Affordable Housing Companies Hit With Penalty for Lead Paint Disclosure Violations

An affordable housing developer and other property owners recently agreed to pay a $200,000 penalty and conduct approximately $2 million in lead paint abatement work to resolve allegations that the property owners failed to comply with the federal Lead Disclosure Rule.

The alleged violations were based solely on the companies' failure to notify prospective tenants that the homes might contain lead-based paint. There was no allegation that any child had suffered lead poisoning as a result of the violations.

As this example illustrates, compliance with the Lead Disclosure Rule is important—and is regularly the subject of EPA and HUD enforcement actions.

Rule Focuses on "Target Housing"

Administered by the U.S. Environmental Protection Agency (EPA) and Department of Housing and Urban Development (HUD), the Lead Disclosure Rule requires sellers and lessors of "target housing"—i.e., housing constructed prior to 1978—to disclose the risks of lead-based paint to prospective purchasers or tenants.

The Lead Disclosure Rule does not apply to housing specifically designated for the elderly or persons with disabilities, unless a child under the age of 6 lives or is expected to live in the housing. Also exempt from the rule are "0-bedroom dwellings," such as dorm rooms, studio apartments and military barracks. There are other limited exceptions to this requirement, including some related to sales of target housing at foreclosure.

Risks of Lead Paint Must Be Disclosed

In order to comply with the rule, the seller or lessor must provide prospective purchasers or lessees with an EPA-approved lead hazard information pamphlet. Sellers or lessors must disclose the presence of any known lead-based paint or lead-based paint hazards to any prospective purchaser or tenant and any agent. They must also provide copies of any reports or records regarding the paint and hazards.

In addition, the seller or lessor is required to provide specific language in the purchase contract or lease—and to obtain and retain certifications from the tenant or purchaser indicating the required information has been provided.

Once they have received this information, prospective purchasers must be provided a 10-day window to conduct a risk assessment or inspection for the presence of lead-based paint or lead-based paint hazards.

HUD Program Provides Lead Reduction Funding

The Lead Disclosure Rule does not require sellers or lessors to conduct any investigation to assess the presence of lead-based paint or lead-based paint hazards or to reduce any such hazards. However, property with lead-based paint hazards, such as peeling or chipping paint, can still run afoul of other statutes or regulations—especially if a child residing in the housing demonstrates an elevated blood-lead level.

For those projects in need, some resources for lead abatement are available from state governments and the federal government. Specifically, as part of the American Recovery and Reinvestment Act of 2009, also known as the economic stimulus package, the federal government authorized $100 million for the Lead Hazard Reduction Program.

The HUD-administered program assists states, Native American Tribes, cities, counties and other units of local government in undertaking comprehensive programs to identify and control lead-based paint hazards in privately owned rental or owner-occupied housing. The program also promotes cost-effective preventive measures to correct multiple residential safety and health hazards in addition to lead.

HUD has already allocated the $100 million to various entities across the nation. Owners of housing that may need lead-reduction controls should contact a local HUD office or visit the agency's Web site.