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Most Residential Real Estate Transactions Now Affected By Federal Lead Paint

Written by: Michael J. Quinn

October 6, 1999

Introduction

As part of a broad range of interrelated lead exposure reduction activities mandated under the Residential Lead-Based Paint Hazard Reduction Act of 1992 (hereinafter referred to as "Title X"), known lead-based paint and lead-based paint hazards must now be disclosed to potential buyers and lessees prior to most real estate sales or rentals. The new program developed jointly by the U.S. Environmental Protection Agency and the Department of Housing and Urban Development is meant to warn the public of lead poisoning hazards, so they may take actions to prevent family members from becoming victims of lead poisoning.

Lead Poisoning Still a Concern in the United States

Houses and apartments built before 1978 account for more than three quarters of all residential property in the United States. Pre-1978 housing is the target of the federal rule because lead-based paint was no longer used after 1977. More than 64 million residences, or about 80 percent of U.S. housing built before 1978, contains some lead paint. While the percentage of children with elevated levels of lead in their blood has declined considerably over the last 20 years, about 1.7 million children still have blood lead levels high enough to raise health concerns. While the law does not require that lead-based paint be removed, it gives buyers and renters an opportunity to make informed decisions regarding whether to rent or purchase a particular home.

Affected Sales and Rentals

Currently, the lead paint disclosure rule affects all real estate sales and rentals of property constructed prior to 1978, with the exception of the following: I. Sales of housing at foreclosure; b) Rental housing found to be free of lead-based paint by a certified inspector; c) Short-term leases of 100 days or less, where no lease renewal or extension can occur; d) Renewals of existing leases in which the lessor has previously disclosed all information required and where no new information has come into the possession of the lessor; e) The purchase, sale, or servicing of mortgages; f) The sale or lease of zero-bedroom dwellings; and g) Housing for the elderly or disabled (unless a child less than six years of age resides in such housing).

Disclosure Requirements for Sellers and Lessors

The federal rule requires sellers and landlords to undertake the following before a sales contract or rental agreement is finalized: a) disclose known lead-based paint and lead-based paint hazards and give available reports to buyers or new and renewing renters (unless required information was previously disclosed); b) disclose to each agent the presence of any known lead-based paint and/or lead-based paint hazards in the housing being sold or leased; c) give buyers and renters an EPA-approved informational pamphlet about the risks and dangers of lead in the home; d) Home buyers must have 10 days to conduct a lead paint inspection at their own expense; and e) Sales contractors and leasing agreements must include certain notification and disclosure language. Sellers, lessors and real estate agents share joint responsibility to ensure compliance with this rule. While the rule establishes a buyer's and renter's right to know about lead-based paint, it does not require that lead-based paint be removed.

Non-Compliance and Enforcement

Failure to comply with the disclosure requirements may result in civil and criminal penalties and potential triple damages in a private civil suit. Generally speaking, violations will not affect the validity or enforceability of any sale or contract for the purchase and sale or lease, or of any loan, loan agreement, mortgage, or lien made in connection with a mortgaged loan. If it can be proven that the seller or lessor violated the disclosure requirements, a purchaser or lessee is limited to seeking relief in a civil lawsuit in which the purchaser or lessee may seek direct compensation for any damages incurred based on the seller's or lessor's non-compliance. In addition to the potential for triple damages, a prevailing plaintiff may be awarded court costs, reasonable attorney's fees, and expert witness fees.

Conclusion

The federal regulations which now require disclosure of known lead-based paint and/or lead-based paint hazards in residential housing built prior to 1978 are part of a joint effort by EPA and HUD to ensure that buyers and renters of property are informed of the risks of lead-based paint and may make informed decisions regarding whether to buy or rent a dwelling. A detailed discussion of all of the complexities of the lead-based paint disclosure requirements is beyond the scope of this article. For general information or to obtain copies of the final rule, EPA-approved lead disclosure pamphlet, or background materials, contact the authors or the National Lead Information Clearinghouse at (800) 424-LEAD. Information regarding how to protect children from lead poisoning is available from the National Lead Information Center at (800) LEAD-FYI.

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