I have an old house from the 50s. The basement is finished but not insulated. When I poked a hole into the wall (in this case it is plywood) it was about 2 inches away from the concrete so I think they used 2x4 width wise and just decided to use the "air" as insulation
What I want to know is what is the best way to proceed:
1.Leave it as is and put drywall on top of it for finishing.
2.Frame on top of the existing walls and insulate that. This will decrease my area but a less work.
3.Demo the walls and re-frame from scratch.
I was thinking of option 2 since I know how to frame, just not sure about the type of insulation that I can use.
If you did a little more exploration you might find that the bottom plate of the walls is staring to rot from being in contact with the concrete as was common practice in the '50s.
Today bottom plate needs to be pressure treated or separated from concrete below grade with poly (or equivalent). Also Code now requires a flame spread rating of 150 for interior finishes so having exposed plywood is something that should be addressed soon. More than likely you will find some electrical deficiencies as well.
Recommend demoing everything and rebuilding to current Code which also means the assembly as a whole needs to be minimum R-20. Good idea to apply dampproofing to the concrete walls (liquid applied or poly) to grade level, then select your preferred choice of assembly. I recommend 2" rigid insulation against the concrete followed by 2 x 4 framing 24" o/c with batt insulation.
We have done several basements for houses that were from anywhere between the 50's and 70's, and your best course of action is to demolish (in our cases).
I would suggest:
1. Demolish plywood and 2x4 (as 2x4 might be in bad condition as is, and it is not properly insulated)
2. Rebuild up to code, and install Styrofoam insulation (better and cheaper than alternative)
3. Drywall it
Obviously what you do is up to your budget, and how cold your basement is, and whether or not there is any mold. However if you are a capable framer, then this wouldn't be a huge cost, and the material budget wont be too egregious (depending on how much linear sqft the wall is).
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