Published: Autumn 1996

LEAD PAINT DISCLOSURE
RESPONSIBILITIES CLARIFIED
Also see Lead-Based Paint Disclosure Regulations

Federal regulations described in the autumn issue of the CNYC Newsletter require that, when dwellings built prior to 1978 are sold or leased, the seller must give the purchaser or lessee certain information, including an Environmental Protection Agency (EPA) booklet on lead-based paint hazards and any known information about the presence of lead-based paint. When the federal regulations enforcing lead paint disclosure requirements were published last August 1996, CNYC noted certain ambiguities in the way that these regulations could be deemed to apply to cooperatives and condominiums.

CNYC called this to the attention of the Department of Housing and Urban Development (HUD) and the EPA, which sent representatives to New York to meet with industry leaders and discuss the issue. The result is a revised disclosure requirement, which HUD and EPA promulgated in December. Question 35 looks at co-ops and condos, and answers the question, Who must disclose? as follows:

"EPA and HUD believe that... the responsibility for disclosure regarding the unit being sold or leased should reside with the individual owner of the unit. This responsibility also includes disclosure of Information concerning common areas.

"Lead-based paint information, particularly regarding common areas, may not be in the hands of the individual owners. In such cases, it may be administratively more efficient for individual owners to arrange for disclosure of information through the corporation or association. But in no instance should information held by the corporation or association be withheld, as it is considered known information held by the individual owners or reasonably obtainable by the owners. The corporation or association simply holds such Information for the benefit of the individual owners and in no way does the representative arrangement shield the individual owners from disclosure responsibility."

A well-run cooperative or condominium will want to help owners comply with federal law by documenting all that is known about lead-based paint in the public areas of the building. This information should be distributed along with the application packet when apartments are sold or subleased to help unit owners meet their disclosure responsibilities. At closing, the board will want to verify that appropriate disclosure has been made.

CNYC has prepared a packet of prototype information for lead-based paint disclosure. To request copies, contact CNYC by phone at (212) 496-7400, fax (212) 580-7801, or e-mail at info@cnyc.coop, or download the documents

Federal Regulations Require
Disclosure of Lead-based Paint

(Also see City Considering New Lead Law)

CNYC thanks attorneys Howard Schechter and David Kasdan of the law firm of Schechter & Brucker for the following article detailing the new federal disclosure requirements regarding the presence of lead-based paint in apartment buildings. Schechter & Brucker, P.C. is a Manhattan-based law firm that has many cooperative and condominium clients.

For more on lead-based paint, see Controlling Lead-based Paint, from the Summer 1995 Newsletter.

On March 6, 1996, the U.S. Environmental Protection Agency (EPA) and the U.S. Department of Housing and Urban Development (HUD) released joint regulations governing disclosure of information concerning lead-based paint by entities selling or leasing residential real estate, including cooperatives and condominiums. The purpose of the regulations is to protect buyers and renters from the potential hazards of lead-based paint.

The new regulations became effective September 6, 1996, for buildings with more than four apartments, and on December 6, 1996, for smaller buildings. The regulations apply to the sale and leasing of housing built before 1978, when the use of lead paint was banned. Owners and lessors of pre-1978 buildings must:

• Provide purchasers and lessees with a lead information pamphlet (printed version available from the federal government by calling 1-800-424-5323; you can also get text and Adobe Acrobat versions at the EPA Web Site).
• Disclose the presence of known lead-based paint.
• Provide any existing records or reports pertaining to the presence of lead-based paint.
• Provide appropriate disclosure language in either the contract of sale or the lease.

Sellers have an additional requirement. They must provide buyers with a 10-day opportunity to conduct an inspection for the presence of lead-based paint before being obligated on the contract, although this inspection may be waived by the purchaser or the parties may agree on a different time period for the inspection. It is advisable to use a disclosure attachment for all leases on pre-1978 apartments. This attachment must:

• Be signed by the lessor, the lessee and any agents.
• Disclose the presence of any known lead-based paint and lead-based paint hazard, or indicate lack of knowledge of the presence of either.
• Contain a statement by the lessee acknowledging receipt of the disclosure information and the required pamphlet and a statement by any agent involved that the agent has informed the cooperative or condominium and its board of its obligations.

EPA-HUD have developed sample disclosure formats for leases that can have been published in the Federal Register. Copies can be obtained from CNYC. Sales contracts must also include specific warnings, disclosures and acknowledgements.

The regulations do not apply to:

• Sales and leases of housing built after 1977.
• Any housing for the elderly or disabled and any housing in which the living area is not separated from the sleeping area (efficiencies, studio apartments).
• Properties sold at foreclosure.
• Pre-1978 rental housing found to be free of lead-based paint.
• Short-term leases for 100 days or less.
• Lease renewals if the information required by the regulations has been previously disclosed.

The regulations require disclosure of known information only. Neither a seller nor a landlord is required to investigate as to the presence of lead-based paint at the property. Once the presence of lead-based paint is known, however, it must be disclosed.

Failure to comply can result in penalties of up to $10,000 for each violation. Failure to comply is also an independent violation of a federal statute known as the Toxic Substances Control Act. The Act also allows for awards of triple damages to the purchaser or lessee against any person who knowingly violates it. Finally, a court can award court costs, reasonable attorneys' fees and expert witness fees to an individual who prevails in an action against the building under this Act.

CITY COUNCIL CONSIDERING NEW LEAD-PAINT LAW

Legislation sponsored by Council Speaker Peter Vallone, Housing & Buildings Committee Chairman Archie Spigner, who is also the Majority Leader of the Council, and Stan Michels, who chairs the Committee on the Environment, is presently under consideration by the City Council.

The proposed legislation is practical and sensible. It recognizes that deteriorating lead paint can present a hazard, particularly to children under the age of six. It states that:

"The Council finds that the most reasonable and effective method of minimizing the danger posed by lead-based paint is to ensure that lead-based paint is maintained intact and abate only that lead-based paint which is peeling or is on or covering a deteriorated subsurface. The Council further finds that requiring the removal of intact lead-based paint would itself create potential lead-poisoning hazards, as well as divert scarce resources away from more serious health risks. Where abatement of lead-based paint is necessary because of deteriorated conditions, however, the Council finds that reasonable steps should be taken to minimize the creation of hazards such as lead dust and paint chips."

The legislation goes on to establish clear criteria for the identification and control of lead-paint hazards both in the dwelling units and in the schools where small children spend their time.

Preliminary hearings were held on this draft legislation on April 29th, with practical suggestions made both by many government agencies and private sector representatives. CNYC will continue to monitor the progress of this legislation and to keep members advised.