Tough New Lead-Based Paint Law Looms

An important deadline is looming for thousands of homeowners and small-scale property owners across the country, many of whom may not have the slightest idea about the new legal liability they face starting Sept. 6.

On that date, the first of two waves of homes for sale and rent becomes subject to new federal regulations governing lead-based paint. Even if you are certain that the property you own--and plan to sell or rent--doesn’t contain lead-based paint, you need to know how the real estate rules change nationwide, first on Sept. 6, and then on Dec. 6.

Here’s a quick heads-up for anyone who owns residential property. Beginning Sept. 6, certain property owners who are selling or plan to lease out a home must comply with the disclosure regulations issued by the federal Environmental Protection Agency and the Department of Housing and Urban Development last March 6. Failure to comply with the rules could subject you to civil penalties up to $10,000, criminal prosecution and a court-imposed award equal to three times any damages incurred by an individual buying or renting your property.

Who is directly affected by the Sept. 6 trigger date? You are if you own more than four residential dwelling units of whatever age, type or location. For example, say you own the home you live in, a vacation cabin at the lake and three duplex condo units you bought back in the 1980s. The Sept. 6 deadline applies to you.

If you own four or fewer dwelling units--again of whatever age or status--the rules won’t kick in for you until the Dec. 6 deadline.

What do the rules require you to do in practical terms? Several things. First, if your property was constructed before 1978, you will be required to disclose any information you have about the existence of lead-based paint in the dwelling.

Bear in mind that the mere existence of lead-based paint doesn’t mean it is an actual hazard to potential purchasers or renters. But you’ve got to tell them what you know--the results of a home inspection, for example--before you conclude any contract of sale or lease.

You also have to provide purchasers and renters with copies of a federally approved lead-based paint hazard pamphlet. Your real estate agent or leasing agent should have a supply of them on hand.

Now comes the kicker: You also have to allow any purchaser of your pre-1978 property up to a 10-day contingency period to bring in a qualified inspector to search for lead-based paint in the house.

Although the wording of the contingency language in your contract will be up to you and the potential purchaser, the bottom line is this: The purchaser can waive his or her right to inspect the property, but you as a seller cannot refuse to permit the buyer up to a 10-day period to check the house out before becoming legally bound by the sales contract.

Because some buyers might be tempted to play contract negotiation games during the new 10-day period, your best bet as a seller will be to use contingency-clause language that clearly spells out both parties’ rights and options in likely scenarios.

The National Assn. of Realtors has distributed guidance to its 700,000-plus members suggesting “typical testing contingency” language that allows:

* The buyer to cancel the contract if the test results reveal “unacceptable” amounts of lead-based paint in the house.

* The seller to get rid of the offending lead-based paint. In this case, the buyer would be bound to go to closing on the sales contract, once buyer and seller agree the removal is complete.

To prevent the buyer from simply using the 10-day period as an opportunity to wriggle out of the original deal for other reasons, the contingency might require delivery of a copy of the buyer’s inspection report to the seller to document the problem.

* A mutually agreed upon statement of the starting and ending date for any testing the purchaser seeks.

* Clear instructions on what happens to the earnest money deposit in the event the sales contract goes bust over lead-based paint.

Here are some other wrinkles in the new rules that might affect you. Not all pre-1978 housing qualifies as “target” property as defined by the disclosure requirements.

For example, houses sold at foreclosure by a bank or other creditor are exempt from both the disclosure and the 10-day inspection contingency mandate. Housing designed for the elderly or disabled where children younger than 6 are not expected to live is also exemptTake the Sept. 6 and Dec. 6 deadlines seriously. Even innocent noncompliance could get you in legal hot water. Or wreck your sale.

Distributed by the Washington Post Writers Group.