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I'm replacing wood paneling in my basement with drywall. There are 1x furring strips attached to the cinder block and covered with tar paper, and the wood paneling was attached to those strips.

Before I put up the drywall, would it make sense to put some thin styro between furring strips and cover it with tar paper, then drywall? Or, would this create a moisture problem and mold growth in the walls?

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up vote 2 down vote accepted

Here's my preferred basement wall construction method:

Should I use steel or wood studs for basement exterior walls?

You live in NY, so I'm guessing your winters aren't the warmest. I'd suggest pulling out the furring strips so you can put a decent amount of insulation. It's recommended to use a continuous insulation model to a value of r-10:

http://www.buildingscience.com/documents/guides-and-manuals/irc-faqs/irc-faq-basement-insulation

To get to r-10 will take a few inches (it will vary based on the type of insulation you are using...extruded vs. expanded polystyrene, for example.)

Then put up new studs (I'd suggest metal) and then your wall board (I'd suggest a paperless product such as DensArmor).

All that said, if you don't want to go to that extent, sticking 1" foam insulation in the existing cavities will help a bit, so you might as well do it. I'd forgo the tarpaper, though.

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Thank you for the suggestions. The tar paper was there when I removed the wood paneling. Can you tell me what purpose it would serve? –  NYSystemsAnalyst Jun 3 '12 at 22:55
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I imagine it was a rudimentary attempt at water proofing the furring strips. If you read up on the building science research, they recommend that basement walls not have any sort of actual vapor barrier. The foam insulation acts as a retarder, but not a barrier, ultimately allowing moisture to dry to one side or the other. –  DA01 Jun 3 '12 at 23:39
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I'd also suggest looking for any signs of water/moisture damage to the panelling and/or furring strips. If you can't see any sign of moisture, that's a good sign indicating you likely are lucky to have a dry basement to begin with. –  DA01 Jun 3 '12 at 23:40
    
The tar paper is between the furring strips and the paneling, not between the furring strips and the block, so I'm not sure how successful that would be a waterproofing ;-). I thought it may have been some attempt at a vapor retarder? I didn't notice any moisture damage to the paneling or furring strips. There are some spots on the block that are darker than others and on one wall, there was a good deal of that white powdery substance (efflorescence?). However, I don't think there is a serious moisture issue because there was no rot, mold or anything on the furring strips. –  NYSystemsAnalyst Jun 4 '12 at 12:51
    
efflorescence is a sign of water migration, so you likely do have some moisture coming through. Having an empty cavity probably helped in that there was likely some form of airflow drying things out. I'd say that's another reason not to add another retarder (tar paper) in addition to the foam. –  DA01 Jun 4 '12 at 14:08
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