Lead Paint Disclosures in Residential Properties Not a Thing of the Past


 Cori Lamont  |    May 05, 2017
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Lead-based paint (LBP) was banned by the federal government from residential properties in 1978, in which the federal government essentially disallowed the sale of LBP for consumer use. Therefore, a property built before 1978 has to comply with laws relating to LBP. And so it probably doesn't strike you as surprising when we discuss LBP and historic properties.

According to the Environmental Protection Agency (EPA), lead from paint is the most common cause of lead poisoning. The two groups most vulnerable to the effects of lead poisoning are children under the age of six and pregnant women. Exposure to LBP in children may contribute to kidney damage and slowed body growth as well as neurological damage, which may include learning disabilities and behavioral problems. For more information, see the EPA’s website at www.epa.gov/lead. 

What is the federal LBP law?

The federal LBP law requires sellers and landlords provide certain disclosures to buyers and tenants of target housing. In addition, the law requires real estate licensees to ensure compliance with the LBP law. Each one of these areas is described below. 

Disclosure requirements 

The federal LBP disclosure law requirements include:

 

  1. Sellers and landlords of most residential housing built before 1978 must disclose the presence of known LBP and/or LBP hazards in the housing.
  2. Sellers and landlords must provide buyers and tenants with any available records or reports pertaining to the presence of LBP and/or LBP hazards.
  3. Sellers and landlords must provide buyers and tenants with a federally approved lead hazard information pamphlet.
  4. Sellers must provide buyers with a 10-day opportunity to conduct a risk assessment or lead inspection for the presence of LBP and/or LBP hazards before buyers are obligated under any purchase contract.
  5. Sales and leasing contracts must include certain disclosure and acknowledgment language.
  6. Agents must ensure compliance with these requirements.

 

Applications to target housing

This federal LBP disclosure law applies to all housing defined as ‚Äútarget housing,‚ÄĚ which includes most private housing, public housing, housing receiving federal assistance and federally owned housing built before 1978.
The EPA and HUD consider ‚Äúhousing constructed before 1978‚ÄĚ to mean housing for which a construction permit was obtained ‚ÄĒ or if no permit was obtained, housing in which construction was started ‚ÄĒ before January 1, 1978. See more in the EPA‚Äôs ‚ÄúInterpretive Guidance‚ÄĚ document online at www.epa.gov/sites/production/files/documents/1018fin.pdf.

Housing not affected by the LBP disclosure law includes:

 

  • Zero-bedroom dwellings, such as lofts, efficiencies, dormitories, military barracks, studios and individual room rentals.
  • Target housing sold at foreclosure.
  • Dwelling units leased short term for 100 days or less where no renewal or extension is available, such as vacation homes or short-term rentals.
  • Designated housing for the elderly and persons with disabilities unless children reside or are expected to reside there.
  • Rental housing that has been inspected by a certified inspector and is found to be free of LBP.

 

Does the federal LBP law apply to target housing being sold ‚Äúas-is‚ÄĚ?¬†

Yes. The seller will be obligated to provide the appropriate disclosure and allow the buyer the opportunity to inspect for LBP. In an ‚Äúas-is‚ÄĚ sale, the seller may decline to complete the Real Estate Condition Report (RECR), but the federal LBP disclosure law remains in force in transactions involving target housing, along with all of the penalties for noncompliance, regardless of whether other disclosures are being made by the seller.

The following are some of the LBP disclosure law definitions:

 

  • Buyer or purchaser: one or more individuals or entities who enter into a contract to purchase an interest in target housing including, but not limited to, partnerships, corporations, trusts, government agencies, housing agencies, Indian tribes and nonprofit organizations.
  • Seller: one or more individuals or entities who transfer, in return for consideration, (1) legal title to target housing, in whole or in part, (2) shares in a cooperatively owned project, or (3) an interest in a leasehold. Seller includes, without limitation, partnerships, corporations, trusts, government agencies, housing agencies, Indian tribes and nonprofit organizations.
  • Target housing: any housing constructed prior to 1978, except housing for the elderly or persons with disabilities ‚ÄĒ unless any child who is less than six years of age resides or is expected to reside in such housing ‚ÄĒ or any zero-bedroom dwelling.

 

Does the federal LBP law apply to target housing stripped down to the studs with all new drywall and paint? 

Yes. The EPA has not exempted residential properties in which all interior and exterior architectural components, such as doors, windows, walls and all other painted surfaces ‚ÄĒ including any outbuildings, fences or signs ‚ÄĒ that were painted prior to December 31, 1977, have been removed or replaced after December 31, 1977, from the LBP disclosure requirements.¬†

Currently the EPA exemptions to the LBP disclosure apply only to the following:

 

  • Sales of target housing at foreclosure.
  • Leases of target housing that have been found to be LBP-free.
  • Short-term leases of 100 days or less, where no lease renewal or extension can occur.
  • Renewals of existing leases in target housing in which the lessor has previously disclosed all information required under ¬ß 745.107 and where no new information described in ¬ß 745.107 has come into the possession of the lessor.

 

What are the agent’s responsibilities? 

The federal LBP rules provide that each agent shall ensure compliance with all the requirements of the rules. ‚ÄúAgent‚ÄĚ is defined as any party who enters into a contract with a seller for the purpose of selling target housing. This includes persons who enter into a contract with a representative of the seller, and excludes buyers and buyer representatives who receive all compensation from the buyer.¬†

This means all listing, selling, cooperative and buyer‚Äôs agents ‚ÄĒ unless paid only by the buyer ‚ÄĒ must abide by the federal LBP rules. To ensure compliance with the rules, an agent shall inform the seller of his or her obligations under the federal LBP rules, ensure that the seller has performed all activities required under the rules, or personally ensure compliance with the rule requirements. HUD‚Äôs and the EPA‚Äôs commentary to the final rules indicates that agents must inform sellers of their obligations, and make sure that the required activities are completed either by the seller or by the agent personally.

Simply stated, the agents need to assure two things: 

 

  • The buyer was provided a completed LBP disclosure, such as the WRA‚Äôs Addendum S form.
  • Before acceptance of the offer, the buyer was provided the EPA-approved pamphlet, ‚ÄúProtect Your Family From Lead in Your Home.‚Ä̬†

 

A copy of the pamphlet can be found in a number of languages such as Russian, Arabic and Spanish at www.epa.gov/lead/protect-your-family-lead-your-home-real-estate-disclosure. 

The penalties for noncompliance with the LBP law are federal and include $11,000 per violation, triple damages plus attorney fees in private enforcement action and potential jail time. These penalties apply to the seller or landlord depending on the situation. In addition, the law applies to real estate agents involved in the transaction who do not act to ensure compliance.

Cori Lamont is Director of Corporate and Regulatory Affairs for the WRA. 

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