If you’ve been paying attention for the past few years, you’ve probably noticed that there’s been a veritable explosion of legislation about lead-based paint at every level of government. Each of these new regulations is aimed at protecting families against the dangers of lead, but the basis for most of the regulations of the last decade goes back to the early 1990s, when president George Bush enacted sweeping legislation now called simply "Title X (ten)".
Although lead has been known to be poisonous (especially to children under the age of 6) for hundreds of years, we did not begin to take action in this country to get lead out of the environment until the 1970s, when the use of lead as an additive to gasoline was banned. In the ensuing 10 years, the number of children showing symptoms of lead poisoning plummeted. Victory was declared, and it was widely assumed that childhood lead poisoning was a thing of the past.
However, it was soon discovered that, years after the last leaded gasoline was manufactured, one group of children still suffered from higher blood-lead levels than others. These children had one thing in common: they lived in older housing. It was soon determined that deteriorating paint was still a major source of lead in the environment of many children, and it was as a result of this discovery that Title X came into being.
Title X totally revamped the ways in which the federal and state governments dealt with lead poisoning, focusing now on lead-based paint as the major environmental hazard. Title X sought to regulate the ways in which rehabbers, landlords, and sellers of properties would carry out their activities and disclosed the presence of lead hazards to the consumers of housing—that is, buyers and renters.
What Title X Really Does
Rather than creating specific laws, Title X directed the Department of Housing and Urban Development and the Environmental Protection Agency to create policies aimed at achieving a "Lead Free USA". HUD and EPA were given authority to create and modify laws regarding lead in the environment, taking into account public interest and health. It has taken almost 8 years just to arrive at a point where disclosure and licensing laws are in place; more regulations are being written to assure that we can get rid of lead in this country for good. The full implementation of Title X will take many more years.
What the Law Says Now
The first new regulations to come from HUD/EPA following the enactment of Title X required that people who lease or sell certain types of properties make written disclosures regarding lead paint hazards to consumers. Although these regulations have been in effect for nearly 5 years, surprisingly few landlords and sellers are aware of the type, scope, or meaning of the disclosures required.
The disclosure rules require landlords and sellers to provide their customers with three things: a pamphlet developed jointly by HUD and EPA called "Protect Your Family From Lead in Your Home", a written notice informing them of any known lead-based paint or hazards, as well as all documentation (such as inspection paperwork) regarding these hazards, and approved "lead warning language", informing the consumer of the risks of lead paint, usually included in the lease or purchase contract. In the case of home sellers, the rules also require that the buyers be given a 10-day right to perform a lead inspection before purchase. The buyer may waive this right. These disclosure rules apply to all residential properties built prior to 1978, except:
Housing that has been inspected by a licensed lead inspector and been determined to be lead-free.
Zero-bedroom units (dorm rooms, lofts)
Housing for the elderly or mentally handicapped where children do not reside (group and nursing homes)
Foreclosures
Nonrenewable leases of less than 100 days (i.e., vacation rentals)
Common Misunderstandings About the Law
There have been several areas of confusion surrounding these guidelines since their inception in 1996. One is the concept of "known" paint hazards. In the language of this document, "known" means that the paint and/or associated hazards have been identified by a licensed lead-based paint inspector. Identification of a problem by your visual inspection or an off-the-shelf lead "detection" kit certainly justifies further investigation by an inspector, but does not constitute a known hazard.
A second question has been when the disclosures should be given. In the case of a rental, the disclosures should be given to and signed by the tenant before the lease signing (or at the beginning of the month, in a month-to-month lease), whether it is a new tenant or an existing tenant who has never signed a lead disclosure but who is renewing a lease. In the case of a buyer, the disclosure may be given at the time of the signing of the purchase contract.
The third misunderstanding involves liability. Some property owners think that making the required disclosures protects them in some way from being sued in the future. Some even check "yes" (as in, there are lead paint hazards in the property) even when they don't know there to be any hazards, under the theory that if the tenants or buyers move in anyway, they have transferred the liability to themselves. This is not true. Some legal experts believe that distributing the pamphlet "Protect Your Family From Lead in Your Home" provides a bit of protection by giving the consumers vital information about how to prevent lead poisoning, thereby transferring some of the liability to the parents. However, the purpose of the disclosures is not to relieve owners of liability, but simply to notify the consumers of possible dangers from lead paint. And on a related note, the law says that these disclosures must be kept on file for 3 years,but most attorneys recommend that they be maintained for at least 20 years, if not indefinitely.
Recent Legislation
In June 1999, a brand-new disclosure law came into effect—this one targeted toward notifying tenants when potentially dangerous repairs or renovations are taking place. The regulation states that any time a landlord intends to undertake a repair that might disturb more than 2 square feet of any painted surface, tenants must receive advanced warning of the work and must be given a copy of "Protect Your Family From Lead in Your Home". If the repairs are being completed by employees of the owner, it is the owner who gives the disclosure. If an independent contractor is doing the work, the contractor gives the disclosures to both the owner and the tenants.
While emergency repairs to protect the health and safety of tenants may be completed without this notification, other, non-emergency items like replacement of windows, plumbing work that will require cutting into walls, replacement of trim, and so on certainly certainly require that this disclosure be made. Once a tenant is notified about upcoming repairs, the notification is good for up to 60 days.
What's in the Future
Concern over lead poisoning is not going to go away, and neither is the public's will to create a lead-safe environment for children. More legislation is already making its way through the appropriate channels to deal with lead in the soil, essential maintenance practices for rental properties, and so on. As more children are diagnosed with high blood-lead levels, real estate professionals can also look for a growing market in urban areas for "lead-free housing". Landlords and real estate investors must weigh the damage that lead-based paint does to children against the expense of making appropriate disclosures, maintaining painted surfaces, and doing what it takes to keep kids safe. It's an equation that can't be disputed, and a cost of doing business that every investor must be willing to shoulder.
Vena Jones-Cox’s real estate business focuses on finding great deals on 1-3 family homes, then lease/optioning them to homeowners or wholesaling them to investors and renovators. All told, she buys and sells about 50 properties per year.
Vena is a frequent guest lecturer at real estate investment groups throughout the country, and particularly enjoys working with new investors. Vena frequently authors articles on real estate investment and the regulatory environment for various newsletters and publications, including The Real Deal, her own monthly newsletter. She has been a guest speaker at the Cato Institute in Washington, D.C., lecturing on the effects of lead-based paint regulation on small investors. And in her spare time, Vena hosts a popular weekly call-in radio program on public radio. Real Life Real Estate Investing can be heard throughout the Midwest and throughout the world on the Internet (WNKU.org) Wednesdays from 5:00-6:00 PM EDT.
Vena Jones-Cox is a past president of the Real Estate Investor’s Association of Cincinnati, the Ohio Real Estate Investor’s Association, and the National Real Estate Investor’s Association. She intends to form the International and, eventually, Pan-Galactic Real Estate Investors Associations so she can be president of those, too. Vena Jones-Cox has been featured in publications such as The Cincinnati Enquirer, Smart Money Magazine, Money Magazine and Reader’s Digest in articles about successful real estate entrepreneurs.
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