing aggregate from Becker’s Quarry for use in residential concrete foundations. As of
June 2019, Becker’s Quarry remained operational, but the concrete company was no longer in business.

“As of December 2019, Massachusetts did not have similar restrictions on the quarry, but state officials told us
they were not aware of any construction companies still sourcing materials from this quarry.

“The United States has a voluntary, consensus-based standards system, whereby most documentary
standards (standards that can describe the performance or design of a product, process, or test) are
developed collaboratively by producers and users through private-sector standards development organizations.

“Insurance companies have largely denied claims for pyrrhotite-related crumbling foundations. According to

a Connecticut report, standard homeowners insurance policies generally cover losses involving a home’s
sudden collapse. Foundations containing pyrrhotite degrade over time and thus insurance companies have
concluded that the damage does not meet the policy’s definition of collapse.

“Over the years, homeowners have filed numerous law suits against their insurance companies, challenging
the denial of their claims. [But] In November 2019, the Supreme Court of Connecticut ruled favorably for
insurance companies in three key cases, further limiting homeowners’ ability to recover costs of replacing
foundations with pyrrhotite damage in the future.”



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