Dear renovators and developers,
Please do not put drywall in the basement.
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Here’s the problem: there are very few basements that are bone dry. If a contractor finishes the walls of a damp basement with drywall, eventually there is a very good chance that mold will begin to grow. The back of a sheet of drywall is covered with paper, basically, and paper is an excellent food source for mold. As a renovation contractor, I tore out a lot of old drywall in basements and bathrooms, and most of it had at least some mold on the the back of it.
The basement does not need to be outright wet to encourage biological growth, it just needs to have a high level of humidity. Because basement walls and the floor are below ground level, there is almost always some level of moisture present. The moisture vapor gets trapped between the foundation and the finished basement wall, and voila, you have a science experiment.
The basement walls in my 100-year-old house sometimes get a little wet, but because my basement is not finished, any moisture on the walls can evaporate without causing much harm.
So what would I recommend? First, unless the basement is unusually dry, I would not finish the walls with drywall. Materials such as steel studs and tile backer board are not perfect either, but they are much less susceptible to mold growth than wood studs and standard drywall. The existing concrete or masonry foundation walls simply could be cleaned and painted, or they could be screened with a material that does not encourage mold growth.
Second, a number of steps can be taken to keep moisture levels low in the basement, some of which are cheap and easy. Gutters and downspouts can be kept clear, and draining at least several feet away from the house. The ground, or grading, around the house, of course, should slope away from the building. Drainage systems, including drain tiles and drainage mats, can be installed outside the foundation walls (and in some cases, inside the walls). Any cracks in the foundation can be repaired, and the outside of the walls sealed with a flexible sealant.
Many people, including me, have a dehumidifier in their basement that drains, through a hose, into a floor drain. It runs anytime moisture levels get too high, and then shuts off automatically. A dehumidifier can make a significant difference. When I bring this up during inspections, I’m surprised how many people are not familiar with the devices, and how easy they can be to operate.
A full basement can add a lot of living space to a house, especially one that is not huge, such as a classic Chicago bungalow. With a little effort and common sense, it’s possible to make a basement livable without wrecking the air quality for the entire building.