Synthetic stucco alert

By: Dave Kirkman Assistant Attorney General

Real estate agents should be aware of a problem in certain areas of the state involving moisture damage to the wall cavities of some newly constructed homes. These wood-framed homes have been sided with a product known as "exterior insulating and finishing system" (EIFS), which is often referred to as "synthetic stucco."

Typically, "synthetic stucco" is applied to foam panels which have been affixed to the sheathing on the outer walls of the homes. The application process is less expensive than applying conventional stucco to masonry or wire mesh subsurfaces. The result is an attractive exterior finish which has become popular with designers as well as home buyers.

Recently, however, building inspectors in Wilmington and elsewhere have detected high moisture levels in wood components of the wall cavities of many of the homes they tested. Architects in the Wilmington area have found similar readings.

High moisture levels often lead to damage of structural features inside the walls, causing wood to rot and plywood or other sheathing to delaminate and deteriorate. Also, in some instances, excess moisture may contribute to termite infestation.

Damage occurs behind the synthetic stucco and therefore is difficult to detect. Often, termites are the first visible clue. But by then, problems may be substantial and expensive to correct. Careful, competent testing with a moisture testing device is the best way to detect the problem in its early stages.

In attempting to identify the cause of the problem, some builders and inspection officials contend that water entering the wall cavities cannot easily escape to the outside of a home which has been sided with EIFS. Instead, the moisture is held inside the wall cavities, where it eventually causes damage. These builders and inspectors further contend that other finishing systems, such as brick veneer and wooden siding, allow moisture to escape.

On the other hand, EIFS manufacturers defend their product. They blame shoddy workmanship and poorly constructed windows, in conjunction with the high moisture levels in Wilmington and other coastal areas where the problem has been most prevalent.

In the Wilmington area, numerous civil suits have been filed as a result of the controversy. And in the U.S. District Court for the Eastern District of North Carolina, a class action lawsuit recently was filed against several EIFS manufacturers.

While these issues are being studied and litigated, real estate agents should refrain from representing the siding on such homes simply as "stucco." Rather, agents should distinguish between synthetic stucco and the more traditional forms.

Commission Caveat

In light of this new information, it is the position of the Commission's legal staff that the presence of synthetic stucco on a property is a material fact and therefore should be disclosed to prospective purchasers. Furthermore, agents should disclose available information about synthetic stucco to consumers and refer them to building inspection offices, manufacturers, and other experts for further information.

In addition, agents may wish to refer prospective purchasers to professional inspectors for a thorough examination of the property.