Background. The painted surfaces of homes built before 1978 used lead based products. In 1971, a federal law was enacted prohibiting the use of these products for residential use.[1] The reason for the ban is because lead-based paint can chip and peel, resulting in air-borne particles to be released and ingested by humans. This tendency for lead based paint to become easily crumbled is known as “friable”. These minute particulates are especially harmful to children by getting into their blood streams and causing permanent brain damage and other disabilities.[2]
Target Housing. This 1996 law, known as the Real Estate Disclosure and Notification Rule, applies to all dwelling units[3] built before 1978. Most private housing, public housing, federally owned housing, and housing receiving federal assistance are affected by the Rule, and are referred to as “Target Housing”. There are some exclusions, however:
- Housing built after 1977 (Congress chose not to cover post-1977 housing because the CPSC banned the use of lead-based paint for residential use in 1978).
- Zero-bedroom units, such as efficiencies, lofts, and
- Leases for less than 100 days, such as vacation houses or short-term
- Housing for the elderly (unless children live there).
- Housing for the handicapped (unless children live there).
- Rental housing that has been inspected by a certified inspector and found to be free of lead-based
- Foreclosure [4]
Seller/Landlord Duties
1. Seller Disclosure of Information. Sellers and landlords of Target Housing must disclose any known presence (including all related information and reports) of either lead-based paint or lead-based paint hazards to :
- Their real estate agents;
- Prospective buyers; and
- Lessees and renters.
The Rule also requires that sellers and landlords disclose all lead-based paint related information and reports to their listing agents. This disclosure duty (as well as the delivery duty discussed below), is/are required to be confirmed in the written Lead Warning Statement document that is to be included with the parties’ sale agreement or lease/rental agreement.
2. Seller Delivery of Pamphlet. Sellers and landlords must deliver to their respective buyers or lessees/renters of Target Housing, a pamphlet entitled “Protect Your Family from Lead in Your Home”. A sample can be found here.
3. Seller Delivery of Lead Warning Statement. The Rule requires that there must be included with the sale or lease/rental agreement, a Lead Warning Statement. This Statement includes certain prescribed text, plus a written confirmation that the seller or landlord has complied with all of the required notifications.[5] This document is to be provided in the same language as contained in the sale agreement or lease/rental agreement. Sellers or landlords, their respective brokers, as well as buyers or tenant/lessees, are required to sign and date the Statement.
The Ten Day Period
The Rule requires that before a purchaser is obligated under any contract to purchase target housing, the seller must provide them with a 10-day period to conduct a risk assessment[6] or inspection[7] for the presence of lead-based paint and /or lead-based paint hazards.
However, this 10-day period is not written in stone; it may be increased, decreased, or waived, so long as the decision occurs in writing and is signed by seller and buyer. Note: The 10-day rule does not apply to the leasing or rental of Target Housing.
The Rule does not require that sellers or landlords remove or abate any lead-based paint found in the home.
Record Retention Period
Sellers and lessors must retain a copy of their lead-based paint disclosures for not less than three (3) years from the date of sale, or the date the lease/rental period begins.
Real Estate Agent Responsibilities
Section 35.94 of the Rule provides that:
(a) Each agent is required to “ensure compliance” with the disclosure and delivery duties under the Act. To ensure compliance, the agent shall:
(1) Inform the seller or lessor of his/her obligations under §§ 35.88[8], 35.90[9], and 35.92[10].
(2) Ensure that the seller or lessor has performed all activities required under §§ 35.88, 35.90, and 35.92, or personally ensure compliance with the requirements of §§ 35.88, 35.90, and 35.92.
(b) If the agent has complied with paragraph (a)(1) above, the agent shall not be liable for the failure to disclose to a purchaser or lessee the presence of lead-based paint and/or lead-based paint hazards known by a seller or lessor but not disclosed to the agent. (Emphasis added.)
Discussion. First, who is the “agent”? Is the Rule just referring to the listing agent? One would think so, since buyer agents typically don’t have any contact or communication with represented sellers. However, why does the law provide that “…each agent shall ensure compliance…”? (Emphasis added.) However, remember that this law was passed in 1992, i.e. when subagency was still in existence, and buyers did not technically have their own agents.[11] For my money, and out of an abundance of caution, today I would encourage both agents, i.e. the seller’s agent and the buyer’s agent, to be vigilant. I’ve seen cases in which the seller’s agent completely forgot their responsibilities under the Rule. So, what is the buyer agent’s responsibility in such a case? Is he or she completely exonerated from any responsibility, e.g. to insist that the lead-based paint issue be vetted with the seller, and making sure the buyer receives the required documents? I submit not.
Moreover, what about Paragraph (b) above? It appears to say that if the agent makes the disclosure requirements to the seller, that agent is not responsible for the presence of lead-based paint/hazards their seller fails to inform them about. By implication, it appears, however, that the reverse is true, i.e. if the agent fails to inform the seller of their disclosure responsibilities, they can be held liable for the presence of lead based paint/hazards, the seller failed to disclose. Accordingly, broker compliance appears to be a “safe harbor” for seller agents who comply with the disclosure requirements of the Rule.
The Take-Away for Real Estate Agents. The lead-based paint law does not impose automatic or vicarious liability against agents for selling a home with lead based paint. Nor does it even appear to require the agent to vet the issue, i.e. ask the seller about the presence or absence of lead-based paint in the home. But is does require that listing agents: (a) Be aware that selling Target Housing, i.e. homes built before 1978, triggers certain duties, and (b) assure compliance with those obligations, by:
- Informing the seller of their duties of disclosure;
- Making sure the pamphlet is delivered to the buyer;
- Getting the Lead Warning Statement signed by all of the parties whose signatures are required; and,
- Retaining those records for at least three years.
As noted above, however, the Rule is not very clear about the buyer agent’s responsibilities under the Rule. My advice? If the seller’s agent fails to comply with the law’s disclosure obligations, the other agent should always do so. ~Phil
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[1] Lead-Based Paint Poisoning Prevention Act. Pub. L. 91–695. Approved 1971-01-13.
[3] The term “dwelling unit” means a: “(1) Single-family dwelling, including attached structures such as porches and stoops; or (2) Housing unit in a structure that contains more than 1 separate housing unit, and in which each such unit is used or occupied, or intended to be used or occupied, in whole or in part, as the home or separate living quarters of 1 or more persons.” See, 24 CFR 35.110 – Definitions.
[4] See, EPA HUD Fact Sheet, here.
[5] Go to link here for sample document.
[6] The term “risk assessment” means: (a) An on-site investigation to determine the existence, nature, severity, and location of lead-based paint hazards; and (b) Providing a report by the individual or firm conducting the risk assessment explaining the results of the investigation and options for reducing lead-based paint hazards. See, 24 CFR 35.110 Definitions.
[7] A lead-based paint “inspection” refers to verifying the existence of lead-based paint “…or other surface coatings that contain lead equal to or exceeding 1.0 milligram per square centimeter or 0.5 percent by weight or 5,000 parts per million by weight.” See, 24 CFR 35.110 Definitions.
[8] The duty of sellers and landlords to inform their agent of the existence of lead-based paint and lead based paint hazards.
[9] The duty to provide buyers with the opportunity to have a lead-based paint inspection within a ten day period before becoming obligated to purchase Target Housing.
[10] The obligation to include the Lead Warning Statement with the sale agreement/contract of sale, or lease/rental agreement for sellers and seller’s agents and landlords and landlord agents to sign.
[11] The Edina class action cases changed all that. For a discussion of the case, go to link here.
