Lawsuits against multifamily landlords over mold and habitability are rising as aging properties and deferred maintenance collide with higher legal costs and shrinking insurance coverage. The number of reported mold violations in Los Angeles 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. In New York City, the 311 city services number tracked more than 31,000 mold complaints in 2025 and is on pace to at least match that figure in 2026, with more than 18,000 complaints through midyear.
The surge in claims has driven habitability insurance premiums up 300% or more, according to Michael Pugh, chief executive at Local Initiatives Support Corp. Premiums now range from $375 to $1,400 per unit, depending on the age and size of the building, according to Pro Insurance Group. 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.
Rising costs and decreasing availability of coverage leave landlords more vulnerable to financial penalties. Jury verdicts can reach into the millions of dollars, as in a February decision that awarded $2.3 million in a Long Beach mold case. Hiring an attorney and mounting a defense without insurance can cost landlords between $50,000 and $100,000, said Chris Gray, president of Moss & Co., a Los Angeles-area property management firm that operates more than 15,000 apartment units.
It becomes hard for owners to deny 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. Gray said the issue emerged in the past five years. Prior to that, it was not part of the industry's vocabulary. This is the biggest threat to multifamily ownership today in Los Angeles, he said.
A combination of aging properties and more instances of inclement weather has made buildings more susceptible to mold. 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. Firms like Moss & Co. are responding by instituting proactive maintenance and testing regimes, which raises operating costs.
The pandemic helped accelerate the number of mold-related lawsuits filed, according to Jake Cohen of Cohen, Cohen & Cohen Law in Southern California. The firm focused on car accidents before the pandemic. Because people were not driving as much during lockdowns, the number of car accident cases dropped. Someone at the firm bought a book about litigating toxic mold cases, and they have since become a focus of the firm's work. As other areas of litigation have proven less lucrative or more crowded, more firms have turned to mold litigation, Cohen said.
In February, a Las Vegas jury awarded a family $6.6 million after it found the apartment owner at fault for failing to remediate mold issues that caused chronic health problems. Dale Walsh, a mold consultant and remediation expert who testified for the plaintiff during the Las Vegas case, said demand for his service has steadily grown in recent years. An Austin couple, Kelsi and Corey Wright, was awarded $1 million after their apartment was infested with mold following a water leak, leading to health issues for the family.