We have written about the lawsuits stemming from defective Chinese drywall in previous posts. Now, a tentative settlement has been reached in the class action suit regarding the defective product.

One affected home owner from Florida moved his family into a brand new home in 2005 after a series of hurricanes destroyed thousands of Florida and Louisiana homes. Soon after they moved in, his family noticed an odor of bitter sulfur permeating the home. As time passed, corrosion formed on mirrors and chrome surfaces, and electrical appliances began to fail. Pipes and wires corroded. Unbeknownst to the homeowner, builders had used defective

Consumer advocates filed a consumer class action against the manufacturer, Knauf Plasterboard Tianjin Co., a German company that manufactured drywall in China. Last week the class action plaintiffs and the drywall company reached an agreement that will create an unlimited fund that will pay for repairs of nearly 5,000 homes. Most of the money will go to rehabilitate homes in Alabama, Florida, Louisiana, and Mississippi.

Under the agreement, homeowners can select their own contractor to make the repairs and request funds for drywall remediation. Homeowners who have already repaired their own homes according to established remediation processes can request reimbursement of their expenses.

The settlement also created a separate fund of $30 million to pay for losses homeowners have incurred in addition to the damage to their homes. For example, many residents developed health problems related to exposure to the contaminated drywall. The $30 million fund is available to pay these consumers' medical bills and other expenses.

Money has not yet begun to flow to homeowners. A federal judge must approve the settlement before it can be finalized. Approval is expected to take place in January, with funds becoming available to homeowners no later than springtime.

Source: Sun Sentinel, "Chinese drywall settlement could be worth up to $1 billion," Michael Kunzelman, Dec. 15, 2011