PYRRHOTITE FOUNDATION FAQs
As the name suggests, Pyrrhotite (/ˈpirəˌtīt/) is a naturally occurring iron sulfide (Fe1-xS). According to the Geological Society of America, “rock aggregate in the failing concrete foundations was largely mined from a single quarry, working a stratified metamorphic unit in eastern CT mapped as Ordovician Brimfield Schist. The gray, rusty brown to orange yellow weathering rock, is a medium to coarse grained, interlayered schist and gneiss, composed of oligioclase, quartz, K-feldspar, biotite and commonly garnet, sillimanite, graphite, and pyrrhotite.”
"Crumbling Foundation" and "crumbling basement" are terms commonly used to describe concrete foundations that have begun to deteriorate because of the presence of pyrrhotite aggregate.
Aggregate is composed of mineral crystals of one or more kinds or of mineral rock fragments.
Concrete is made by mixing Portland cement with aggregate, including small rocks and sand.
According to Trinity geologist Dr. Jonathan Gourley, in the presence of moisture/air and calcium, the sulphur in the pyrrhotite reacts and transforms to several secondary minerals, and associated changes in volume lead to a loss of structural integrity. While current science is unable to predict whether any given concrete foundation containing pyrrhotite will fail, recent developments relying upon the magnetic properties of pyrrhotite have greatly lowered the cost of accurate testing.
Most of the residential concrete containing pyrrhotite aggregate from JJ Mottes Concrete was installed within a 20 mile radius of its former location at 10 Meadow Lane in Stafford Springs, CT.
Insurance policies giveth and insurance policies taketh away. A number of insurance coverage lawsuits regarding this issue are winding their way through the courts at this time.
Although very fact specific, circumstances of actual current collapse have a better chance of success than where conditions indicate that a collapse is inevitable but not predictable.
Yes, there are several tests.
Most concrete shows some kind of minor non-structural cracking but pyrrhotite cracking has some telltale signs. One sign to look for is "map cracking" and another is horizontal cracking. Obviously, if the concrete is crumbling or falling apart, it is time to get professional help.
The way to confirm the existence of pyrrhotite in concrete is to conduct a core test. Core tests involve drilling into concrete walls with a special tool to remove small cylinders of the concrete for testing. Currently there are two main testing methods, petrographic analysis and
Trinity College's Dr. Gourley and Dr. Christoph Geiss, investigating methods for testing concrete samples for pyrrhotite, succeeded in developing a new thermo-magnetic test. The test is significantly less expensive and time consuming than traditional petrographic analysis methods and is already available to homeowners, engineers, and others.
Both MA and CT now have reimbursement programs for visual and core testing.
Should you hire an attorney or an expert first?
- Qualified experts should be chosen in conjunction with the advice of an attorney. Experts must not only be technically qualified but must be selected with a view that they may need to provide documents or testimony in some future legal forum (e.g., property tax abatement, income tax casualty loss, lawsuit, etc.)
- All attorney-client discussions about pyrrhotite legal issues are confidential.
- Only licensed professional engineers are qualified to conduct visual tests and to prepare reports of core sample tests.
- Consult an attorney before making any claim. Mistakes made at this stage have already haunted homeowners who were denied coverage.
Property Tax Abatement
- CT legislation has already created a streamlined process for claiming a tax abatement.
- MA is going to be on a case by case basis. Keep in mind that the affected towns are not happy about losing tax base.
- It is never too early to consult with a bankruptcy attorney to develop a game plan for asset protection.
- In many cases, the cost of repair of a pyrrhotite tainted foundation may destroy any home equity and may make the property worthless.
- The pyrrhotite foundation problem is a multi-billion dollar disaster.
- Sadly, with any disaster response there are those who take advantage of vulnerable and uninformed people. Beware of grifters and crooks. Use only licensed and insured contractors. Check references.
- Use written contracts and have them reviewed by an attorney who is experienced with the building process.
- Currently, the official position of the State of CT appears to be that the only remedy is lifting and full-replacement of the foundation. As a technical matter, this may not be accurate. Licensed CT Professional Engineers may be able to design less drastic fixes, including leaving the pyrrhotite foundations in place forever.
- The earliest reports and complaints about pyrrhotite foundations with JJ Mottes actually go back to 1997 in CT. There may be situations where people had reason to know that their foundation was defective and engaged in a form of fraud to unload a "hot potato."
- If you bought your house from a builder who may have known about pyrrhotite, you may have a case.
- If your home inspector missed something in the inspection report, you may have a case.
- If your basement was recently finished by the prior owner (to cover up evidence of pyrrhotite), you may have a case.
- Your attorney can help you select one or more experts to investigate the facts and determine whether there is any party with potential liability.
Amounts spent to fix pyrrhotite crumbling foundations can be deducted as a casualty losses, if certain steps are taken.
In response to pressure from CT homeowners impacted by pyrrhotite foundation losses, the IRS issued two Revenue Procedures to create a "safe harbor" to claim casualty losses on federal taxes. (Rev. Proc. 2017-60, Rev. Proc. 2018-14) The issue requiring a safe harbor exception (progressive deterioration) is similar to the issue being litigated between homeowners and insurance carriers - whether a collapse has occurred when the building has not (yet) fallen down.
Among other details, Rev. Proc. 2017-60 requires a homeowner to obtain a written evaluation from a licensed structure engineer that the defective foundation contains pyrrhotite. Based on that evaluation, for CT residents in accordance with CT Public Act 16-45, the homeowner must also request and receive a property tax reassessment. Massachusetts residents can also take advantage of the safe harbor. The second Revenue Procedure extends, modifies and clarifies the earlier one.
The Tax Cuts and Jobs Act (Public Law 115-97) (TCJA) was structured to end casualty loss deductions. On October 17, 2018 the IRS announced an expanded exception to the new tax law's ending of casualty loss deductions. This is very good news for people with pyrrhotite foundations.
Commissioner Charles Rettig issued a letter stating in part that pyrrhotite casualty loss deductions can be used to offset 100% of taxable income for up to 2o years in the future and 2 years in the past:
Casualty loss deductions that qualify for the safe harbor under Revenue Procedures 2017-60 and 2018-14 are treated as trade or business deductions and can create or increase a taxpayer's NOL. A taxpayer can carry these NOLs back 2 years and forward 20 years, and the NO Ls can offset 100 percent of the taxpayer's taxable income in the carryback or carryover years. Any NOLs from casualty losses meeting the requirements of Revenue Procedures 2017-60 and 2018-14 are treated as arising either in or before the 2017 taxable year. Thus, the TCJA amendments that affect casualty losses and NOLs starting in the 2018 tax year, do not affect these NOLs.
CT homeowners are guided by the details of Public law 16-45 in seeking and receiving property tax assessments. MA legislation has not caught up and the issue of property tax abatement should be researched before claiming a loss.
As the October 17th announcement of a huge exception to the new federal tax law shows, the rules are in flux. It would be prudent to consult tax professionals before making any moves.
On Monday November 5, 2018, Connecticut went live with Connecticut Foundation Solutions Indemnity Company, the captive insurance company created to pay for pyrrhotite foundation replacement ("CFSIC"). The website is crumblingfoundations.org.
This is the official source of information on how CT owners can learn about the types of claims covered and how to apply for relief.
WHAT THE WEBSITE CONTAINS:
Step 1: Do I Have a Claim?
Step 2: What Kind of Claim Do I Have?
Step 3: How Do I Apply?
Step 4: What Do I Need to Apply?
Step 5: What Happens to My Application?
Step 6: What Can I Expect After That?
The website is not written in plain English and will likely require explanation to people who are not familiar with insurance terminology.
- Maximum payout $175,000
- Two tiers of claims
- Requires testing by a licensed professional engineer
- Must submit insurance claim and have it denied
- Home purchase date must be before October 31, 2017
- Must prove that home was built in 1983 or later
- No money available for driveways, landscaping, and similar appurtenances
- No money for porches or decks
- No money for reframing or drywall
- No moving, relocation, temporary housing, or similar incidental expenses
Check back for more updates.
Disclaimer: The purpose of this FAQ is to provide general information. It does not constitute legal advice and should not be acted on without the specific advice of an attorney. See our Terms, Notices, & Disclaimers page for more information.