In what looks to be a precedent-setting case, a Miami jury has determined that a 12 percent discount will suffice for any reputational damage cast upon a residence built with defective Chinese drywall exuding foul smells and corroding metal, according to a CondoVultures.com analysis.

On June 18, a Miami-Dade Circuit Court jury awarded a $2.5 million judgment to the homeowners of a 4,300-square-foot residence that was built using the defective Chinese drywall supplied by the South Florida distributor Banner Supply, according to the Miami Herald.

Most of the judgment is meant to pay for remediating the defective Chinese drywall in the four-bedroom house built in 2007 in the Miami neighborhood of Coconut Grove. The plaintiffs contended that the smell made the house virtually uninhabitable.

The jury decided that homeowners Armin and Lisa Seifart should receive $200,000 - 12 percent of the original $1.7 million purchase price - in compensation to deal with any long-term reputational damage that the property experiences due to being built with the defective Chinese drywall. 

"Scientists and builders know what it takes to remediate a property that was built with defective Chinese drywall," said Peter Zalewski, a principal with the Bal Harbour, Fla-based real estate consultancy Condo Vultures® LLC. "Up until this civil case, the real estate industry really had no idea as to how to quantify the reputational damage associated with a property that has defective Chinese drywall. This case, along with the pending cases, will provide the price discovery necessary to ultimately compensate homeowners who have defective Chinese drywall in their residences.

"This decision, however, does not give us a clear understanding of how a new buyer will view a property that once had defective Chinese drywall."     

The Miami jury awarded $705,000 to pay for the replacement of the defective Chinese drywall, and an additional $1.6 million - an average of $100,000 per month - to cover the expenses that the Seifarts incurred in relocating into a second home while the original home is remediated. 

Before 2009, hardly anyone knew or cared about defective Chinese drywall. Virtually no one understood the impact of this imported building material that has been blamed for metal corrosion, electrical mishaps, and potential health problems.

In the midst of the building boom coupled with the devastation caused by multiple hurricanes in 2004 and 2005, suppliers looked to China for drywall in an effort to deal with the strong demand for building materials.

Many industry watchers expect that the defective Chinese drywall that was imported and installed will have a huge negative impact on South Florida's already troubled real estate market and any home built with significant amounts of it may be deeply devalued.

The true number of homes constructed with Chinese drywall remains uncertain but estimates suggest that between 35,000 and 100,000 homes and commercial properties across the United States, Canada and the Bahamas were made from this material.

The adverse affects of Chinese drywall was first discovered in homes located within Florida in January 2009. Litigators, who are representing hundreds of clients with drywall problems, suspects there may be 35,000 homes infected in Florida alone with large pockets in Miami-Dade, Broward and Palm Beach counties, according to a previous CondoVultures.com report.

Peter Zalewski of Condo Vultures® can be reached at 800-750-0517 or by email at peter@condovultures.com This e-mail address is being protected from spambots. You need JavaScript enabled to view it . Don't forget to sign up for our weekly Market Intelligence Report™ for detailed condo reports. Looking for a property at a deep discount? You are encouraged to take a peek at the Vultures Database™ or view our Video Gallery. Looking for bulk projects direct from developers or lenders? Visit the Condo Vultures® Bulk Deals Database™. Our new books, the Official Condo Buyers Guide to Miami™ , Official Condo Buyers Guide To South Beach™, Official Condo Buyers Guide to Sunny Isles Beach™, Miami's Great Condo Crash: A Chronicle of the Boom and Bust™ , and the First-Time Home Buyers Guide To South Florida™ are now available. Want to see every foreclosure filed in South Florida since 2007? Check out our Foreclosure Database™.

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