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October 24, 2017

14 Things You Should Know about New Lead Paint Rules

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14 Things You Should Know about New Lead Paint Rules

New federal regulations requiring sellers or lessors of pre-1978 residential dwellings to disclose the presence of known lead-based paint in the property will go into effect Sept. 6, 1996, for owners of more than four residential dwellings, and Dec. 6, 1996, for owners of one to four residential dwellings.

For years, federal, state, and local governments have been attempting to limit the amount of human exposure to lead, a toxic metal that, when present in the human body, attacks the central nervous system. In 1978 the federal government banned the use of lead-based paint in residential buildings.

Existing lead-based paint in dwellings remains a source of environmental concern, say analysts for the NATIONAL ASSOCIATION OF REALTORS®. According to the U.S. Department of Housing and Urban Development, more than one-half of the U.S. housing stock---and more than three-quarters of units built before 1978---contains some lead-based paint.

In 1992 the U.S. Congress passed the Residential Lead-Based Paint Hazard Reduction Act, which requires seller disclosure of lead-based paint and lead-based paint hazards in connection with the sale or lease of pre-1978 dwellings. The law directed the U.S. Environmental Protection Agency and HUD to issue regulations to implement those requirements. EPA and HUD issued the regulations on March 6.

Here are answers to some key questions about the regulations:

1. What do the new regulations require of sellers, lessors, and real estate professionals?

Before ratification of a contract for sale or lease

  • Sellers and landlords must disclose known lead-based paint and lead-based paint hazards and provide available reports to buyers and tenants.
  • Sellers and landlords must give buyers and renters a federal pamphlet titled Protect Your Family From Lead in Your Home.
  • Homebuyers will get a 10-day period to conduct a lead-based paint inspection or risk assessment at their own expense if desired. The number of days can be changed by mutual consent.
  • Sellers and lessors must include certain language in sales contracts and leasing agreements to ensure that disclosure and notification actually take place. Sellers, lessors, and real estate professionals share responsibility for ensuring compliance.

2. What are the specific responsibilities of real estate salespeople?

Real estate salespeople must ensure that

  • Sellers and landlords are aware of their obligations.
  • Sellers and landlords disclose the proper information to buyers and tenants.
  • Sellers give buyers the 10-day opportunity (or another mutually agreed-on period) to conduct an inspection.
  • Lease and sales contracts include proper disclosure language and acknowledgments that all the required information was provided.

3. What type of housing is covered?

Most private housing, public housing, federally owned housing, and housing receiving federal assistance

4. What housing is not covered?

  • Housing built after 1977
  • Zero-bedroom units, such as efficiencies, lofts, and dormitories
  • Housing with leases for less than 100 days, such as vacation houses or short-term rentals
  • Housing exclusively for the elderly (unless there are children living there)
  • Housing for the handicapped (unless there are children living there)
  • Rental housing that has been inspected by a certified inspector and found to be free of lead-based paint
  • Houses being sold because of foreclosure

5. Is the seller required to correct any lead hazards that are found?

No. Nothing in the law requires an owner to remove lead paint or correct hazards. The law also doesn't prevent the two parties from negotiating hazard reduction as a contingency. That'll be handled the same as any other defect.

6. Will the salesperson be held liable if the sellers or lessors fail to disclose information known to them about the presence of lead-based paint?

As long as the salesperson has informed the sellers or lessors of their obligations to disclose, the salesperson won't be held liable for the failure to disclose to a purchaser or lessee the presence of lead-based paint or lead-based paint hazards known by sellers or lessors but not disclosed to the salesperson, says NAR.

7. To whom does the disclosure have to be made?

The disclosure must be made to the purchaser or the lessee. The regulations define a "purchaser" as any entity that enters into an agreement to purchase, and "lessee" is defined as any entity that enters into an agreement to lease, rent, or sublease. The regulations make it clear that the rule doesn't require mass disclosure to all prospective purchasers or lessees, regardless of their degree of interest. Only the actual purchaser or lessee must receive the information, subject to the timing requirements set forth below, says NAR.

8. When should the disclosure occur and the pamphlet be distributed?

For sales transactions, the disclosure must occur prior to the seller's acceptance of the purchaser's written offer to purchase. If the potential purchaser makes an offer before the requisite disclosures are provided, the seller may not accept that offer until the disclosure activities are completed and the potential purchaser has had an opportunity to review the information and consider whether to amend the offer prior to becoming obligated under the contract, says NAR.

For lease transactions, the lessor must provide the information and complete the disclosure portions of the lease before accepting the lessee's offer and must also provide the lessee an opportunity to review the disclosed information and amend the lease offer, says NAR.

9. How will the testing period work?

The regulations don't prescribe any particular method of satisfying this requirement, but they allow the potential purchaser and seller to include in the sales contract home inspection contingency language similar to that already in common use. The only specific requirement is that the purchaser must be given up to 10 days to have the testing done. The purchaser can demand an opportunity to test even if the seller has already had the property tested. The parties can agree, in writing, to a longer or shorter time frame, says NAR.

The contingency language may provide the purchaser with the right to cancel the contract if test results show unacceptable amounts of lead in the home. The contingency language may also provide the seller the right to remove the lead and correct the problem, thus binding the purchaser to the contract, says NAR.

The purchaser can also simply waive the right to test, as long as it's in writing. Although there's no mandatory federal contingency language, the regulations include a suggested format. The parties are free to create other contingencies concerning such matters as the starting and ending time for testing, each party's responsibilities if lead is found, and the disposition of earnest money, says NAR.

10. Will buyer's brokers be required to comply with the regulations?

The regulations define agent as "any party who enters into a contract with a seller or lessor, including any party who enters into a contract with a representative of the seller or lessor for the purpose of selling or leasing target housing." This means that listing salespeople, selling salespeople, and buyer's brokers (if paid by the seller through a cooperative brokerage agreement with the listing salesperson) are "agents" and are responsible for ensuring compliance under the rule.

Buyer's brokers who are compensated solely by the buyer are exempt from the regulations, says NAR.

11. How will the federal regulations affect the need to comply with state or local lead disclosure law?

Although the federal government can't delegate the enforcement of the federal lead-based paint law to the states, the EPA and HUD have tried to avoid duplication and to allow for the incorporation of the federal requirements into existing state laws, says NAR.

If state law already requires use of a lead disclosure pamphlet, the state may apply to the EPA for approval to have that document used in lieu of the federal pamphlet. However, compliance with the federal law doesn't eliminate any obligations of sellers, lessors, or salespeople to comply with state or local lead-based paint disclosure, testing, or remediation requirements, according to NAR.

12. Will the failure to comply give a purchaser or lessee the right to void the sales or lease transaction?

No, says NAR. Both the federal law and regulations expressly provide that noncompliance can't be used to void or nullify the contract after ratification and can't void any transfer of real estate.

13. Where can I get copies of the regulation and the information pamphlet that must be given to buyers and renters of pre-1978 dwellings?

Call the National Lead Information Center at 800/424-LEAD. Fax orders to 202/659-1192.

14. Whom can I contact for technical advice on complying with the regulations?

Call HUD or the EPA. For addresses and phone numbers, call Today's REALTOR® Interactive, 312/329-8400, and press 7.

Unless otherwise noted, this information was supplied by HUD.

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