Published: Summer 1996
SEMINAR EXAMINES LEAD PAINT
HAZARD DISCLOSURE RULES
The Federal Residential Lead-Based Paint Hazard Reduction Act imposes
additional requirements on the procedure for selling and renting houses
and apartments in all buildings built prior to 1978. Owners are required
to disclose to prospective purchasers all known information about lead-based
paint in their units and in the public areas of the building, to include
in their contracts a lead-warning statement required by EPA, and to give
purchasers an EPA lead information pamphlet (available at no cost from
the EPA and also on CNYC's Internet homepage at http://www.cnyc.coop).
They must also allow the purchaser 10 days to have the apartment inspected
for lead-based paint; within that 10-day period, purchasers dissatisfied
with the lead-based paint assessment results may cancel their contracts
of sale and receive refunds of any deposits. Transactions concerning studio
apartments or other apartments without bedrooms are exempt from the disclosure
requirement, as are leases for less than 100 days.
DISCLOSURE REQUIRED ON SALES
September 6, 1996, is the compliance date for sales or leases by owners
of more than four apartments, and December 6, 1996, is the date by which
owners of individual units who sell or sublease must comply. Both the
seller and the cooperative or condominium in which the unit is located
are obligated to provide this disclosure, and the obligations run concurrently.
Therefore, beginning September 6, 1996, buildings in which there are sponsors
who own more than four units should have been providing disclosure information
about the building and verifying that the sponsor has disclosed lead-based
paint information about the unit offered for sale or rent.
"My rule is that you can't disclose too much, only too little,"
stated Marc J. Luxemburg, Esq., president of the Council of New York Cooperatives
& Condominiums, as he introduced an intensive two-hour seminar on
September 11, 1996, focusing on the disclosure regulations. A rapt audience
of board members, building managers, attorneys and lead-control professionals
peppered him with challenging questions on many aspects of compliance.
They were pleased with the packet of CNYC-suggested prototype documents
that Mr. Luxemburg distributed.
He stressed that these regulations are strictly concerned with disclosure.
There is no requirement either to perform physical tests for lead-based
paint or to remove or abate any lead-based paint, hazardous or not. Most
states and municipalities have additional requirements relating to the
control of lead-based paint, and New York is one of these.
ASSUME LEAD PAINT IS PRESENT
Mr. Luxemburg advised every building in New York City built prior to
1960, and before 1978 elsewhere, to assume that there is lead-based paint
in the building and to so disclose. He further advised that the board
conduct a good-faith effort to compile all available information about
construction projects and tests that may have occurred that would have
significance for lead paint disclosure. This could include the records
maintained by present or former board members, the superintendent or the
managing agent, the sponsor, shareholders or former shareholders, or engineers,
architects and contractors, or environmental studies made for banks or
If, for example, the building or any part of it had been completely renovated
subsequent to 1978, with walls removed and replaced, etc., the affected
area could be presumed to be free of lead-based paint. The replacement
of windows subsequent to 1978 is very significant, as lead hazards exist
primarily where friction surfaces -- windows, doors, etc. -- cause paint
to flake or chip, or paint dust to be freed into the air. This information
should be organized in a document that is concise and readable.ALERT OWNERS TO NEW PROCEDURES
The cooperative or condominium should alert all owners that additional
procedures will now be necessary when units are sold or leased. Mr. Luxemburg
suggested that each board decide whether it will require disclosure prior
to the contract of sale or after its execution. This decision will determine
when the building's disclosure document is to be presented to the prospective
purchaser or lessee. To protect itself from any liability, the board should
require the seller and purchaser to each acknowledge that lead-based paint
disclosure has been made. It should also require that the seller indemnify
the cooperative or condominium and its agents and representatives, including
the transfer agent, against claims for failure to have complied with the
federal lead-based paint disclosure requirements.
Many insurance policies now specifically exclude from coverage any liability
for lead paint hazards. Still others will be silent on the issue, but
will deny coverage if you are sued on a lead hazard issue on the grounds
that it is automatically excluded as an environmental issue. Mr. Luxemburg
advised participants to make thorough inquiry about lead liability coverage
when next renewing their insurance policies. Check on the track record
of your particular carrier with lead liability cases. This should provide
a good indication of future conduct. Finally, there are some carriers
that sell independent lead liability policies.
Both the Environmental Protection Administration (EPA), which can impose
criminal penalties for violations, and the Department of Housing and Urban
Development (HUD), which can impose civil penalties, have jurisdiction
over the Residential Lead-Based Paint Hazard Reduction Act.
Because the sale of lead-based paint was outlawed in New York in 1960,
requests have been made to move the target date for disclosure to 1960,
but no action has yet been taken. In addition, neither the law nor the
regulations addresses special situations caused by the double layer of
ownership in New York city cooperatives and condominiums. CNYC is in regular
contact with both the EPA and HUD on clarifying many of these questions.
As soon as any modifications are made, CNYC will quickly notify its members.