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Does the Federal Lead-based Paint Disclosure Law Apply to you?
The Disclosure Rule requires sellers, lessors and agents to comply with certain requirements when selling or leasing housing built before 1978 (target housing). For purposes of the Disclosure Rule, “seller” is defined as any entity that transfers legal title to target housing, in whole or in part. The Disclosure Rule defines “lessor” as any entity that offers target housing for lease, rent, or sublease. “Purchaser” is defined as an entity that enters into an agreement to purchase an interest in target housing under the Disclosure Rule. “Lessee” is defined as any entity that enters into an agreement to lease, rent, or sublease target housing. Finally, the Disclosure Rule defines “agent” as any party who enters into a contract with a seller or lessor, including any party who enters into a contract with a representative of the seller or lessor, to sell or lease target housing.
The Disclosure Rule requires that, before a purchaser or lessee is obligated under any contract to purchase or lease target housing, certain requirements must be met. These requirements include the following:
- Sellers and lessors must provide purchasers and lessees with an EPA-approved lead hazard information pamphlet;
- Sellers and lessors must disclose the presence of any known lead-based paint and/or lead-based paint hazards to the purchasers and lessees and to any agent;
- Sellers and lessors must provide purchasers and lessees with any available records or reports pertaining to the presence of lead-based paint and/or lead-based paint hazards in the target housing;
- Sellers must grant purchasers a 10-day period to conduct a risk assessment or inspection for the presence of lead-based paint and/or lead-based paint hazards, unless the parties mutually agree, in writing, upon a different period of time or the purchaser waives, in writing, the opportunity to conduct the risk assessment or inspection;
- Sellers and lessors must disclose information pertaining to lead-based paint and/or lead-based paint hazards as an attachment to a contract to sell target housing or as an attachment or within a contract to lease target housing in accordance with the Disclosure Rule requirements;
- Sellers, lessors and agents must retain a copy of each Disclosure Rule statement and certification for at least three years from completion of the transaction; and
- Each agent involved in any transaction to sell or lease target housing must ensure compliance with all requirements of the Disclosure Rule.
The Disclosure Rule does NOT apply to the following transactions:
- Sales of target housing at foreclosure;
- Leases of target housing that has been found to be lead-based paint free by an inspector certified under the Federal program or under a federally accredited state or tribal certification program;
- Short term leases of 100 days or less, where no lease renewal or extension can occur;
- Lease renewals where the lessor previously met all disclosure requirements and the information pertaining to lead-based paint and/or lead-based paint hazards has not changed;
- The sale or lease of 0-bedroom dwellings; and
- The sale or lease of housing for the elderly or persons with disabilities (unless any child under six (6) years of age resides or is expected to reside in such target housing).
EPA Enforcement Information:
Determining the Number of Violations
Each requirement of the Disclosure Rule is a separate and distinct requirement and a failure to comply with any requirement is a violation of the Disclosure Rule. In order to determine whether a violation of the Disclosure Rule has occurred, the applicable requirements must be reviewed to determine which regulatory provisions have been violated. For example, each lessor who is leasing target housing must comply with each of the Disclosure Rule requirements of 40 CFR §§ 745.107(a), 745.113(b) and § 745.113(c) including:
- Provide the lessee with an EPA-approved lead hazard information/pamphlet;
- Disclose to the lessee the presence of any known lead-based paint and/or lead-based paint hazards;
- Disclose to each agent the presence of any known lead-based paint and/or lead-based paint hazards and the existence of any available records or reports pertaining to lead-based paint and/or lead-based paint hazards;
- Provide to the lessee any available records or reports pertaining to lead-based paint and/or lead-based paint hazards in the target housing;
- Include, as an attachment or within each contract to lease target housing, the Lead Warning Statement;
- Include, as an attachment or within each contract to lease target housing, a statement by the lessor disclosing the presence of known lead-based paint and/or lead-based paint hazards or indicating no knowledge of lead-based paint and/or lead-based paint hazards;
- Include, as an attachment or within each contract to lease target housing, a list of any records or reports available to the lessor that pertain to lead-based paint and/or lead-based paint hazards or indicate that no such records or reports are available;
- Include, as an attachment or within each contract to lease, a statement by the lessee affirming receipt of the required information;
- Include, as an attachment or within each contract to lease, a statement by any agent(s) involved in the transaction to lease target housing that such agent(s) has informed the lessor of the lessor’s obligations and that the agent(s) is aware of his/her duty to ensure compliance;
- Include, as an attachment or within each contract to lease target housing, signatures and dates of the lessor, agent, and lessee certifying to the accuracy of their statements; and
- Retain a copy of the completed disclosure records for no less than three years from the commencement date of the lease.
Supplemental Environmental Projects (SEPs) are environmentally beneficial projects which a respondent agrees to undertake in settlement of an environmental enforcement action, but which the respondent is not otherwise legally required to perform. SEPs are only available in negotiated settlements.
EPA has broad discretion to settle cases with appropriate penalties. Evidence of a violator’s commitment and ability to perform the proposed Supplemental Environmental Projects (SEP) is a relevant factor for EPA to consider in establishing an appropriate settlement penalty. The SEP Policy, effective May 1, 1998, defines categories of projects that may qualify as SEPs and establishes procedures for calculating the cost of the SEP and the percentage of that cost which may be applied as a mitigating factor in determining an appropriate settlement amount. See Appendix C for links on EPA’s website to the current version of the SEP Policy and the November 23, 2004 memo entitled “Supplemental Environmental Projects in Administrative Enforcement Matters Involving Section 1018 Lead-Based Paint Cases”. EPA should ensure that the inclusion of any SEP in settlement of an enforcement action is consistent with the SEP Policy in effect at the time of the settlement.
Responsible Party Examples
This appendix gives examples of parties who may meet the regulatory definition of agent12 and therefore need to comply with the Disclosure Rule. This is not intended to be a complete or exhaustive list.
Listing Real Estate Agency (Listing Agent): Traditionally, the real estate agency enters into a direct contract with the seller or lessor for the right (exclusive or otherwise) to represent the seller. The contract states the terms of compensation in the amount of a set percentage of the sale price in consideration of the time and effort expended by the broker (real estate agency) on behalf of the seller and in further consideration of the advice and counsel provided to the seller. Thus, real estate agencies may be agents under the Disclosure Rule, and as such would be responsible for ensuring compliance with the Disclosure Rule.
Where an agency is the agent, the Disclosure Rule requirement for signature of an agent may be satisfied by a signature from any sales associate and/or broker who is in a contractual relationship with the seller or lessor for the purpose of selling or leasing target housing.
Selling Real Estate Agency (Selling Agent): The residential real estate sales contract traditionally is brokered between a listing real estate agency that represents the seller, and a selling real estate agency that represents the purchaser. Both agencies are generally paid their commissions by the seller. The listing and selling real estate agencies generally have sales associates who share their sales commission with the real estate agency and all may be agents in a sale or lease of target housing.
Buyer’s Agent: Any representative compensated solely by the purchaser is not an agent for the purposes of the Disclosure Rule.
Contract Service Provider: If a seller does not use the services of a real estate agency, but instead handles the transaction personally with the help of a contract service provider, and one responsibility of the contract service provider is to ensure that all the proper documents are used, completed and signed, the contract service provider is an agent and is responsible for ensuring compliance with the Disclosure Rule.
Property Management Firm: Where a property management firm enters into a contract with a seller or lessor for the purpose of selling or leasing target housing and where the firm’s duties include ensuring that the parties properly execute all sales and leases, the property management firm may be an agent for purposes of the Disclosure Rule.
Resident Manager: Where a resident manager is an independent contractor who has entered into a contract with a seller or lessor for the purpose of selling or leasing target housing and the duties of the resident manager include ensuring that the parties properly execute all sales and leases, then the resident manager is an agent for the purposes of the Disclosure Rule.
Locator Service: An entity or individual that locates target housing for a lessee and neither contracts with nor is in any way compensated by the lessor is not an agent for the purposes of the Disclosure Rule.
Learn more: EPA 1018 Disclosure Enforcement Policy