Karin Vickers, 45, bought her Homestead, Fla., house in 2006. She fears issues with tainted drywall have hurt her home's value.

By Julie Schmit, USA TODAY

Real estate agent Felix Martinez thought he'd found his dream house when he bought the 3,500-square-foot beauty in Homestead, Fla., two years ago.

Then, he says, his large-screen TV mysteriously failed. Next, the air conditioner went. His bath towels smelled like rotten eggs. Visitors noted an odor in the house. Martinez says he's suffered new sinus problems and sleep apnea. His wife and son sneeze a lot.

The walls in the home, a recently filed class-action lawsuit alleges, were built with the same kind of Chinese-made drywall that tests have shown emit sulfur gases that corrode copper coils and electrical and plumbing components.

Similar problems have been linked to hundreds of Florida homes. Tens of thousands of homes there and in other states could be affected, say lawyers who have filed lawsuits on behalf of Florida homeowners. The discovery has created a firestorm that's engulfed an international building supplier, large and small home builders and dozens of subcontractors. The issue also has revived concerns about quality-control procedures of U.S. companies that use Chinese-made products, following episodes in recent years involving contaminated toothpaste and pet-food ingredients, lead-tainted toys and defective tires imported from China.

A leading U.S. home builder, Lennar, and a Chinese drywall manufacturer, Knauf Plasterboard Tianjin, say tests show the gases given off by the drywall pose no health hazards. Florida regulators and the federal Consumer Product Safety Commission are investigating.

Lawyers say far more testing needs to be done.

"If it can put holes in metal coils, how do we know it doesn't cause problems in children or adults?" asks attorney Jeremy Alters of Florida-based law firm Alters Boldt Brown Rash Culmo. Alters says he has clients who developed respiratory ailments "out of the blue" after moving into allegedly affected homes.

Knauf says Chinese drywall imports started in significant amounts in 2005 as a result of a shortage driven by the booming housing market and rebuilding after Hurricanes Katrina and Wilma.

In addition to lawsuits on behalf of Florida homeowners, a class-action lawsuit was recently filed by an Alabama home builder that has made air conditioning repairs on two dozen Alabama homes, says attorney Steven Nicholas. A class-action lawsuit has also been filed on behalf of Louisiana homeowners.

Lawyers say they're investigating more complaints in other states and Florida.

"We know for a fact that this product is in Virginia, Louisiana and California," says Charles LaDuca, of Washington, D.C.-based law firm Cuneo Gilbert & LaDuca. "The breadth of the problem is just unfolding."

Investigations began in 2004

So far, Florida is ground zero. Up to 1,000 homes in the southern part of the state may be affected, says Jack Snider, president of American Management Resources Corp. (AMRC). Working for homeowners and builders, the environmental consulting firm has tested drywall for gases and checked homes for odors and corrosion.

AMRC first began investigating odor complaints in 2004 and found drywall to be the cause. Because most drywall doesn't identify its origin, Snyder says, it took until 2006 before foreign-made drywall became the focus.

Homeowner lawsuits allege that the drywall has corroded air conditioning and refrigerator coils, microwaves, computer wiring, faucets and copper tubing.

Tests paid for by Lennar say the drywall appears to emit sulfur gases that can damage air conditioning coils, electrical plumbing components and other material.

In one test, copper pipe turned black after four weeks when placed in a sealed container with a piece of affected drywall, according to a lawsuit filed Jan. 30 by Lennar against Knauf Gips of Germany and its Chinese affiliate, Knauf Plasterboard Tianjin, and others. The pipe then started to corrode, Lennar says.

Lennar alleges that Knauf produced "defective" drywall. It also says subcontractors put it in homes without Lennar's knowledge. Lennar has said it has more than 80 affected homes in Florida and dozens more under review. It is relocating residents while it installs new drywall in homes.

"Lennar stands alongside its homeowners as a victim," its lawsuit says.

Plaintiffs' attorneys say residents have suffered a host of health issues, including rashes, new allergies, asthma and sore throats. Along with receiving compensation, they should be monitored long-term for health issues, says attorney Ervin Gonzalez of Colson Hicks Eidson. "This has been an economic, physical and emotional problem for victims," he says. Based on import records, he estimates that up to 60,000 U.S. homes may be affected, with about half in Florida.

Testing air

Drywall is made from gypsum, a mineral. Manufacturers also make synthetic gypsum by processing residues produced by coal-burning power plants.

Normally, drywall doesn't smell or emit sulfur gases, says Nancy Spurlock, a spokeswoman for National Gypsum. It doesn't import drywall or ingredients from China, she says.

Lennar, which refused interview requests, says it discovered the issue after noticing frequent air conditioning problems in homes.

Its consulting firm, Environ International, tested air in 79 affected Florida homes late last year and found sulfur compounds at levels well within health and safety limits or on par with outdoor air.

Knauf's testing firm, the Center for Toxicology and Environmental Health in Arkansas, recently tested 20 Florida homes with discolored wiring.

It found results similar to Environ's, says toxicologist Phillip Goad, who oversaw his firm's testing. Levels of carbonyl sulfide were in the range of salt marsh air. Exposure to carbon disulfide were well within safety levels set by The National Institute for Occupational Safety and Health.

At higher concentrations than found in the homes, carbonyl sulfide can irritate eyes and the respiratory system, and have other effects, says Goad. Carbon disulfide can produce symptoms including irritated eyes, headaches and fatigue.

The Consumer Product Safety Commission dispatched staffers to Florida late last month to investigate and will do health hazard testing, says spokesman Joe Martyak. The Florida Department of Health is also testing. Its website says it has not "identified data suggesting an imminent or chronic health hazard at this time." In January, the state inspected 12 homes built from 2004 through 2008 to assess possible health hazards and set up more sensitive testing protocols. Results are pending, it says.

Mine was changed in 2006

Knauf says odor complaints about its Chinese drywall surfaced in 2006. Its investigation determined that the drywall smelled like drywall made from natural gypsum in China. The drywall from one China mine used by Knauf contained iron disulfide, a naturally occurring mineral. That would account for the smell, Goad says.

Knauf says it stopped using the mine — which other manufacturers also used — in late 2006 after the issues arose. It says it's being "unfairly" tainted because it labels its imported drywall from China while others do not.

Knauf says it was responsible for just 20% of the Chinese drywall that came to the U.S. in 2006. It also says that Lennar has identified homes with odor and copper issues that included non-Knauf drywall.

Consultant Snider, too, says that other drywall makers "have not been as noticed as Knauf."

Lennar and Taylor Morrison, a home builder based in Arizona with a dozen affected Florida homes, say they're absorbing the expenses of relocating residents for the several months it can take to repair affected homes.

Lennar says it used the Chinese-made drywall in a small percentage of Florida homes built from November 2005 through November 2006. It's not being used in new homes, it says. Lennar and Taylor, both of which build homes outside of Florida, say they're not aware of homes outside of Florida being affected.

South Kendall Construction of Florida built Martinez's home. The company is still assessing the situation, according to its attorney, Kieran Fallon. It has tested several dozen Florida homes and expects about 50 to have problems, he says.

Martinez says he can't afford to rent another place while South Kendall figures out what to do. "We're caught between a rock and a hard place," he says.

Karin Vickers, a 45-year-old certified public accountant, is in the same situation.

She bought her Homestead, Fla., home across the street from Martinez, also in 2006, for $485,000. "I love the house," she says. But the air conditioning didn't work properly and was just replaced. Her TV also failed after a year. Her wall sockets turned black, and her bathroom smells like burned matches, she says.

Even if her house is repaired, she worries that issues could crop up again.

The real estate crash has knocked her home's value down about one-third, Vickers estimates. "It's dropped more now because of this," she says.