Lawsuits against multifamily landlords over mold and habitability are on the rise.

The issue of mold in the U.S. housing stock is a growing one as properties age and rising costs lead to deferred maintenance. Keeping properties free of the fungus is crucial to maintaining tenant health. 

At the same time, increased risk of lawsuits has driven up the cost of habitability insurance, pushing some carriers out of states like California. As a result, some landlords find themselves in a situation where they can face substantial legal costs without a sufficient backstop. 

“This is the biggest threat to multifamily ownership today in LA,” said Chris Gray, president of Moss & Co., a Los Angeles-area property management firm that operates more than 15,000 apartment units.

“All of this came up in the last five years,” he said. “Prior to that, it wasn’t an issue and wasn’t part of our vocabulary.” 

Nationwide data isn’t available, and many cities don’t break out mold data amid other housing complaints, but there are signs of significant growth. The number of reported mold violations in LA County for buildings with five or more units more than doubled from 2021 to 2025, reaching 116 last year, according to the county health department.

New York City's 311 city services number tracked more than 31,000 mold complaints in 2025 and is on pace to at least match that number in 2026, with more than 18,000 through midyear.

Complaints spike in July through October in the city, and this summer's record heat and humidity are predicted to exacerbate the problem, according to RentHop’s annual mold study of New York City.

The number of mold and habitability lawsuits across the nation, which impact the rental market and affordable housing market, has surged, according to Michael Pugh, CEO at Local Initiatives Support Corp. He has seen insurance premiums rise 300% or more.

Habitability insurance varies broadly in cost, based on age and size of the building, among other factors. Premiums can range from $375 to $1,400 per unit, according to Pro Insurance Group, and water damage is the most common type of claim. The Illinois-based brokerage refers to habitability insurance as “one of the most volatile and rapidly changing commercial property lines in 2026.”

The rising cost and decreasing availability of these policies leave landlords more vulnerable to financial penalties in the event of a suit.

Jury verdicts in the cases can reach into the millions of dollars, as in a February decision that awarded $2.3M in a Long Beach, California, mold case. Hiring an attorney and mounting a defense without insurance can cost landlords between $50K and $100K, Gray said.

It becomes hard for owners to deny any claims until they have paid for investigations, lawyers and testing, which means it often makes sense to settle, said Michael Hall, vice president of casualty at Golden Bear Insurance Co.

“I’ve been in the business for a decade, and it went from not being a thing to definitely being a thing,” Hall said.

Firms like Gray’s are responding by instituting proactive maintenance and testing regimes, which raises operating costs.

A combination of aging properties and more instances of inclement weather has led to more properties becoming susceptible to mold issues.

Climate change is “speeding along” the aging process for the housing stock, said Sarah Adbelhadi, lead researcher for the National Low Income Housing Coalition. At the same time, there has been disinvestment from the federal and state levels to support upgrades and repairs to affordable housing.

There’s no question that, especially due to bad actors in the multifamily industry who aren’t properly maintaining apartments or handling habitability issues, mold can become a serious housing and health issue. 

Increasing research has shown mold can be a trigger for childhood asthma and other health problems. There have been well-documented health and habitability issues in military, public and manufactured housing, underscoring how damaging deferred maintenance can be. 

The pandemic also helped accelerate the number of mold-related lawsuits filed, according to Jake Cohen of Cohen, Cohen & Cohen Law in Southern California, which focused on car accidents before the pandemic.

Because people weren’t driving as much during lockdowns, the number of car accident cases dropped. Someone at Cohen’s firm bought a book about litigating toxic mold cases, and they have since become a focus of the firm’s work. 

At that time, it was a niche area of the law. But as other areas of litigation, especially the well-worked auto accident sector, have proven less lucrative or more crowded, more firms have turned to mold litigation, Cohen said.

“Long story short, the mill firms are spending money to advertise to get these mold cases,” Cohen said. 

California is far from the only place where there has been an uptick in such legal actions. In February, a Las Vegas jury awarded a family $6.6M after it found the apartment owner at fault for failing to remediate mold issues that cause chronic health problems. 

Dale Walsh, a mold consultant and remediation expert who testified for the plaintiff during the case in Las Vegas, said the demand for his service has steadily grown in recent years.

An Austin couple, Kelsi and Corey Wright, was awarded $1M after their apartment was infested with mold following a water leak, leading to health issues for the family. 

Science has improved around the impacts of mold on health, making juries more responsive, according to Kristina Baehr, who represented the Austin couple in their legal battle. 

“I got to ask a Texas jury in the Wright case, ‘Is she a Karen, or is she an Erin Brockovich?’” Baehr said, referencing the paralegal and consumer advocate whose work was instrumental in building a groundwater contamination case against PG&E in 1993, inspiring an award-winning film sharing her name. “The jury ultimately found she was more like Erin Brockovich and rewarded her accordingly for taking a stand.”

Baehr’s firm, Just Well Law, which grew out of her family’s own experience with a toxic mold lawsuit, has helped found the Safe Housing Collaborative, a collection of lawyers working on toxic housing issues that will hold its first conference in October in Austin. 

“Lawyers may be skeptical. The insurance defenders, the old guard, may be skeptical,” she said. “But the American people have seen what mold does. And they've seen people get hurt.”

Many of the issues involve bad actor landlords, according to Kathy Zeisel, director of special legal projects for the Children’s Family Law Center.

But other landlords are more responsive to the problem, she said, with some supporting a 2014 Washington, D.C., law change that was among the first in the nation to increase inspections and require professional remediation after a violation is discovered.

When faced with a complaint, some owners very quickly hire an inspector, but others don’t, letting the burden and cost of conducting tests fall to the tenant, Ziesel said. Many can’t afford to hire someone to test for mold without support from a legal services organization, which can create a stalemate for lower-income tenants where a test never happens.

It can cost $1K or more to test for mold, which can balloon to hourly costs for expert witnesses, further tests to verify remediation was successful, and relocation funds during apartment upgrades, depending on the case. 

While lawsuits have only recently become more common, mold and habitability have long been a focus of tenant activism and organizing. Within roughly the last decade, especially after the pandemic supercharged a push for renter protections, cities and municipalities have passed tenant protections, beefed up enforcement, provided tenant legal aid and increased inspections. 

“I think habitability has had this kind of resurgence in the tenant activism space and just people being more aware of what their rights are,” Adbelhadi said.