[Federal Register Volume 61, Number 45 (Wednesday, March 6, 1996)]
[Rules and Regulations]
[Pages 9064-9088]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-5243]
[[Page 9063]]
_______________________________________________________________________
Part VIII
Department of Housing and Urban Development
Environmental Protection Agency
_______________________________________________________________________
24 CFR Part 35
40 CFR Part 745
Lead; Requirements for Disclosure of Known Lead-Based Paint and/or
Lead-Based Paint Hazards in Housing; Final Rule
Federal Register / Vol. 61, No. 45 / Wednesday, March 6, 1996 / Rules
and Regulations
[[Page 9064]]
DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT
24 CFR Part 35
RIN 2501-AB58
ENVIRONMENTAL PROTECTION AGENCY
40 CFR Part 745
[OPPTS-62130A; FRL-5347-9]
RIN 2070-AC75
Lead; Requirements for Disclosure of Known Lead-Based Paint and/
or Lead-Based Paint Hazards in Housing
Agencies: Department of Housing and Urban Development (HUD) and the
Environmental Protection Agency (EPA).
ACTION: Final rule.
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SUMMARY: As a result of past Federal, State, and local efforts to
reduce lead in the environment, the percentage of children with
elevated levels of lead in their blood has declined considerably over
the last 20 years. Approximately 1.7 million children, however, still
have blood-lead levels high enough to raise health concerns. Studies
suggest that lead exposure from deteriorated residential lead-based
paint, contaminated soil, and lead in dust are among the major existing
sources of lead exposure among children in the United States. Section
1018 of the Residential Lead-Based Paint Hazard Reduction Act of 1992
directs EPA and HUD to jointly issue regulations requiring disclosure
of known lead-based paint and/or lead-based paint hazards by persons
selling or leasing housing constructed before the phaseout of
residential lead-based paint use in 1978. Under that authority, EPA and
HUD are establishing the following requirements: (1) Sellers and
lessors of most residential housing built before 1978 must disclose the
presence of known lead-based paint and/or lead-based paint hazards in
the housing; (2) 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; (3)
sellers and lessors must provide purchasers and lessees with a
federally approved lead hazard information pamphlet; (4) sellers must
provide purchasers with a 10-day opportunity to conduct a risk
assessment or inspection for the presence of lead-based paint and/or
lead-based paint hazards before the purchaser is obligated under any
purchase contract; (5) sales and leasing contracts must include certain
disclosure and acknowledgment language; and (6) agents must ensure
compliance with these requirements. These provisions ensure that
families receive both specific information on the housing's lead
history and general information on lead exposure prevention. With this
information, consumers can make more informed decisions concerning home
purchase, lease, and maintenance to protect their families from lead
hazard exposure.
DATES: Effective date: March 6, 1996 except for 24 CFR 35.88, 35.90,
35.92, and 35.94 and 40 CFR 745.107, 745.110, 745.113, and 745.115
which contain information collection requirements that have not been
approved by OMB. Once OMB has approved these information collection
requirements, EPA and HUD will publish a document giving notice of the
effective date and adding the OMB approval number to 24 CFR part 35 and
40 CFR part 9.
The requirements in this final rule are applicable in the following
manner: (1) For owners of more than four residential dwellings, the
requirements are applicable on September 6, 1996 and (2) For owners of
one to four residential dwellings, the requirements are applicable on
December 6, 1996.
FOR FURTHER INFORMATION CONTACT: For general information or to obtain
copies of the final rule, pamphlet, or background materials, contact
the National Lead Information Clearinghouse (NLIC), toll free, at (800)
424-LEAD or fax requests to the NLIC at (202) 659-1192. Copies of the
final rule, a brief question-and-answer document, and the pamphlet
Protect Your Family From Lead In Your Home, are available on the
Internet at the National Safety Council's gopher at cais.com and on the
World Wide Web at http://www.nsc.org/nsc/ehc/ehc.html. For technical
information: At HUD, contact Conrad C. Arnolts, Office of Lead-Based
Paint Abatement and Poisoning Prevention, Department of Housing and
Urban Development, 451 7th St., SW., Washington, DC 20410, Telephone:
(202) 755-1810, E-mail: [email protected] (use underscore
characters), or John B. Shumway, Office of General Counsel, Telephone:
(202) 708-9988, E-mail: John--B.--S[email protected] (use underscore
characters). Persons who are hearing impaired may access these
telephone numbers by calling the Federal Information Relay Service at
1-800-877-TDDY.
At EPA, contact Charles Franklin, Chemical Management Division,
Office of Pollution Prevention and Toxics, Environmental Protection
Agency, 401 M St., SW., Washington, DC 20460, Telephone: (202) 260-
1781, E-mail: [email protected].
For general information or to obtain copies of the final rule,
pamphlet, or background materials, contact the National Lead
Information Clearinghouse (NLIC), toll free, at (800) 424-LEAD or fax
requests to the NLIC at (202) 659-1192.
Copies of the final rule, a brief question-and-answer document, and
the pamphlet Protect Your Family From Lead In Your Home, are available
on the Internet at the National Safety Council's gopher at cais.com and
on the World Wide Web at http://www.nsc.org/nsc/ehc/ehc.html.
SUPPLEMENTARY INFORMATION:
I. Authority
This final rule is issued under the authority of section 1018 of
the Residential Lead-Based Paint Hazard Reduction Act of 1992 (42
U.S.C. 4852d). The Residential Lead-Based Paint Hazard Reduction Act is
Title X of the Housing and Community Development Act of 1992, Pub. L.
102-550.
II. Background
A. Legal Background
Congress passed the Residential Lead-Based Paint Hazard Reduction
Act of 1992 (hereafter referred to as Title X or the Act) to address
the need to control exposure to lead-based paint hazards. In addition
to amending the Toxic Substances Control Act (TSCA) and the Lead-Based
Paint Poisoning Prevention Act (LBPPPA), Title X established the
infrastructure and standards necessary to reduce lead-based paint
hazards in housing. Within this law, Congress recognized lead poisoning
as a particular threat to children under age 6 and emphasized the needs
of this vulnerable population (section 1003 of Title X).
Section 1018 of Title X requires EPA and HUD to promulgate joint
regulations for disclosure of any known lead-based paint or any known
lead-based paint hazards in target housing offered for sale or lease.
(Target housing is defined in section 1004(27) of Title X, section
401(17) of TSCA, and is discussed in Unit IV.C. of this preamble.)
Specifically, section 1018 requires the following activities before a
purchaser or lessee is obligated under a contract to purchase or lease
target housing: (1) Sellers and lessors must provide purchasers and
lessees with a lead hazard information pamphlet, as developed under
section 406(a) of TSCA; (2) sellers and lessors must
[[Page 9065]]
disclose the presence of known lead-based paint and/or lead-based paint
hazards in such housing and provide purchasers and lessees with any
lead hazard evaluation report available to the seller or lessor; (3)
sellers must permit purchasers a 10-day opportunity to conduct a risk
assessment or inspection for the presence of lead-based paint hazards;
and (4) sales contracts must include an attached Lead Warning Statement
and acknowledgment, signed by the purchaser.
Violation of section 1018 may result in civil and criminal
penalties and potential triple damages in a private civil suit.
Section 1018 mandated that EPA and HUD promulgate these
requirements no later than 2 years after the date of enactment of Title
X (October 28, 1994), to take effect 3 years after enactment of Title X
(October 28, 1995). Due to promulgation delays, EPA and HUD have
revised the effective date provisions for this rule.
This rule represents one of a broad range of interrelated lead
exposure reduction activities mandated under Title X. Many of these
other activities support and affect the development of the section 1018
rule. Several of the activities most closely related to the disclosure
requirements are briefly discussed below.
The statutory provision most closely tied to section 1018 is
section 406(a) of TSCA. Section 406(a) directs EPA to develop and
publish, after notice and comment, a lead hazard information pamphlet
on lead-based paint hazards in the home. EPA developed the pamphlet in
consultation with HUD, the Centers for Disease Control and Prevention
(CDC), and the Consumer Product Safety Commission (CPSC), which has
joined as a co-sponsor of the pamphlet. EPA issued a notice of
availability in the Federal Register of August 1, 1995 (60 FR 39167),
to announce the pamphlet's completion. As mandated under section 1018
of Title X, this lead hazard information pamphlet must be given to
purchasers and lessees of target housing.
Under section 403 of TSCA, EPA is charged with issuing regulations
that identify lead-based paint hazards, lead-contaminated dust, and
lead-contaminated soil, based on the definitions provided in section
401 of TSCA. In July 1994, EPA released an interim guidance document to
provide public and private decisionmakers with guidance on identifying
and prioritizing lead-based paint hazards for control before the
issuance of the final section 403 standards. EPA subsequently issued
the interim guidance document in the Federal Register of September 11,
1995 (60 FR 47248). EPA is in the process of developing the proposed
section 403 standards.
Section 402 of TSCA directs EPA (in consultation with HUD, the
Department of Labor (DOL), and the Department of Health and Human
Services (HHS)) to promulgate regulations on accreditation of training
programs and training and certification of individuals and contractors
engaging in lead-based paint evaluation and reduction activities. This
section also requires that EPA, in consultation with the above
agencies, develop standards for performance of such lead-based paint
evaluation and reduction activities. EPA issued the proposed section
402 rule on September 2, 1994 (59 FR 45872), and expects to issue the
final rule shortly. Under the section 1018 disclosure requirements
issued today, available reports resulting from such evaluation and
reduction activities must be provided to the purchaser or lessee.
Pursuant to sections 1012 and 1013 of Title X, HUD is drafting
regulations setting out procedures for all federally owned residential
property and housing receiving Federal assistance. These procedures
concern occupant notification as well as evaluation (such as inspection
and risk assessment) and reduction (such as interim controls and
abatement) of lead-based paint and/or lead-based paint hazards. The
regulations implementing sections 1012 and 1013 will not address the
provision of a lead hazard information pamphlet to new purchasers and
lessees of target housing, nor any of the other requirements under
section 1018. HUD will release these regulations in proposed form as
soon as possible for public comment.
Pursuant to section 1015 of Title X, HUD and EPA established a Task
Force on Lead-Based Paint Hazard Reduction and Financing, made up of
private and public organizations representing the spectrum of interests
affected by the lead-based paint issue. The Task Force developed
recommendations on evaluating and reducing lead-based paint hazards in
private housing. The Task Force released its recommendations on July
11, 1995, in a report entitled Putting the Pieces Together: Controlling
Lead Hazards in the Nation's Housing. A copy of this report has been
entered into the public record for this rule.
Pursuant to section 1017 of Title X, HUD and EPA, in cooperation
with other Federal Agencies, have revised HUD's guidelines for lead-
based paint hazard evaluation and reduction activities. These revised
guidelines, entitled Guidelines for the Evaluation and Control of Lead-
Based Paint Hazards in Housing (hereafter referred to as the ``HUD
Guidelines''), were released to the public in June 1995. A copy of the
HUD Guidelines is included in the public record for this rule.
B. Lead Poisoning in the United States
Lead affects virtually every system of the body. While it is
harmful to individuals of all ages, lead exposure can be especially
damaging to children, fetuses, and women of childbearing age. As recent
studies have identified previously unrecognized effects, there has been
increasing concern about blood-lead levels once thought to be safe.
Since 1978, CDC has lowered the blood-lead level of concern from 60
g/dL (micrograms per deciliter) to 10 g/dL (Ref. 2).
Lead poisoning has been called ``the silent disease'' because its
effects may occur gradually and imperceptibly, often showing no obvious
symptoms. Blood-lead levels as low as 10 g/dL have been
associated with learning disabilities, growth impairment, permanent
hearing and visual impairment, and other damage to the brain and
nervous system. In large doses, lead exposure can cause brain damage,
convulsions, and even death. Lead exposure before or during pregnancy
can also alter fetal development and cause miscarriages.
In 1991, the Secretary of HHS characterized lead poisoning as the
``number one environmental threat to the health of children in the
United States'' (Ref. 1). Although the percentage of children with
elevated blood-lead levels has declined over the last 20 years,
millions of U.S. children still have blood-lead levels high enough to
threaten their health (Ref. 1). The Third National Health and Nutrition
Examination Survey (NHANES III) indicates that over the past two
decades, the average child's blood-lead level has decreased from 12.8
g/dL to 2.8 g/dL (Ref. 8). NHANES III also indicates,
however, that in 1991 approximately 1.7 million U.S. children under the
age of 6 still had blood-lead levels that exceeded the CDC 10
g/dL level of concern (Ref. 8).
C. Hazards from Past Uses of Lead-Based Paint
Efforts to reduce exposure to lead from sources like gasoline and
food cans have played a large role in the past reductions of blood-lead
levels in the United States. Despite these successes, a significant
human health hazard remains from improperly managed lead-based paint.
From the turn of the
[[Page 9066]]
century through the 1940's, paint manufacturers used lead as a primary
ingredient in many oil-based interior and exterior house paints. Usage
gradually decreased through the 1950's and 1960's, as largely lead-free
latex paints became more popular. Although the CPSC banned lead-based
paints from residential use in 1978 (currently, paints may not have
greater than 0.06 percent lead by weight (Ref. 3)), EPA and HUD
estimate that 83 percent of the privately owned housing units built in
the United States before 1980 contain some lead-based paint. By these
estimations, approximately 64 million homes may contain lead-based
paint that may pose a hazard to the occupants if not managed properly
(Ref. 4).
Lead from exterior house paint can flake off or leach into the soil
around the outside of a home, contaminating children's playing areas.
Dust caused during normal lead-based paint wear (especially around
windows and doors) can create a hard-to-see film over surfaces in a
house. In some cases, cleaning and renovation activities can increase
the threat of lead-based paint exposure by dispersing fine lead dust
particles in the air and over accessible household surfaces. If managed
improperly, both adults and children can receive hazardous exposures by
inhaling the fine dust or by ingesting paint dust during hand-to-mouth
activities. Children under age 6 are especially susceptible to lead
poisoning (Ref. 2).
III. Summary of Proposed Rule and Public Comments
Under the authority of Title X, EPA and HUD issued a proposed rule
in the Federal Register of November 2, 1994 (59 FR 54984). The proposed
rule described the basic approach for implementing the requirements
under section 1018, including draft regulatory text, definitions, and
standardized form language for use in all transactions. In many cases,
EPA and HUD also included a range of options for implementing the rule
along with requests for comment on specific implementation issues.
In response to the proposed rule, identified by docket number
OPPTS-62130A, EPA and HUD received responses from 198 commenters during
the 60-day comment period. The largest number of responses
(approximately 25 percent) came from the real estate industry. Other
commenter groups included representatives from the banking/financial
industry (9 percent), letters from State and local officials involved
with public health or environmental protection (8 percent), comments
from advocacy groups (8 percent), letters from attorneys representing
various groups (9 percent), and concerned private citizens (23
percent). Approximately 10 percent of the responses came from education
officials, housing authorities, and groups involved with real estate
development and construction. The paragraphs that follow briefly
describe some of the key areas that were addressed by the commenters.
A number of comments addressed the scope and applicability of the
rule. Commenters discussed a range of transaction types for specific
exclusion or inclusion.
While numerous comments addressed the various definitions contained
in the rule, most suggestions involved revisions and modifications to
existing terms as opposed to requests that additional terms be defined.
A prevalent theme was consistency of terminology across different rules
such as those for sections 402, 404, and 406 of TSCA.
Comments concerning the disclosure requirement targeted issues such
as the scope of disclosed information; the precise stage at which
disclosures should be made; recordkeeping parameters; and the ways in
which common areas of multi-unit buildings will be affected by
disclosure.
The lead hazard information pamphlet requirements generated
comments in the following three categories: strategies for States and
tribes (hereafter, all references to States include Indian tribes) with
their own notification materials; making the pamphlet available in
other languages; and requests for more varied and active distribution
strategies.
The proposed disclosure and acknowledgment form generated requests
for simplification and availability in non-English languages. Some
suggestions involved revising portions of the Lead Warning Statement.
The section of the proposed rule that received the most comments
concerned the proposed 10-day evaluation period. Of particular concern
were the commencement and length of the evaluation period; the
practical availability of certified inspectors or risk assessors to do
the testing; and the practicality and logistics of obligating
purchasers to provide a report to sellers.
Other topics that elicited some comment included the role of the
agent, the effective date of the rule, and potential penalties for
noncompliance.
A more complete summary of the comments received, along with EPA's
and HUD's responses, is available in the public record for this
rulemaking.
IV. Final Rule Provisions and Key Comments Addressed
EPA and HUD have revised the proposed rule to reflect the Agencies'
desire to maximize the rule's clarity, flexibility, consistency with
other Federal activities, and consistency with existing real estate
practice. These goals are important considerations to ensure quick and
widespread implementation of the rule.
In particular, many of the changes to the final rule fall into five
general categories. These areas include: (1) Clarifications of the
rule's applicability, (2) modification of key definitions, (3)
establishment of a clear and common sense disclosure process, (4)
development of a concise disclosure record, and (5) development of a
flexible framework for the 10-day evaluation period.
Throughout the preamble for this final rule, there are citations to
24 CFR part 35 and 40 CFR part 745. These references reflect the
location that the final regulatory text will occupy in the Code of
Federal Regulations (CFR) following the rule's promulgation. EPA and
HUD are adding this final joint EPA/HUD regulation to both titles to
ensure that the public can easily locate the requirements. Where the
preamble references the actual rule language, therefore, it will
regularly include references to the requirements as they appear in each
title. While the requirements are identical, in some cases the
nomenclature for the two titles may be slightly different.
A. Clarifying the Rule's Scope and Applicability
Section 1018 mandated that the rule apply to sales and leases of
target housing. The proposed rule also discussed certain unique types
of housing transactions that deserved special attention in implementing
the regulations. For example, the preamble of the proposed rule
explained the rule's exclusion of the following from the statutory
definition of target housing: housing built after 1977, housing for the
elderly, housing for the disabled, 0-bedroom dwellings, and commercial
lodging. Many commenters recommended that the regulatory text of the
final rule clearly designate types of transactions that are included
and excluded.
EPA and HUD have expanded the scope and applicability section of
the regulatory text to better define the rule's impact on certain types
of transactions. Below is a brief discussion of the unique transactions
addressed under the scope and applicability section and the
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rationale for including or excluding them.
1. Transactions to sell properties at foreclosure. The final rule
retains the exclusion for foreclosure sales presented in the proposed
rule. While some commenters opposed exempting foreclosure transactions
due to the lack of protection for the purchaser, EPA and HUD believe
that the circumstances typically surrounding foreclosure transactions
make pre-sale disclosure and evaluation unworkable and impractical.
Access to properties during foreclosure proceedings is often limited,
making evaluations impossible. Such properties typically are sold on an
``as is'' basis with regard to all structural and environmental
factors. Further, these transactions do not necessarily involve direct
interaction between the property owner and the purchaser, and the
mortgage holder or trustee is unlikely to have information on the
presence of lead-based paint and/or lead-based paint hazards. In light
of these circumstances, EPA and HUD believe that it would be
inappropriate to extend Federal disclosure and evaluation requirements
to foreclosure transactions.
This exclusion does not apply, however, to the sale of housing
originally acquired through a foreclosure sale and subsequently resold
(an expansion of the exclusion recommended by some commenters). In such
cases, EPA and HUD believe that the rule's provisions can be
incorporated into the sales process since many of the extenuating
circumstances of foreclosure sales no longer apply.
2. Rental housing found to be free of lead-based paint. The final
rule exempts from coverage leasing transactions involving target
housing that is free of lead-based paint, as determined by a certified
inspector. For the purposes of this rule, EPA and HUD have defined
``lead-based paint free'' as the absence of paint with lead levels
above those provided in Title X.
In addition to receiving support by many public commenters, this
exclusion was recommended by the Task Force on Lead Hazard Reduction
and Financing. EPA and HUD strongly encourage the concept of lead-based
paint evaluation in rental housing. Evaluations can help lessors to
detect the presence of lead-based paint and to determine whether
certain management practices and occupant education efforts are
necessary. Where evaluations discover lead-based paint, such results
will provide lessors and/or lessees with the information necessary to
take appropriate hazard reduction steps. EPA and HUD also believe that
the exemption will provide a valuable incentive to building owners to
conduct inspections and remove lead-based paint where present.
Under the provisions of the regulation, disclosure during rental
transactions is limited to the disclosure of known lead-based paint
and/or lead-based paint hazards, provision of available records and
reports, provision of a lead hazard information pamphlet, and creation
and retention of lead warning and acknowledgment language. These
activities provide substantially fewer benefits in cases where reliable
information indicates that the housing is lead-based paint free. At the
same time, EPA and HUD expect that the exemption for lead-based paint
free units will not dissuade many lessors from providing their
inspection reports to prospective lessees on a voluntary basis. Given
the value that lead-safe housing would have to an informed consumer,
EPA and HUD expect that owners will see a great benefit in informing
lessees of the housing's lead-based paint free status.
Because of the distinct disclosure obligations the statute imposes
on sellers, obligations that purchasers assume upon purchase of the
housing, EPA and HUD are not allowing the lead-based paint free
exemption for sales transactions. Unlike lessees, purchasers take on
new obligations to comply with the disclosure provisions during all
subsequent sales or leasing transactions. Exempting sales transactions
could disrupt the flow of information from owner to owner regarding the
status of the target housing and the purchaser's potential disclosure
obligations. Further, Title X guarantees purchasers more than just
known information and available reports. Title X guarantees each
purchaser the opportunity to conduct an evaluation for lead-based paint
and/or lead-based paint hazards, regardless of the information
disclosed by the seller. Exempting sales transactions based on the
information in the possession of the seller would deny the purchaser
that evaluation right. While many purchasers will accept the seller's
information and waive their evaluation opportunity (especially if the
seller provides an evaluation by a certified inspector), some
purchasers may prefer to have their own evaluation performed.
Because the Federal training and certification program will not
take effect until some time after the effective date of this rule, EPA
and HUD recognize the need for a process to allow property owners to
seek exclusions for lead-based paint free housing in States without
federally authorized certification programs. In the interim period
before the Federal certification program (to be issued under subpart L
of 40 CFR part 745) takes effect, inspectors qualified under any
existing State certification program, and using State-approved methods,
are considered qualified to conduct inspections for the purpose of
determining whether housing is lead-based paint free. In States without
existing certification programs, lessors may use the services of
inspectors certified in other States. Once the Federal or federally
authorized State certification program has taken effect in a particular
State, however, this interim provision will expire and subsequent
inspections for the purposes of this exclusion will have to be
performed by inspectors with Federal or federally authorized State
certification.
Some commenters asked whether lessors hoping to meet the lead-free
exemption could correct for possible false (or outdated) positive
findings during lead-based paint inspections. The lessor always retains
the option of having additional tests performed by certified
inspectors. Nothing in either the law or the regulation is intended to
revoke or restrict that right. An additional test can sometimes clarify
whether or not lead-based paint is present. For example, if a lessor
believed that a previous inspection had rendered a false-positive
result (all measurement techniques involve some small degree of
sampling and analytical error), the lessor could choose to have a
certified inspector retest the area in question. If the additional
testing by a certified inspector indicated that the initial positive
results were false (i.e., that there was in fact no lead-based paint
present), then the lessor would qualify for the lead-based paint free
exemption. Similarly, suppose a lessor first had a test done in 1982
using an X-ray fluorescence (XRF) device that indicated the presence of
lead-based paint. Because testing procedures were less reliable at that
time (standard practice often failed to consider the effect of the
substrate underneath the paint on the accuracy of the measurement and
instrument calibration checks were often deficient), the lessor might
choose to conduct a new test using the improved methodology available
today. If this second test indicated that lead-based paint was not
present, then the lessor would qualify for the lead-based paint free
exemption. As a third example, a lessor who had all lead-based paint
removed from a rental property following an earlier inspection could
choose to have a new inspection or
[[Page 9068]]
clearance examination conducted on the abated property. If the new
information indicated that lead-based paint was no longer present, then
the lessor would qualify for the lead-based paint free exemption. In
all three cases, if the second test confirmed the original findings, or
if the test was not conducted by a certified inspector, the exemption
would not be available.
3. Short-term leases of 100 days or less. Many commenters
recommended that the final rule clarify the distinction between short-
term lodgings and longer term residential housing. The final rule
addresses these comments by excluding housing transactions involving
leasing agreements of 100 days or less, where no lease renewal or
extension can occur. This time period is intended to capture all
leasing transactions of 3 months or less, while providing several
additional days to allow flexibility in the transaction. Building upon
the logic discussed in the proposed rule, the final rule's short-term
lease exclusion captures most seasonal vacation rentals and hotel and
motel transactions, as well as other forms of short-term lodging.
During such transactions, which are typified by short stays and quick
occupant turnover, EPA and HUD believe that the disclosure provisions
are impractical and counter to Congressional intent. The notification
requirements of this rule would apply to vacation rentals in cases
where the stay extends beyond a 100-day period. Under such
circumstances, EPA and HUD believe that the potential for occupant
exposure to lead-based paint and/or lead-based paint hazards merits the
disclosure of information required by the rule, regardless of whether
the stated purpose of the lease is temporary or permanent housing.
In addition, EPA and HUD have placed a limitation on extensions and
renewals of such short-term leases to ensure that month-to-month
leasing transactions remain covered by the final rule. Commenters noted
that many rental transactions incorporate an open-ended month-to-month
leasing agreement. These transactions will still be covered by the
final rule unless the parties establish in advance that the term of
rental will be no longer than 100 days. In an open-ended month-to-month
lease arrangement, for example, the rule still applies since the
leasing agreement fails to limit the lease term to 100 days or less,
i.e., the lease agreement could possibly be extended beyond 100 days.
If both parties wish to extend a previously exempted short-term lease
beyond the 100-day limit, all provisions of this rule must be satisfied
in full before any such ``extension'' occurs.
4. Lease renewals. The final rule does not require repeated
disclosure during the renewal of existing leases in which the lessor
has previously disclosed all information required under 24 CFR 35.88
and 40 CFR 745.107 and where no new information has come into the
possession of the lessor. As stated in the proposed rule, EPA and HUD
do not believe that duplicative disclosure provides significant
benefits.
Several commenters noted that in many residential leasing
transactions, leasing arrangements switch to month-to-month ``at-will''
arrangements after an initial period of occupancy. In such cases, the
leasing arrangement may continue indefinitely without any ``renewal
process.'' Under such circumstances, EPA and HUD interpret renewal to
occur at the point when the parties agree to a significant written
change in the terms of the lease, such as a rental rate adjustment.
Following such alteration of terms, the disclosure requirements apply
to any new information obtained subsequent to the original disclosure.
5. The purchase, sale, or servicing of mortgages. The final rule
does not cover, and was never intended to cover, the purchase, sale, or
servicing of mortgages. During the comment period, many commenters
expressed concern that the proposed rule could be interpreted to hold
liable persons involved in the purchase, sale, or servicing of
mortgages where the title of the housing does not change hands as part
of the transaction.
6. The sale or lease of 0-bedroom dwellings. The final rule does
not apply to transactions involving 0-bedroom dwellings, in keeping
with the definition of ``target housing'' provided in section 1004 of
Title X. This definition, at the heart of the section 1018 provisions,
specifically excludes 0-bedroom dwellings of all types.
7. Informal rental agreements. In the proposed rule, EPA and HUD
proposed excluding ``informal rental agreements which do not involve a
lease'' (a phrase meant to capture oral leases) because ``such
arrangements, by virtue of their informality, make the administration
and enforcement of these requirements extremely difficult.'' EPA and
HUD have removed any implied exclusion for oral leases. In deciding not
to exclude such leases, EPA and HUD drew heavily upon the public
comments. Many of these comments suggested that the absence of a
written lease may not have bearing on the ``formality'' of the housing
arrangement. Commenters noted that oral leases make up a significant
portion of the housing arrangements in certain areas, especially those
that lack rental housing codes.
Further, although the absence of a written lease provides
challenges for certain Federal enforcement and compliance monitoring
approaches, EPA and HUD now believe that enforcement is possible. Other
evidence may exist, for example, to demonstrate that a leasing
agreement exists between two parties. Congress also provided lessees
with opportunities for redress under its civil penalty provisions at
section 1018(b)(3). These safeguards are not dependent upon Agency
actions and therefore should not be constrained by EPA and HUD
limitations.
EPA and HUD have also considered policy reasons for not excluding
oral leases. First, EPA and HUD are sympathetic to commenter concerns
that an explicit exclusion for oral leasing transactions could create
incentives for lessors to avoid written leases. If the rule's exclusion
were to indirectly discourage the use of written leases, lessees would
lose both their right to information on lead-based paint poisoning
prevention and the many other protections afforded by written leases.
Commenters also noted that a disproportionate number of oral
transactions occur in low-income, disadvantaged communities. These
communities are already at greater risk of exposure to lead-based paint
hazards.
Nevertheless, while the final rule does not provide an explicit
exclusion for oral leasing arrangements, EPA and HUD expect that many
oral lease transactions may be excluded for other reasons (length of
arrangements, rental of 0-bedroom dwelling, etc.).
B. Effective Date
In the proposed rule, EPA and HUD requested comment on the issue of
extending the effective date for the final rule beyond October 28,
1995, in light of the promulgation delays. EPA and HUD noted Congress'
inclusion of a 1-year window between the statutory promulgation
deadline and the statutorily mandated effective deadline. EPA and HUD
received comments in support of and in opposition to an extension.
Commenters opposed to delaying the effective date generally argued
that any delay in implementation would increase the number of
preventable exposures to lead-based paint hazards. According to these
commenters, given the importance of educating consumers about their
options for reducing lead hazards, the positive effects of early
implementation outweigh the practical difficulties.
While agreeing that this rule addresses an important consumer
[[Page 9069]]
protection and empowerment goal, EPA and HUD believe that the rule's
effective implementation requires an informed and prepared general
public and regulated community. EPA and HUD believe that a phase-in
period is necessary to provide adequate time for the real estate
industry, private lessors, and independent housing sellers and lessors
to become familiar with the rule requirements and to set up procedures
for compliance.
Sellers and lessors who own more than four residential dwellings
will have 6 months from the final rule's promulgation to implement full
disclosure during sales and leasing transactions. This phase-in
schedule ensures that all such property owners, sellers, lessors, and
agents will have adequate notice of the new requirements before they
take effect. Believing that property owners with four or fewer
dwellings are more likely to be non-professional sellers and lessors,
EPA and HUD are providing a 9-month phase-in period for such owners.
EPA and HUD encourage all sellers and lessors to begin voluntary
disclosure in advance of their relevant effective date.
EPA and HUD also received comments recommending delaying the
effective date until after EPA issues its standards for lead hazards in
paint, dust, and soil. These commenters stated that the regulated
community would be unable to disclose adequately the presence of lead-
based paint and lead-based paint hazards in the absence of Federal
standards.
EPA and HUD do not believe that this rule requires Federal lead
hazard standards to be effective. In section 1018, Congress mandated
that sellers and lessors disclose not just lead-based paint hazards but
also the presence of lead-based paint, a far more inclusive mandate
(since not all lead-based paint is necessarily a hazard).
Further, EPA and HUD expect that records will likely provide
purchasers and lessees with information on lead-based paint and, where
they exist, lead-based paint hazards. Accordingly, if records
pertaining to lead-based paint are fully disclosed, disclosure of lead-
based paint hazards should also be accomplished.
The statute and now this rule provide a clear definition for the
levels of lead in paint that constitute lead-based paint. The statute
also provides a qualitative definition of lead-based paint hazard,
including certain exposures to lead-based paint that is peeling or
chipping; lead-based paint that is on friction, impact, or chewable
surfaces; and lead-contaminated dust and soil.
EPA and HUD have augmented these definitions by providing guidance
on identifying lead hazards in paint, dust, and soil (60 FR 47248).
Regarding the need for guidance to help prospective purchasers and
lessees with the interpretation of disclosed information, EPA and HUD
believe that the statutory definition of ``lead-based paint hazard,''
combined with EPA's lead hazard guidance and the HUD Guidelines,
provides sellers, purchasers, lessors, and lessees with valuable
information for interpreting any disclosed information.
Some commenters have also recommended delaying the effective date
of the final rule until after the activation of the Federal standards
for training and certifying lead workers, being developed under section
402 of TSCA. After considering the comments and reexamining the
statute, EPA and HUD have determined that such a delay is unnecessary.
EPA and HUD believe that the HUD Guidelines will provide adequate
interim guidance for the evaluation and management of lead-based paint
hazards in target housing, prior to the release of the section 402
training and certification standards.
C. Definitions
EPA and HUD received comments on many of the proposed definitions.
Below is a brief discussion of the significant definitions being
promulgated under this final rule.
1. Agent means 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, for the purpose of selling or
leasing target housing. This term does not apply to purchasers or any
purchaser's representative who receives all compensation from the
purchaser.
EPA and HUD initially defined ``agent'' to be ``any party who
enters into a contract with a seller or lessor to represent the seller
or lessor for the purpose of selling or leasing target housing.''
Several commenters stated that the language in this definition was
needlessly vague. Listing agents typically enter into a contract with
the seller and represent the seller. ``Buyer'' agents, however, often
enter into a contractual relationship with a seller or the seller's
agent but may represent both the seller and the purchaser in the real
estate transaction. EPA and HUD have revised this definition so that
any party entering into a contractual relationship directly with the
seller or lessor (or indirectly with a representative of the seller or
lessor) for the purpose of selling or leasing the target housing, is an
``agent'' for the purposes of this rule. As a consequence, listing
agents, selling agents, and buyer agents (if paid by the seller or
through a cooperative brokerage agreement with the listing agent), are
``agents'' and are responsible for ensuring compliance under the rule.
Since section 1018 refers only to agents having entered into a contract
with the seller or lessor, buyer's agents paid entirely by the
purchaser are not considered ``agents'' under this rule.
2. Available means in the seller's or lessor's possession or
reasonably obtainable by the seller or lessor at the time of the
disclosure.
Section 1018(a)(1) requires that sellers and lessors provide the
purchasers and lessees with ``any lead hazard evaluation reports
available to the seller or lessor.'' EPA and HUD interpret available
lead hazard evaluation reports to mean records and reports that pertain
to lead-based paint and/or lead-based paint hazards in the target
housing and that are in the possession of the seller or lessor or that
are reasonably obtainable by the seller or lessor at the time of the
disclosure.
EPA and HUD expect that most sellers and lessors will retain copies
of relevant information in their possession along with other important
housing files (title, outstanding leases, etc.). In some cases,
however, the seller or lessor may no longer have possession of the
records but may have reasonable access to the information. Examples of
``reasonably obtainable'' records include records retained by a
separate or outside entity on behalf of the seller or lessor and copies
of reports retained by the original inspector or risk assessor that
would be available to the owner in cases where the original records
were destroyed or lost. The term ``reasonably obtainable'' is not
intended to impose an obligation on the seller or lessor to conduct
further evaluation of the housing.
3. Common area means a portion of a building generally accessible
to all residents/users including, but not limited to, hallways,
stairways, laundry and recreational rooms, playgrounds, community
centers, and boundary fences.
This definition is unchanged from the proposed rule. The term
``common area'' will be used in other TSCA Title IV regulations, some
of which may require a broader interpretation of common area. The final
rule provides one broadly interpreted term applicable under all of the
TSCA rules, to avoid the confusion of multiple rule-specific
definitions. Though several commenters recommended minor changes to
adjust the scope of the definition, EPA and HUD believe that other
regulatory
[[Page 9070]]
provisions adequately clarify the relevant scope of the term ``common
area'' as it relates to target housing.
4. Foreclosure means any of the various methods, statutory or
otherwise, known in different jurisdictions, of enforcing payment of a
debt, by the taking and selling of real property.
EPA and HUD added this definition in response to requests that the
final rule include a regulatory definition of the term. EPA and HUD
believe that this definition will help property owners determine the
applicability of the foreclosure exemption to their transactions.
Recognizing that different jurisdictions may have differing
interpretations of what constitutes ``foreclosure,'' EPA and HUD have
developed a general definition that provides flexibility to work within
established local laws and customs.
5. Housing for the elderly means retirement communities or similar
types of housing specifically designed for households composed of one
or more persons 62 years of age or more at the time of initial
occupancy.
In response to public comments, EPA and HUD have added a definition
for this term to the regulatory text. This definition is consistent
with the definition used by HUD's Supportive Housing for the Elderly
Program (See 24 CFR 277.1(f)). While some commenters recommended the
use of a ``55 years or older'' standard (as used to define ``older
person'' in the Fair Housing Act), HUD believes that the current
definition is more consistent with HUD's other programs for the
elderly.
6. Lead-based paint means paint or other surface coatings that
contain lead equal to or in excess of 1.0 milligram per square
centimeter or 0.5 percent by weight.
This term has been modified slightly from the language provided in
Title X and TSCA to retain consistency with the many HUD programs
already using the levels defined under section 302(c) of the Lead-Based
Paint Poisoning Prevention Act.
7. Lead-based paint free housing means target housing that has been
found to be free of paint or other surface coatings that contain lead
equal to or in excess of 1.0 milligram per square centimeter or 0.5
percent by weight.
EPA and HUD have added this definition in support of the provision
of the rule that allows rental transactions in ``lead-based paint
free'' rental housing to be excluded from the section 1018
requirements. EPA and HUD provide further discussion of this provision
in unit IV.A.2. of this preamble.
8. Lead-based paint hazard means any condition that causes exposure
to lead from lead-contaminated dust, lead-contaminated soil, or lead-
contaminated paint that is deteriorated or present in accessible
surfaces, friction surfaces, or impact surfaces that would result in
adverse human health effects as established by the appropriate Federal
agency.
This term, defined in section 1004 of Title X, is unchanged from
the proposed rule. EPA has released guidance on identifying lead
hazards in paint, dust, and soil (60 FR 47248) and is currently
developing Federal standards. In addition, HUD has released
comprehensive guidelines for evaluation and control of lead-based paint
hazards in housing (Ref. 7).
9. Lessee means any entity that enters into an agreement to lease,
rent, or sublease target housing, including but not limited to
individuals, partnerships, corporations, trusts, government agencies,
housing agencies, Indian tribes, and nonprofit organizations.
EPA and HUD received limited comments on this definition and have
made minor revisions to the language of the definition to clarify its
applicability to trusts and subleases.
10. Lessor means any entity that offers target housing for lease,
rent, or sublease, including but not limited to individuals,
partnerships, corporations, trusts, government agencies, housing
agencies, Indian tribes, and nonprofit organizations.
EPA and HUD received limited comments on this definition and have
made minor revisions to the language of the definition to clarify its
applicability to trusts and subleases.
11. Owner means any entity that has legal title to target housing,
including but not limited to individuals, partnerships, corporations,
trusts, government agencies, housing agencies, Indian tribes, and
nonprofit organizations, except where a mortgagee holds legal title to
property serving as collateral for a mortgage loan, in which case the
owner is considered the mortgagor.
EPA and HUD have revised the definition provided in the proposed
rule to clarify its applicability to trusts and to clarify one
situation in which mortgage lenders (mortgagees), rather than borrowers
(mortgagors), hold title and are therefore owners.
12. Purchaser means an entity that enters into an agreement to
purchase an interest in target housing, including but not limited to
individuals, partnerships, corporations, trusts, government agencies,
housing agencies, Indian tribes, and nonprofit organizations.
EPA and HUD received limited comments on this definition and have
made minor revisions to the language of the definition to clarify its
applicability to trusts.
13. Risk assessment means an on-site investigation to determine and
report the existence, nature, severity, and location of lead-based
paint hazards in residential dwellings, including: (1) Information
gathering regarding the age and history of the housing and occupancy by
children under age 6; (2) visual inspection; (3) limited wipe sampling
or other environmental sampling techniques; (4) other activity as may
be appropriate; and (5) provision of a report explaining the results of
the investigation.
This definition, provided in section 1004 of Title X, is unchanged
from the proposed rule. Under section 402 of TSCA, EPA will promulgate
separate regulations regarding the conduct of such activities, as well
as a program for training and certifying workers engaged in these
activities. Under section 404 of TSCA, these regulations will also
include a process for authorizing States to implement their own
training and certification programs.
14. Seller means any entity that transfers legal title to target
housing, in whole or in part, in return for consideration, including
but not limited to individuals, partnerships, corporations, trusts,
government agencies, housing agencies, Indian tribes, and nonprofit
organizations. The term ``seller'' also includes: (1) An entity that
transfers shares in a cooperatively owned project, in return for
consideration and (2) an entity that transfers its interest in a
leasehold in jurisdictions or circumstances where it is legally
permissible to separate the fee title from the title to the
improvement, in return for consideration.
EPA and HUD received limited comments on this definition and have
made minor revisions to the language of the definition to clarify its
applicability to trusts.
15. Target housing means any housing constructed prior to 1978,
except housing for the elderly or persons with disabilities (unless any
child who is less than 6 years of age resides or is expected to reside
in such housing) or any 0-bedroom dwelling.
This definition was provided by section 1004 of Title X and is
unchanged. Where commenters provided recommendations for revising or
clarifying the definition, EPA and HUD have addressed those comments
within the scope and applicability section of the final rule.
Commenters also noted that the proposed rule
[[Page 9071]]
misstated the statutory definition by limiting the 0-bedroom dwelling
exception to housing where no children under 6 reside or are expected
to reside. EPA and HUD have modified the definition to reflect the
statutory language.
16. 0-bedroom dwelling means any residential dwelling in which the
living area is not separated from the sleeping area. Such term includes
efficiencies, studio apartments, dormitory housing, military barracks,
and rentals of individual rooms in residential dwellings.
In the preamble of the proposed rule, EPA and HUD clarified their
interpretation of this term by identifying efficiencies, studio
apartments, dormitory housing, military barracks, and other such
housing in which the living area is unseparated from the sleeping area
as types of dwellings that are not covered under the rule. EPA and HUD
have added rentals of individual rooms in a residential dwelling to the
types of transactions that would involve a 0-bedroom dwelling. All of
these clarifications are included in the regulatory definition in the
final rule's regulatory text.
D. Changes to the Disclosure Requirements
Section 1018(a)(1)(B) requires that ``before the purchaser or
lessee is obligated under any contract to purchase or lease the
housing, . . .the seller or lessor shall. . .disclose to the purchaser
or lessee the presence of any known lead-based paint or any lead-based
paint hazards, in such housing, and provide any lead hazard evaluation
report available to the seller or lessor.''
EPA and HUD received more than 150 comments on their proposed
requirements for such information disclosure, addressing both the
proposed disclosure process and the issue of what information should be
covered. In particular, recurring themes among the comments included:
(1) The need for greater specificity regarding the necessary timing for
disclosure activities; (2) concerns over which activities should
constitute disclosure; and (3) what kinds of information should be
disclosed under this rule. The following is a brief discussion of these
key points and a summary of the regulatory requirements.
1. Timing of disclosure events. In addressing the need for greater
clarity regarding the timing of disclosure activities, EPA and HUD have
attempted to maximize the parties' flexibility in incorporating these
requirements during negotiations. EPA and HUD believe that this
flexibility is important given the many types of transactions covered
by these provisions and the existence of distinct local requirements
and customs. Therefore, the final rule identifies only the latest point
at which full disclosure must occur. Using the statute as a guide, EPA
and HUD have identified this point as before the purchaser or lessee
becomes obligated under any contract to purchase or lease the housing.
Some commenters raised the concern, however, that without
additional clarification regarding how and when information must be
disclosed, the final rule could cause unnecessary confusion regarding
how the requirements will work in actual practice. After reviewing the
framework set out in the proposed rule, EPA and HUD have revised and
clarified the requirements in a number of ways. First, the final rule
contains numerous minor changes to the wording of definitions and
requirements to clarify that the rule does not require mass disclosure
to all prospective purchasers, regardless of their degree of interest.
Second, the rule requires that certain disclosure and acknowledgment
language become part of the final sale or lease contract. In making
these changes, EPA and HUD have considered the typical negotiation
process involved in leasing and sales transactions.
During sales transactions, for example, purchasers often take the
first step toward formalizing a sales agreement by providing a written
offer to purchase the housing. If accepted and signed by the seller,
this offer typically becomes the sales contract. The statute's mandate
that disclosure and notification take place before the purchaser is
obligated imposes a requirement on the seller to disclose information
before accepting the purchaser's offer, thereby allowing the purchaser
an opportunity to review the information and to possibly amend the
offer. If a seller were to accept a purchaser's offer and obligate the
purchaser before disclosing known information, such a seller would be
in violation of Title X and this rule. Of course, the parties can
always agree to conduct the disclosure activities in advance of
contract discussions, provided that the final contract includes the
signed and dated disclosure elements mandated by this rule.
In leasing transactions, the disclosure process is even simpler.
While the parties are free to negotiate when the disclosure process
occurs, lessors must provide the information and complete the
disclosure portions of the lease (or attachment) before the lessee
becomes obligated under a contract to lease the housing. By requiring
that the disclosure information be included in or as an attachment to
the lease, EPA and HUD seek to ensure that the disclosure process
automatically occurs during lease negotiations.
The requirement that the contract or an attachment include
disclosure language fulfills two additional functions. First, the
process of completing and signing these sections ensures that all
parties are aware of their rights and obligations and are able to
confirm that the appropriate actions have already occurred. Second,
this disclosure language provides a clear record of compliance.
While sections 1018(a)(2) and (3) mandate lead warning language for
all sales transactions, the inclusion of such language as an attachment
to leases is not specifically mandated by Title X. EPA and HUD,
however, believe that it is necessary to include the warning language
in leases as well. Further, the completion and retention of disclosure
and acknowledgment language is a necessary component of any effective,
enforceable disclosure requirement for leasing transactions.
2. Components of full disclosure. EPA and HUD consider full
disclosure to have occurred when the seller or lessor has provided the
following items to the purchaser or lessee.
a. A lead hazard information pamphlet approved by EPA. As required
by TSCA section 406, EPA has developed a lead hazard information
pamphlet, entitled Protect Your Family from Lead in Your Home, and has
made it available through government channels and private sources. EPA
issued the final notice of the pamphlet's availability in the Federal
Register of August 1, 1995 (60 FR 39167). In addition to providing
detailed information on how to obtain copies (individually, in bulk,
and as camera-ready reprints), the notice describes the process of
developing the pamphlet, including considerable public review and
comment.
The statute also allows States to develop their own lead hazard
information pamphlets under section 406, provided that they obtain
authorization and approval from EPA. Several States that already have
disclosure provisions have expressed their desire to seek approval to
use their own pamphlets in lieu of the Federal pamphlet. EPA and HUD
encourage States interested in developing their own materials to seek
approval of their pamphlets for distribution under the section 1018
regulations.
b. Notice of the presence of known lead-based paint and/or lead-
based paint hazards. Sellers and lessors must disclose, based on their
actual knowledge, whether the target housing
[[Page 9072]]
is known to contain lead-based paint and/or lead-based paint hazards.
EPA and HUD received many comments on the types of information under
consideration for disclosure under these requirements. Many of the
commenters expressed concern that the proposed rule was too vague about
what constituted ``known information.'' For example, did EPA and HUD
intend for the disclosure requirements to distinguish between
information already in the possession of the seller or lessor and
information that could be obtained only by some further investigation
or inference? Several commenters described this distinction in terms of
actual knowledge (knowledge stemming from existing facts and
information) versus constructive knowledge (knowledge that could be
inferred or obtained by further inquiry). An expectation that the
property owners meet a constructive standard for knowledge could create
an implied testing requirement.
While the Agencies hope to encourage lead hazard evaluation and
reduction efforts through all of their regulatory and non-regulatory
programs, neither Agency believes that Congress intended to mandate
additional lead hazard evaluation activities in private housing. EPA
and HUD believe that Congress intended to limit the disclosure
obligation to actual knowledge. The final rule, therefore, embraces an
actual knowledge standard as well. With this clear standard, property
owners and their agents will be able to take affirmative steps to
comply fully with the rule and be confident that they have met the
requirements of the law and its implementing regulations. EPA and HUD
believe that such finality is a necessary part of this regulation,
given the diverse makeup of the regulated community.
c. Provision of records and reports on lead-based paint and/or
lead-based paint hazards available to the seller or lessor. As mandated
by section 1018(a)(1)(B), sellers and lessors must ``provide to the
purchaser or lessee any lead hazard evaluation report available to the
seller or lessor.'' EPA and HUD have interpreted ``available evaluation
reports'' to mean records and reports that pertain to lead-based paint
and/or lead-based paint hazards in the target housing and that are in
the possession of the seller or lessor or that are reasonably
obtainable by the seller or lessor at the time of the disclosure.
During the proposed rule phase, EPA and HUD requested comment
regarding the disclosure of known lead-based paint and/or lead-based
paint hazards in other units within target housing. EPA and HUD
received both supporting and opposing comments on this requirement.
Opponents argued that distinct dwelling units can have very different
painting histories, making information on one unit an unreliable
indicator of other units. Proponents argued that regardless of
differences that may exist, the painting histories of different units
in a building are usually similar enough to provide valuable
information for individuals considering whether lead hazard exposure
precautions are prudent.
EPA and HUD believe that information and reports on other units in
the target housing are directly relevant to prospective purchasers and
lessees if the information stems from evaluation or reduction efforts
in the target housing as a whole. In large multifamily properties,
evaluations do not necessarily examine every dwelling unit in the
housing. Rather, inspectors or risk assessors examine a representative
sample of the dwelling units and apply the findings to the housing as a
whole. While such evaluations might not include data on a specific
unit, the fact that the evaluation was designed to provide information
on the housing as a whole makes the report's findings relevant.
The proposed rule also requested comment on whether sellers and
lessors should have to disclose information on past elevated blood-lead
levels in other occupants of target housing. Based on the comments and
further deliberation, EPA and HUD decided against requiring disclosure
of medical information for several reasons. As commenters pointed out,
lead exposure, elevated blood-lead levels, or lead poisoning may come
from sources other than lead-based paint hazards in the housing. Where
elevated blood-lead levels were determined to stem from lead-based
paint hazards in the housing, the follow-up environmental assessment
activities in the affected person's housing will likely generate more
germane records regarding lead-based paint exposure hazards in the
housing.
Commenters also questioned whether disclosure requires the actual
transfer of all documentation from the seller or lessor, or whether
simply making the information accessible for the purchaser's or
lessee's evaluation is adequate. Based on the mandate in section
1018(a)(1)(B), EPA and HUD believe that Congress clearly intended for
purchasers and lessees to receive their own copies of the records and
reports available to the seller or lessor. Therefore, the seller or
lessor remains obligated to provide copies of all relevant materials to
the purchaser or lessee.
d. Completed Lead Warning Statement and acknowledgment language,
attached to the sales or lease contract. This information, set out in
24 CFR 35.92 and 40 CFR 745.113, documents the disclosure and
acknowledgment process, and serves as the primary confirmation tool for
all parties in ensuring full compliance with the regulatory
requirements. This information is especially important in cases where
purchasers or lessees conduct contract negotiations through their own
representatives (requiring sellers, lessors, or their agents to provide
documents to the representative instead of the purchaser or lessee). In
such cases, the attachment provides a record that sellers, lessors, and
agents can use to confirm that purchasers and lessees have received the
necessary disclosure materials.
The proposed rule required the use of disclosure forms as
attachments to each contract to purchase or lease target housing. These
forms would have served as the key mechanisms for documenting
compliance with the requirements. EPA and HUD carefully considered the
merits of each element, limiting the rule to information necessary for
demonstrating full compliance.
The final rule includes some changes to the information that must
be included in the contract. Where the proposed rule required that
sellers and lessors use federally developed disclosure forms, the final
rule provides greater flexibility for negotiating parties to develop
their own language, provided that it contains the mandated elements.
EPA and HUD eliminated the requirement that parties use a single form.
Instead, the final rule mandates only the information elements that
must be included without mandating specific formats or forms.
This flexibility is especially important to States that have
developed, or are considering developing, their own disclosure
requirements. During the comment period, several States requested that
the final rule provide flexibility for States to merge their forms with
the Federal form, eliminating unnecessary duplication. Under the final
rule, States and jurisdictions will be able to make changes to the
format as necessary to retain consistency with State and local laws and
customs.
The following is a discussion of the required elements.
(i) Seller, agent, and purchaser requirements. The final rule
requires that each contract to sell target housing include an
attachment containing specific disclosure and acknowledgment
[[Page 9073]]
elements, in the language of the contract (e.g., English, Spanish). The
elements required are described below:
(A) The first required element is the Lead Warning Statement,
consisting of the following language:
Every purchaser of any interest in residential real property on
which a residential dwelling was built prior to 1978 is notified
that such property may present exposure to lead from lead-based
paint that may place young children at risk of developing lead
poisoning. Lead poisoning in young children may produce permanent
neurological damage, including learning disabilities, reduced
intelligence quotient, behavioral problems, and impaired memory.
Lead poisoning also poses a particular risk to pregnant women. The
seller of any interest in residential real property is required to
provide the buyer with any information on lead-based paint hazards
from risk assessments or inspections in the seller's possession and
notify the buyer of any known lead-based paint hazards. A risk
assessment or inspection for possible lead-based paint hazards is
recommended prior to purchase.
Congress mandated this language in section 1018(a)(3) of Title X.
While several commenters recommended providing simpler language, EPA
and HUD are constrained by the mandate and have retained the statement
as proposed.
(B) The second required element is a statement disclosing the
presence of any known lead-based paint and/or lead-based paint hazards
in the target housing or indicating no knowledge of the presence of
lead-based paint and/or lead-based paint hazards. The seller must also
provide any additional information available concerning the known lead-
based paint and/or lead-based paint hazards, such as the basis for the
determination that lead-based paint and/or lead-based paint hazards
exist in the housing, the location of the lead-based paint and/or lead-
based paint hazards, and the condition of the painted surfaces. The
statement must also list all records and reports pertaining to lead-
based paint and/or lead-based paint hazards that are available to the
seller and that have been provided to the purchaser. If no such records
or reports are available to the seller, the statement must so indicate.
(C) The third element is a statement affirming that the purchaser
has received the information noted in paragraph (B) above and the lead
hazard information pamphlet required under section 406 of TSCA (15
U.S.C. 2696). The pamphlet described above may be the Federal pamphlet
entitled Protect Your Family from Lead in Your Home or a State-
developed pamphlet that has been approved by EPA.
(D) The fourth required element is a statement that the purchaser
has received a 10-day opportunity to conduct a risk assessment or
inspection for the presence of lead-based paint and/or lead-based paint
hazards (unless the parties have mutually agreed to a different period
of time), before becoming obligated under the contract to purchase the
housing. Alternatively, a purchaser who chooses to waive the risk
assessment or inspection opportunity must so indicate in writing.
(E) The fifth required element is a statement by any agent involved
in the transaction that the agent has informed the seller of the
seller's obligations under 42 U.S.C. 4852d and that the agent is aware
of his/her duty to ensure compliance with the requirements of this
rule.
(F) The sixth required element is the signatures of the seller(s),
agent(s), and purchaser(s), certifying the accuracy of their statements
on the attachment, along with their dates of signature. These
signatures document the acceptance by the parties of the information
they have provided on the attachment as a whole and alert the various
parties to their respective roles and responsibilities.
(ii) Lessor, agent, and lessee requirements. Each contract to lease
target housing must include the following elements, as an attachment or
within the contract, in the language of the contract (e.g., English,
Spanish).
(A) The first required element is a Lead Warning Statement with the
following language:
Housing built before 1978 may contain lead-based paint. Lead
from paint, paint chips, and dust can pose health hazards if not
managed properly. Lead exposure is especially harmful to young
children and pregnant women. Before renting pre-1978 housing,
lessors must disclose the presence of known lead-based paint and/or
lead-based paint hazards in the dwelling. Lessees must also receive
a federally approved pamphlet on lead poisoning prevention.
EPA and HUD received a considerable amount of comment regarding the
language of the Lead Warning Statement used in the leasing disclosure
attachment. EPA and HUD have developed a modified Lead Warning
Statement for leasing transactions that uses simpler words and syntax
than the purchase warning statement required by Title X.
(B) The second required element is a statement disclosing the
presence of any known lead-based paint and/or lead-based paint hazards
in the target housing or indicating no knowledge of the presence of
lead-based paint and/or lead-based paint hazards. The lessor shall also
provide any additional information available concerning the known lead-
based paint and/or lead-based paint hazards, such as the basis for the
determination that lead-based paint and/or lead-based paint hazards
exist; the location of the lead-based paint and/or lead-based paint
hazards; and the condition of the painted surfaces. The statement must
also list any records or reports pertaining to lead-based paint and/or
lead-based paint hazards that are available to the lessor and that have
been provided to the lessee. If no such records or reports are
available to the lessor, the statement must so indicate.
(C) The third required element is a statement affirming that the
lessee received the information noted in paragraph (B) above and the
lead hazard information pamphlet required under section 406 of TSCA (15
U.S.C. 2686).
(D) The fourth required element is a statement by any agent
involved in the transaction that the agent has informed the lessor of
the lessor's obligations under the law and that the agent is aware of
his/her duty to ensure compliance with the requirements of this rule.
(E) The fifth required element is the signatures of the lessor(s),
agent(s), and lessee(s), certifying the accuracy of their statements,
along with their dates of signature. These signatures document the
acceptance by the parties of the information they have provided as a
whole and alert the various parties to the roles and responsibilities
of each party.
3. Sample disclosure attachments. Recognizing that many parties may
prefer having access to a sample format, EPA and HUD have developed
sample disclosure formats for sales and leasing contracts for public
reference. These samples are not included in the regulatory text
itself. Nothing in the rule requires the use of these specific formats
if a seller or lessor wishes to develop a separate format that includes
all of the required elements.
[[Page 9074]]
(Sample Disclosure Format for Target Housing Sales)
------------------------------------------------------------------------
Disclosure of Information on Lead-Based Paint
and/or Lead-Based Paint Hazards
Lead Warning Statement
Every purchaser of any interest in residential real
property on which a residential dwelling was built prior
to 1978 is notified that such property may present
exposure to lead from lead-based paint that may place
young children at risk of developing lead poisoning.
Lead poisoning in young children may produce permanent
neurological damage, including learning disabilities,
reduced intelligence quotient, behavioral problems, and
impaired memory. Lead poisoning also poses a particular
risk to pregnant women. The seller of any interest in
residential real property is required to provide the
buyer with any information on lead-based paint hazards
from risk assessments or inspections in the seller's
possession and notify the buyer of any known lead-based
paint hazards. A risk assessment or inspection for
possible lead-based paint hazards is recommended prior
to purchase.
Seller's Disclosure
(a) Presence of lead-based paint and/or lead-based paint
(i)---- Known lead-based paint and/or lead-based paint
hazards are present in the housing (explain).
-------------------------------------------------------
-----------------------------------
(ii)----Seller has no knowledge of lead-based paint and/
(b) Records and reports available to the seller (check
(i) or (ii) below):
(i)----Seller has provided the purchaser with all
available records and reports pertaining to lead-based
paint and/or lead-based paint hazards in the housing
(list documents below).
-------------------------------------------------------
-----------------------------------
(ii)---- Seller has no reports or records pertaining to
lead-based paint and/or lead-based paint hazards in the
housing.
Purchaser's Acknowledgment (initial)
(c)----Purchaser has received copies of all information
listed above.
(d)----Purchaser has received the pamphlet Protect Your
Family from Lead in Your Home.
(e)----Purchaser has (check (i) or (ii) below):
(i)---- received a 10-day opportunity (or mutually
agreed upon period) to conduct a risk assessment or
inspection for the presence of lead-based paint and/or
lead-based paint hazards; or
(ii)---- waived the opportunity to conduct a risk
assessment or inspection for the presence of lead-based
paint and/or lead-based paint hazards.
Agent's Acknowledgment (initial)
(f)----Agent has informed the seller of the seller's
obligations under 42 U.S.C. 4852d and is aware of his/
her responsibility to ensure compliance.
Certification of Accuracy
The following parties have reviewed the information
above and certify, to the best of their knowledge, that
the information they have provided is true and accurate.
-------------------- -------------------- -----
------------- ------------------
Seller Date Sel
ler Date
-------------------- -------------------- -----
------------- ------------------
Purchaser Date Purc
haser Date
-------------------- -------------------- -----
------------- ------------------
Agent Date Agen
t Date
------------------------------------------------------------------------
[[Page 9075]]
(Sample Disclosure Format for Target Housing Rentals and Leases)
------------------------------------------------------------------------
Disclosure of Information on Lead-Based Paint
and/or Lead-Based Paint Hazards
Lead Warning Statement
Housing built before 1978 may contain lead-based paint.
Lead from paint, paint chips, and dust can pose health
hazards if not managed properly. Lead exposure is
especially harmful to young children and pregnant women.
Before renting pre-1978 housing, lessors must disclose
the presence of known lead-based paint and/or lead-based
paint hazards in the dwelling. Lessees must also receive
a federally approved pamphlet on lead poisoning
prevention.
Lessor's Disclosure
(a) Presence of lead-based paint and/or lead-based paint
hazards (Check (i) or (ii) below):
(i)---- Known lead-based paint and/or lead-based paint
hazards are present in the housing (explain).
--------------------------------------------------------
---------------
(ii)----Lessor has no knowledge of lead-based paint and/
or lead-based paint hazards in the housing.
(b) Records and reports available to the lessor (Check
(i) or (ii) below):
(i)---- Lessor has provided the lessee with all
available records and reports pertaining to lead-based
paint and/or lead-based paint hazards in the housing
(list documents below).
-------------------------------------------------------
-------------------
(ii)----Lessor has no reports or records pertaining to
lead-based paint and/or lead-based paint hazards in the
housing.
Lessee's Acknowledgment (initial)
(c)----Lessee has received copies of all information
listed above.
(d)----Lessee has received the pamphlet Protect Your
Family from Lead in Your Home.
Agent's Acknowledgment (initial)
(e)------ Agent has informed the lessor of the lessor's
obligations under 42 U.S.C. 4852d and is aware of his/
her responsibility to ensure compliance.
Certification of Accuracy
The following parties have reviewed the information above
and certify, to the best of their knowledge, that the
information they have provided is true and accurate.
-------------------- -------------------- -----
--------------- ------------------
Lessor Date Lesso
r Date
-------------------- -------------------- -----
--------------- ----------------
Lessee Date Lesse
e Date
-------------------- -------------------- -----
--------------- ------------------
Agent Date Agen
t Date
------------------------------------------------------------------------
[[Page 9076]]
4. Recordkeeping requirements. EPA and HUD have retained the
recordkeeping requirements under this rule largely as proposed. The
seller and any agent are required to retain a copy of the completed
disclosure and acknowledgment contract attachment (discussed below),
required under Secs. 35.92(a) and 745.113(a), for 3 years from the
completion date of the sale. Similarly, the lessor and any agent are
required to retain a copy of the completed lease or attachment,
required under Sec. 35.92(b) and Sec. 745.113(b) of this rule for 3
years from the commencement of the leasing period. EPA and HUD have
determined that a 3-year period is an appropriate amount of time to
ensure compliance with the requirements of Title X and to support
Federal compliance monitoring efforts. This recordkeeping requirement
is not intended to place any limitations on civil suits under Title X
or to otherwise affect a lessee's or purchaser's rights under the civil
penalty provisions of section 1018(b)(3) of Title X.
EPA and HUD requested comment on whether the rule should include an
additional recordkeeping provision requiring that property owners
retain all records and reports of lead-based paint and/or lead-based
paint hazards in the housing for the length of their ownership. Based
on the statute's use of the term ``available'' lead hazard evaluation
reports, EPA and HUD have determined that a specific recordkeeping
requirement for such reports is beyond the scope of this regulation.
EPA and HUD have, however, clarified ``available'' lead hazard
evaluation reports to encompass records and reports in the possession
of the seller or lessor or reasonably obtainable by the seller or
lessor at the time of the disclosure. This approach recognizes that
third parties may in some cases play an independent recordkeeping role
for the seller or lessor.
While the Agencies do not mandate the retention of these records,
EPA and HUD encourage sellers and lessors to retain relevant records in
anticipation of future sale or lease. The information provided can help
purchasers and occupants take exposure prevention precautions during
later ownership or occupancy. The requirement to disclose the presence
of known lead-based paint and/or lead-based paint hazards remains even
if the seller or lessor is unable to locate the original reports
quantifying the data. Section 1018 requires sellers and lessors to both
(1) disclose the presence of known lead-based paint and/or lead-based
paint hazards in the housing and (2) provide available written records
and reports to the purchaser or lessee. By mandating that both actions
occur, Congress recognized the distinction between the two actions, and
the fact that the seller or lessor might have actual knowledge of lead-
based paint and/or lead-based paint hazards above and beyond that
present in available reports.
5. Failure to fully disclose before ratification of contracts. As
mandated by Title X, the disclosure of information, the provision of
the lead hazard information pamphlet, and the purchaser's opportunity
to conduct a risk assessment or inspection must occur before the
purchaser or lessee becomes obligated under any contract to purchase or
lease the dwelling. Section 1018(c) prohibits regulatory provisions
that would ``affect the validity or enforceability of any sale or
contract for the purchase and sale or lease of any interest in
residential real property or any loan, loan agreement, mortgage, or
lien made or arising in connection with a mortgage loan'' and states
that nothing in the rule ``shall create a defect in title.'' The
disclosure requirements contained in this rule must occur prior to
contract ratification and, as such, do not affect the validity of the
subsequent contract. Nor does failure to conduct full disclosure before
sale or lease affect the validity of the sales or leasing contract
itself. Rather, purchasers seeking remedy for the non-disclosure may
avail themselves of the civil remedies afforded by section 1018 of
Title X.
6. Opportunity to conduct a risk assessment or inspection. Section
1018(a) requires that sellers provide purchasers with a 10-day
opportunity to conduct a risk assessment or inspection for the presence
of lead-based paint and/or lead-based paint hazards before becoming
obligated under a purchase contract. The length of time may be
shortened or lengthened by mutual agreement. In the proposed rule, EPA
and HUD offered several approaches for implementing this provision of
section 1018: (1) Establishing Federal standards for the implementation
of the evaluation period, providing flexibility for adjustment by
mutual consent; (2) limiting the regulatory text to the statutory
language, thereby maximizing the discretion of the two parties in
negotiating the terms; (3) codifying contract contingency language for
use in complying with the final rule; and (4) establishing requirements
for providing evaluation opportunities before the preparation of
contracts.
Recognizing that home inspections for various hazards and housing
defects are common occurrences during housing transactions around the
country, EPA and HUD believe that the market can incorporate this
requirement into future transactions without detailed regulatory
language. The final rule, therefore, steers away from the proposed
rule's preferred approach of codifying Federal standards for the
performance of the 10-day evaluation period provision.
However, EPA and HUD also recognize that some private sellers may
choose to conduct their housing sales without the aid of a trained
agent and may lack familiarity with the standard processes for
conducting such evaluations in the sales transaction. For such persons,
EPA and HUD are providing the following discussion of several likely
approaches for implementing this provision.
First, some purchasers may choose to waive the opportunity for a
risk assessment or inspection. Purchasers may be especially inclined to
waive the opportunity in cases where the seller provides significant
amounts of relevant information on the property during the disclosure
process, or in cases where no children are expected to reside in the
housing. If the purchaser chooses to waive the evaluation opportunity,
the purchaser is still obligated to acknowledge receipt of the
evaluation opportunity on the attachment, documenting this voluntary
decision to waive the opportunity.
EPA and HUD expect that in most cases where the purchaser chooses
to exercise his or her evaluation opportunity, the parties will develop
and incorporate into the contract mutually agreeable terms for the
conduct and completion of the evaluation opportunity. The final rule
provides sellers and purchasers with broad flexibility to develop terms
for performing the risk assessment or inspection.
As many commenters noted, home inspections are already common
aspects of housing transactions. Frequently, these inspections are
incorporated into the sales contracts as contingency clauses, providing
mutual agreement on the timing, terms, and conduct of the inspection.
Common terms addressed in these clauses include: (i) The starting and
ending day of the inspection period; (ii) any contingencies and
conditions tied to the contract regarding the inspection period; (iii)
the process for removing any contingency or condition following the
completion of the inspection; and (iv) the disposition of any earnest
money provided by the purchaser before the opportunity to inspect. This
general framework is one possible approach that parties can consider
when developing mutually
[[Page 9077]]
agreeable terms for the evaluation period required by section 1018(a)
of Title X.
While most commenters stressed the importance of providing
flexibility for the parties to develop mutually agreeable evaluation
terms, many also recommended the inclusion of sample language as a
reference. For the purpose of providing guidance on creating contract
language, EPA and HUD have included the following sample contract
contingency clause for optional use. This language is offered as a
sample only, and nothing in this rule imposes a requirement on either
party to accept or reject this language in the current or modified
form.
------------------------------------------------------------------------
Sample Contract Contingency
Language
This contract is contingent upon a risk assessment or
inspection of the property for the presence of lead-
based paint and/or lead-based paint hazards at the
Purchaser's expense until 9 p.m. on the tenth calendar-
day after ratification [Insert date 10 days after
contract ratification or a date mutually agreed upon].
(Intact lead-based paint that is in good condition is
not necessarily a hazard. See the EPA pamphlet Protect
Your Family From Lead in Your Home for more
information.) This contingency will terminate at the
above predetermined deadline unless the Purchaser (or
Purchaser's agent) delivers to the Seller (or Seller's
agent) a written contract addendum listing the specific
existing deficiencies and corrections needed, together
with a copy of the inspection and/or risk assessment
report. The Seller may, at the Seller's option, within --
---- days after Delivery of the addendum, elect in
writing whether to correct the condition(s) prior to
settlement. If the Seller will correct the condition,
the Seller shall furnish the Purchaser with
certification from a risk assessor or inspector
demonstrating that the condition has been remedied
before the date of the settlement. If the Seller does
not elect to make the repairs, or if the Seller makes a
counter-offer, the Purchaser shall have ------ days to
respond to the counter-offer or remove this contingency
and take the property in ``as is'' condition or this
contract shall become void. The Purchaser may remove
this contingency at any time without cause.
------------------------------------------------------------------------
E. Agent Responsibilities
Title X specifically addresses the responsibilities of agents,
requiring them to ensure compliance with the provisions of the law.
Agents fulfill this requirement by informing sellers or lessors of
their obligations and by making sure that these activities are
completed either by the seller or lessor or by the agent personally.
Accordingly, 24 CFR 35.94(b) and 40 CFR 745.107(c) identify the
seller's affirmative duty to disclose to the agent any known lead-based
paint and/or lead-based paint hazards on the property. Provided that
the agent has actually informed the seller or lessor of his/her
obligation, the final rule notes that the agent will not be responsible
for information withheld from the agent by the seller or lessor.
V. Non-Compliance and Enforcement
EPA and HUD received considerable comment on the enforcement
provisions discussed in the statute and the proposed rule. Many
commenters requested more guidance regarding the Agencies' plans for
enforcement of the provisions, as well as assurances that the Agencies
recognize the importance of active education and outreach to the
regulated community. As all enforcement authority for EPA and HUD
derives directly from the authorizing statutory language, both the
proposed rule and the final rule contain enforcement language that is
essentially the same as language provided in Title X and TSCA. The
following is a discussion of the general enforcement authority provided
by Congress, along with some discussion of the process that EPA and HUD
will use in developing a sensible, effective enforcement approach.
A. HUD Authority
Section 1018(b)(1) of Title X authorizes HUD to impose civil
monetary penalties on any person who knowingly violates section 1018.
This authority applies to violations of this final rule as well. HUD
can impose penalties under section 102 of the Department of Housing and
Urban Development Reform Act of 1989 (42 U.S.C. 3545). These penalties
may be up to $10,000 for each violation. In addition, section
1018(b)(2) of Title X authorizes the Secretary to ``take such lawful
action as may be necessary to enjoin any violation'' of the law's
provisions.
B. EPA Authority
1. Civil. Section 1018(b)(5) of Title X provides that failure or
refusal to comply with section 1018 or its implementing regulations is
a violation of TSCA section 409. Violations of TSCA section 409 are
subject to TSCA section 16 penalties. Thus, a violator of section 1018
can be subject to the penalty provisions under TSCA section 16 of up to
$10,000 for each violation.
2. Criminal. TSCA section 16(b) provides that any person who
knowingly or willfully violates section 409 (and thus section 1018)
could, in addition to or instead of any civil penalty, be subject, upon
conviction, to a fine of not more than $25,000 for each day of
violation or to imprisonment for not more than 1 year, or both. For the
purposes of enforcement under section 1018, Congress has modified the
application of TSCA section 16, limiting the fine to $10,000 ``for each
violation.''
C. Enforcement Responses
Because the enforcement provisions of section 1018 are clearly set
forth in the statute, the final rule retains largely unchanged the
discussion of the enforcement authority.
However, it is EPA's and HUD's intent that outreach and compliance
assistance
[[Page 9078]]
will be a major component of the section 1018 compliance program so
that individuals are fully informed of the new requirements and their
obligations. EPA and HUD also intend to bring clarity and
predictability to the enforcement process for section 1018, in
acknowledgment of the large and diverse population affected by this
rule. Concurrent with this rule's release, EPA will issue a short
``Statement of Approach'' as it relates to ensuring compliance with the
requirements of section 1018, for the information of the general
public. This informational document will discuss the Agency's approach
to the section 1018 compliance assurance program. EPA is also
developing a policy for use by EPA enforcement personnel to achieve a
common sense result between a particular violation of section 1018 and
a particular enforcement response. This policy includes, but is not
limited to, issuing notices of warning (without penalties) as
appropriate to let people know that they are out of compliance and to
give them an opportunity to come into compliance, while maintaining
provisions that will ensure that willful and repeat violators are
appropriately penalized. This result is reached in the context of an
``Enforcement Response Policy'' (ERP), which EPA is developing
separately for this rule.
Regarding HUD enforcement actions, HUD's civil money penalty
procedures are set out in 24 CFR part 30. These procedures include
notices of intent to request civil money penalties, civil money penalty
panels, administrative hearings and appeals, judicial review, and
collection of penalties. A civil money penalty panel develops
guidelines to determine the appropriate penalty for a violation of
section 1018. These guidelines include the following factors: the
gravity of the offense, awareness of procedures, any history of prior
offenses, the ability to pay the penalty, the injury to the public, any
benefits received by the violator, any potential benefits to other
persons, deterrence of future violators, the violator's culpability,
and such other matters as justice may require.
D. Civil Liability--Direct Compensation
In addition to the EPA and HUD enforcement authority for the
provisions of this final rule, section 1018(b)(3) of Title X states
that ``[A]ny person who knowingly violates the provisions of this
section shall be jointly and severally liable to the purchaser or
lessee in an amount equal to 3 times the amount of damages incurred by
such individual.'' This provision allows the purchaser or lessee to
seek direct compensation for any damages incurred based on the seller's
or lessor's noncompliance. Section 1018(b)(4) authorizes the court to
award court costs, reasonable attorney fees, and expert witness fees to
a prevailing plaintiff.
E. Validity of Contracts and Liens
Section 1018(c) provides that nothing in section 1018 (or its
implementing rules) ``shall affect the validity or enforceability of
any sale or contract for the purchase and sale or lease of any interest
in residential real property or any loan, loan agreement, mortgage, or
lien made or arising in connection with a mortgage loan. . . .'' It
also provides that nothing in section 1018 (or its implementing rules)
shall ``create a defect in title.''
EPA and HUD have looked at section 1018(c) in the context of other
section 1018 provisions, which outline specific clauses that must be
attached to contracts for the purchase and sale of target housing and
specific procedural protections that must be given to the purchaser or
lessee.
The provisions of section 1018 cannot void or nullify the contract
after ratification and cannot void any transfer of real estate, even if
it can be proven that the seller or lessor violated section 1018
provisions. In such circumstances, the purchaser or lessee is limited
to the remedies provided in section 1018. Of course, traditional causes
of action under State law would still exist, and possibly could be
applied to some section 1018 violations. Also, violations of section
1018 could be subject to civil and criminal penalties administered by
EPA and HUD under section 1018(b).
VI. Federal Effect on State and Local Disclosure Requirements
Several commenters noted that some States and municipalities
already have requirements for the disclosure of information on lead-
based paint in housing. In developing the Federal disclosure
requirements, several key questions have been raised regarding such
programs: (1) Can States obtain authorization to administer and enforce
their programs in lieu of the Federal program? and (2) What effect do
the Federal requirements have on the ability of States to run their own
programs?
EPA and HUD have determined that Title X does not provide authority
to delegate the administration and enforcement of these section 1018
requirements to State programs. Where such authority to authorize State
programs was anticipated by Congress (as in TSCA section 402), Congress
provided specific authority.
Where possible, EPA and HUD have developed these requirements to
make it possible for State and Federal requirements to complement each
other. For example, EPA and HUD had State programs in mind when adding
flexibility in the development of disclosure and acknowledgment
attachments.
Finally, nothing in this rule is intended to relieve a seller,
lessor, or agent from any responsibility for compliance with State or
local laws, ordinances, codes, or regulations governing notice or
disclosure of known lead-based paint and/or lead-based paint hazards.
VII. Summary of Regulatory Impact Analysis
EPA and HUD have prepared a Regulatory Impact Analysis (RIA) that
examines the potential costs, benefits, and impacts of regulations for
the disclosure of known lead-based paint hazards in residential
property upon the transfer of the property for sale or rental. The
analysis is presented in five sections:
Background and Framework for Analysis
Profile of Sectors Affected
Estimated Costs to Private Parties and Government
Effect of the Lead-Based Paint Hazard Disclosure Rule for
Real Estate Transfers on Small Businesses--Regulatory Flexibility
Analysis
Assessment of Benefits
A. Background and Framework for Analysis
Those parties directly affected by the rule are the seller, lessor,
agent, property manager, purchaser, and lessee. The required activities
that impose regulatory burden on the affected parties fall into four
categories for cost estimation purposes:
1. Start-up costs, which include learning the rule's requirements
and establishing compliance procedures;
2. Disclosure costs, which refer to the costs resulting from the
actual transfer of information and obtaining needed signatures;
3. Recordkeeping costs, which result principally from the
requirement that signed acknowledgment forms must be retained by the
provider of the information; and
4. Materials costs, which are linked primarily to the disclosure
requirement, as the lead hazard information pamphlet must be purchased
or photocopied (acknowledgment forms must also be duplicated). Costs
may also be incurred
[[Page 9079]]
for filing where a large number of acknowledgment statements or
documents for disclosure are generated (e.g., by agents), though such
burden was estimated to be quite modest.
The requirements of section 1018 of the Act fall primarily on the
seller or lessor of ``target housing,'' which is defined to be any
housing constructed prior to 1978, except housing for the elderly or
persons with disabilities (unless any child who is less than 6 years of
age resides or is expected to reside in such housing) or any 0-bedroom
dwelling. However, if an agent or property manager acts on behalf of
the seller or lessor, which EPA and HUD have estimated to be the case
in most transfers, responsibilities to ensure compliance fall to such
agents or managers as well.
To estimate the impacts of the rule, EPA and HUD sought data
pertaining to the number of affected parties in each classification
listed above, the frequency with which affected purchase and lease
transactions are completed, and the incremental costs, in labor and
materials, added to each transaction by the regulations.
B. Profile of Sectors Affected
The larger of the two affected sectors expected to bear the
principal effects of the rule falls within Standard Industrial
Classification (SIC) code 651, Real Estate Operators and Lessors. EPA
estimates there to be 92,000 establishments potentially affected by the
rule. Also affected are business establishments falling within SIC code
653, Real Estate Agents and Managers. An additional 92,000
establishments could be affected by the rule in this sector.
Employment data were obtained for the occupations most likely to be
involved in transactions subject to the rule. EPA and HUD estimate that
324,000 real estate agents and 243,000 property managers will be
affected.
With regard to transaction volume, 2.9 million sales transactions
and 9.3 million rental transactions were estimated to occur annually in
target housing.
C. Estimated Costs to Private Parties and Government
Table 1 below summarizes the estimated annual costs associated with
the rule. The four costs to private parties, or compliance costs, are
discussed briefly below. Costs to government represent rule
administration activities.
The first private party cost category, start-up costs, represents
about one-third of overall annual compliance costs. Factors affecting
the magnitude of these costs include the number of employees having to
familiarize themselves with the regulations, both initially (employees
in the existing workforce) and over time (new entrants to the affected
sectors); the time required to learn the activities that must be
undertaken in order to comply; and the hourly compensation of affected
employees.
As Table 1 shows, disclosure event costs constitute the greatest
portion of overall compliance costs. Factors affecting the magnitude of
these costs include the frequencies of regulated events; the time
involved in performing required activities, such as providing to the
prospective purchaser/lessee the required information and obtaining the
required signatures; and the hourly compensation of all involved
parties. EPA and HUD also took into account the fact that a number of
States have similar requirements pertaining to information transfer
regarding potential lead hazards in the sale of residential property.
Thus, an allowance was made in the burden estimates for transactions
occurring in such States to reflect a certain level of current
compliance.
Table 1--Summary of Annual Costs of the Disclosure Rule for Residential
Property Transfer
------------------------------------------------------------------------
------------------------------------------------------------------------
Estimated Annual Costs to Private Parties -
Sales Transactions
Start-up Costs* $25.8 million
Disclosure Event Costs 20.2 million
Recordkeeping Costs 0.6 million
Materials Costs 2.8 million
---------------------------
Total for Sales Transactions: $49.4 million
Estimated Annual Costs to Private Parties -
Rental Transactions
Start-up Costs* $ 1.1 million
Disclosure Event Costs $25.6 million
Recordkeeping Costs $1.9 million
Materials Costs $3.4 million
---------------------------
Total for Rental Transactions: $32.0 million
===========================
Total Estimated Annual Costs to Private $81.4 million
Parties:
Costs to Government
Low Estimate $2.4 million
High Estimate $4.3 million
Total Estimated Annual Costs:
Based on Low Estimate of Government Costs: $83.8 million
Based on High Estimate of Government Costs: $85.7 million
* First-year costs annualized at 3 percent
rate over 6 years.
------------------------------------------------------------------------
Recordkeeping and materials costs account for a relatively modest
share of overall annual costs. Factors affecting the magnitude of these
costs include the number of affected parties per transaction; the
frequency of
[[Page 9080]]
transactions, the costs of acquiring/duplicating documents, which
include the lead hazard information pamphlet and signed acknowledgment
forms; and costs to maintain documents.
Additional, indirect costs resulting from actions taken by
consumers in response to the information made available by the rule
were not quantified, for reasons detailed in Unit VII.E. of this
preamble.
To administer the final regulation, resources will be required to
conduct a number of activities, including: inspections; violation case
management; establishment and maintenance of cooperative agreements;
compliance assistance, development of performance measurement criteria;
and management.
D. Effect of the Lead-Based Paint Hazard Disclosure Rule for Real
Estate Transfers on Small Businesses--Regulatory Flexibility Analysis
EPA and HUD investigated the potential impacts of the rule on small
businesses and have prepared a Regulatory Flexibility Analysis (RFA).
Although a large number of small establishments may be affected by the
rule, cost impacts were not found to be of sufficient magnitude to
cause undue harm to such establishments. The RFA is summarized
separately in Unit X.B. of this preamble.
E. Assessment of Benefits
The market imperfection that the rule is intended to correct is the
lack of information available to prospective home purchasers and
lessees concerning lead-based paint hazards in homes they may be
considering for purchase or rent. Under the rule, general information
about the risks associated with lead-based paint will be provided
through the provision of a brochure. When available, information about
the presence of or abatement of lead in the specific unit being
considered for purchase or rent must also be disclosed (e.g.,
information concerning previous testing for the presence of lead-based
paint, abatement history, etc.). The failure of the marketplace to
provide this information or to provide prospective home purchasers and
lessees the opportunity to develop such information means that
prospective purchasers and lessees might purchase or lease a property,
or make pricing or rental payment decisions regarding properties,
without understanding possible lead-related health risks or risk
management costs accompanying the transaction.
EPA and HUD expect that this rulemaking will generate benefits by
giving prospective home purchasers and lessees access to information
that might otherwise have been unavailable (e.g., information
pertaining to abatement activities for a specific residence) or that
they might have been able to acquire only through their own effort and
at some cost. In addition, EPA believes the information will generate
health benefits by leading many purchasers and lessees to modify their
behavior in a way that will reduce risks from lead-based paint. For
example, purchasers could undertake abatement activities subsequent to
taking ownership of a dwelling, change household cleaning practices, or
request professional assistance when undertaking renovation activities.
The rule may also prompt property owners, due to reluctance on the part
of prospective purchasers/lessees to select housing containing lead-
based paint, to act to reduce lead-related hazards associated with
their residential dwellings. Health benefits resulting from such
activities are distinguishable from the more direct benefits of the
rule, i.e., the value of improved information. Further, in cases where
action is taken to remediate a lead-based paint hazard, additional
costs would be incurred, and would have to be subtracted from the
expected benefits associated with the remediation.
EPA and HUD note that the regulation does not require actions to
reduce lead-based paint hazards in residential housing. Thus, the
extent to which lead exposure decreases depends upon how transaction
participants (i.e., sellers/lessors and prospective purchasers/lessees)
value and respond to the additional information.
The RIA details three approaches that are evolving and that can be
seen as a starting point in an effort to expand the level of
understanding of how benefits from information products can be valued.
However, an information base and the associated accepted analytical
methods necessary to predict consumer reaction to information products
on lead-based paint hazards are not readily available; thus,
quantifying the expected benefits of this rule, either in terms of
efficiency gains from improved decisionmaking or risk reduction, would
be extremely difficult. Given the high level of uncertainty associated
with the results from such a quantitative analysis, and given the
prescriptive nature of section 1018 of the Act, EPA and HUD believe
that the information provided in the qualitative analysis presented in
the RIA served to inform decisionmaking.
VIII. Rulemaking Record
A record for this final rule has been established for both EPA and
HUD under docket number ``OPPTS-62130.'' The public version of this
record for both agencies (which does not contain any information
claimed as Confidential Business Information) is available for
inspection from 12 noon to 4 p.m., Monday through Friday, excluding
legal holidays. The public record is located in EPA's TSCA
Nonconfidential Information Center (NCIC), Rm. NE-B607, 401 M St., SW.,
Washington, DC 20460.
The docket contains reference works that EPA and HUD referred to in
developing this regulation. In addition, other documents, including the
Regulatory Impact Analysis, Information Collection Request, and copies
of all comments on the proposed rule, are included in the docket for
public review. The draft of the final rule submitted by EPA and HUD to
OMB for review prior to the final rule's promulgation will also be
contained in the docket.
IX. References
1. Alliance to End Childhood Lead Poisoning, 1991. Preventing
Childhood Lead Poisoning: The First Comprehensive National Conference;
Final Report. Washington, DC.
2. CDC, 1991. U.S. Centers for Disease Control and Prevention,
Preventing Lead Poisoning in Young Children: A Statement by the Centers
for Disease Control. Atlanta, GA.
3. CPSC, 1977. Notice Reducing Allowable Levels of Lead in Lead-
Based Paint. Federal Register. September 1, 1977: 42 FR 44199.
4. EPA, 1995. U.S. Environmental Protection Agency, Report on the
National Survey of Lead-Based Paint in Housing: Base Report.
Washington, DC: EPA747-R95-003.
5. HUD, 1995. U.S. Department of Housing and Urban Development,
Task Force on Lead-Based Paint Hazard Reduction and Financing, Putting
the Pieces Together: Controlling Lead Hazards in the Nation's Housing:
Final Report. Washington, DC: HUD-1542-LBP.
6. HUD, 1990. Lead-Based Paint; Interim Guidelines for Hazard
Identification and Abatement in Public and Indian Housing; Notice.
Federal Register. April 18, 1990: 55 FR 14556.
7. HUD, 1995. Department of Housing and Urban Development,
Guidelines for the Evaluation and Control of Lead-Based Paint Hazards
in Housing. Washington, DC.
8. Pirkle, 1994. Pirkle, J.L., D.J. Brody, E.W. Gunter, R.A.
Kramer, D.C. Paschal,
[[Page 9081]]
K.M. Flegal, T.D. Matte, The Decline in Blood Lead Levels in the United
States. Journal of the American Medical Association, 272(4): 284-291.
X. Regulatory Assessment Requirements
A. Executive Order 12866
Pursuant to Executive Order 12866 (58 FR 51735, October 4, 1993),
it has been determined that this is a ``significant regulatory action''
because of potential novel legal or policy issues arising out of the
new legal mandates this action implements. This action was submitted to
OMB for review, and any comments or changes made during that review
have been documented in the public record.
In addition, EPA and HUD have prepared a Regulatory Impact Analysis
(RIA) in conjunction with their lead information disclosure rule for
real estate transfers. EPA and HUD find that the rule will not have an
effect on the economy of $100 million or more, will not result in major
increases in costs or prices, and is not anticipated to have
significant adverse effects on competition, employment, investment, or
productivity in the relevant sectors.
EPA and HUD estimate the overall costs to affected entities to be
$81.4 million and costs to government to range from $2.4 to $4.3
million. These estimates include costs for rule familiarization,
information disclosure and obtaining required signatures,
recordkeeping, materials costs, and government administration costs.
EPA and HUD estimate that the provisions of the rule will add about
$2.00 to $6.00 to the cost of each transaction.
A copy of the RIA is available in the TSCA Public Docket Office for
review and public comment. For information on the public docket, see
Unit VIII. of this preamble, entitled Rulemaking Record.
B. Regulatory Flexibility Act
The Regulatory Flexibility Act (5 U.S.C. 601 et seq.) requires
Federal agencies to consider whether a regulatory action will have an
adverse economic impact on small entities. Section 605(b) requires the
agencies to either certify that the regulatory action will not have a
significant economic impact on a substantial number of small entities,
or prepare a Regulatory Flexibility Analysis. Under the EPA policy that
implements the Regulatory Flexibility Act, EPA performs a Regulatory
Flexibility Analysis whenever a regulatory action is anticipated to
have any economic impact on any small entities, and will also seek to
involve these small entities in the development of the regulatory
action to the extent possible. As such, in an effort to identify and
characterize the rule's effects on small business, EPA and HUD have
prepared a Regulatory Flexibility Analysis. This assessment has been
included as part of the RIA and is summarized below.
In preparing the RFA, EPA and HUD first developed an establishment
profile for each major sector (SIC 651 and SIC 653). This profile
indicated that approximately 75 percent of all establishments in SIC
651 (Real Estate Operators and Lessors) and approximately 73 percent of
all establishments in SIC 653 (Real Estate Agents and Managers) fell
within the 1 to 4 employee size class. These proportions increased to
90 percent and 87 percent, respectively, when employee size class 1 to
9 was examined.
To measure the cost impacts of the rule on these small
establishments, representative or model establishments were designed.
These model establishments corresponded to typical establishments in
each affected sector, with respect to number of employees and annual
transaction volume. Since transaction activity was reported to vary
widely, a range of transaction volume was estimated for each
establishment type.
For each model establishment, annual regulatory costs were then
calculated and compared to annual labor and overhead costs. Ratios were
computed for both high and low estimates of the range of transaction
activity. In the case of a real estate sales organization, regulatory
costs were found to represent from 0.20 to 0.42 percent of labor and
overhead costs. In the case of a rental establishment, impacts were
slightly higher, ranging from 0.21 to 0.47 percent. An establishment
engaged in both activities was projected to sustain impacts of 0.28 to
0.63 percent.
Thus, while a large number of small establishments will be
potentially affected by the rule, cost impacts were not found to be of
sufficient magnitude to cause undue harm to such establishments.
Consequently, no regulatory alternatives are being proposed in
connection with small business impacts.
C. Paperwork Reduction Act
The information collection requirements in this rule have been
submitted for approval to the Office of Management and Budget (OMB)
under the Paperwork Reduction Act, 44 U.S.C. 3501 et seq. An
Information Collection Request (ICR) document has been prepared by EPA
(EPA ICR No. 1710.02) and a copy may be obtained from Sandy Farmer,
OPPE Regulatory Information Division, Environmental Protection Agency
(2136), 401 M St., SW., Washington, DC 20460 or by calling (202) 260-
2740. The information requirements are not effective until OMB approves
them.
The information collection requirements of this rule apply to
sellers, lessors, and agents of target housing. Before selling or
leasing target housing, the following information collection activities
must occur: (1) Disclosure of known lead-based paint and/or lead-based
paint hazards; (2) provision of any available records and reports
pertaining to lead-based paint in the housing; (3) provision of a
federally approved lead hazard information pamphlet; (4) completion and
subsequent retention of disclosure and acknowledgment language for 3
years, and (5) provision of a 10-day evaluation opportunity to
purchasers before obligation under purchase contracts (this time period
can be adjusted or waived by mutual consent).
These requirements will help to: (1) Ensure that purchasers and
renters of older housing make informed housing and maintenance
decisions before they become obligated under purchase or lease
contracts; (2) ensure that all participants in target housing sales and
leasing transactions fully understand their rights and obligations
under section 1018 and the implementing regulations; (3) document the
completion of all disclosure activities by the responsible parties; and
(4) provide a record of compliance for use by EPA and HUD enforcement
officials. Under the authority of section 1018 of Title X, the
information collection requirements of this rule are mandatory for all
applicable sales and leasing transactions.
The annual costs to private parties to comply with the requirements
of the rule are estimated to be $81.4 million, with an associated
burden of 7.1 million hours. Annual costs may be broken down into two
components: Initialization or start-up costs, estimated to be $26.9
million (annualized at 3 percent over 3 years); and costs for
information disclosure and maintenance of records, estimated to be
$54.5 million. Annual burden is estimated to be distributed among 35.1
million responses, averaging 12.2 minutes per response. The number of
respondents is estimated to be 15.5 million. Burden means the total
time, effort, or financial resources expended by persons to generate,
maintain, retain, or disclose or provide information to or for a
Federal
[[Page 9082]]
agency. This includes the time needed to review instructions; develop,
acquire, install, and utilize technology and systems for the purposes
of collecting, validating, and verifying information, processing and
maintaining information, and disclosing and providing information;
adjust the existing ways to comply with any previously applicable
instructions and requirements; train personnel to respond to a
collection of information; search data sources; complete and review the
collection of information; and transmit or otherwise disclose the
information.
An Agency may not conduct or sponsor, and a person is not required
to respond to, a collection of information unless it displays a
currently valid OMB control number. The OMB control numbers for EPA's
regulations are listed in 40 CFR part 9 and 48 CFR Chapter 15. Upon OMB
approval, EPA will issue a notice in the Federal Register to announce
OMB's approval and to make a technical amendment to include a reference
to this approval in 40 CFR part 9.
Send comments on the burden estimates and any suggested methods for
minimizing respondent burden, including through the use of automated
collection techniques, to the Director, OPPE Regulatory Information
Division, Environmental Protection Agency (2136), 401 M St., SW.,
Washington, DC 20460, and to the Office of Information and Regulatory
Affairs, Office of Management and Budget, 725 17th St., NW.,
Washington, DC 20503, marked ``Attention: Desk Officer for EPA.''
Include the ICR number in any correspondence.
D. Environmental Impact
In accordance with 40 CFR 1508.4 of the regulations of the Council
on Environmental Quality and 24 CFR 50.19 and 50.20(o)(2) of the HUD
regulations, the policies and procedures contained in this final rule
relate only to information services and are, therefore, categorically
excluded from the requirements of the National Environmental Policy
Act.
E. HUD's Regulatory Agenda
This rule was listed as Item No. 1517 in HUD's Semiannual Agenda of
Regulations published on April 25, 1994 (59 FR 20424), in accordance
with Executive Order 12866 and the Regulatory Flexibility Act, and was
requested by and submitted to the Committee on Banking, Finance and
Urban Affairs of the House of Representatives under section 7(o) of the
Department of Housing and Urban Development Act.
F. Unfunded Mandates Reform Act
Pursuant to Title II of the Unfunded Mandates Reform Act of 1995,
which the President signed into law on March 22, 1995, EPA and HUD have
assessed the effects of this regulatory action on State, local, and
tribal governments, and the private sector. This action is not an
``unfunded mandate'' as defined by that statute and will not result in
the expenditure of $100 million or more by any State, local, or tribal
government, or by the private sector. Nevertheless, EPA and HUD
consulted with several State, local, and tribal governments during the
development.
A copy of the RIA is available for public review. For information
on the public docket, see Unit VIII. of this preamble, entitled
Rulemaking Record.
List of Subjects in 24 CFR Part 35
Environmental protection, Grant programs-housing and community
development, Hazardous substances, Lead, Lead poisoning, Mortgage
insurance, Rent subsidies, Reporting and recordkeeping requirements.
List of Subjects in 40 CFR Part 745
Environmental protection, Hazardous substances, Lead, Recordkeeping
and notification requirements.
Dated: February 29, 1996.
Henry Cisneros,
Secretary, Department of Housing and Urban Development.
Dated: February 29, 1996.
Carol M. Browner,
Administrator, Environmental Protection Agency.
Therefore, 24 CFR subtitle A and 40 CFR Chapter I are amended as
follows:
24 CFR Subtitle A
PART 35--LEAD-BASED PAINT POISONING PREVENTION IN CERTAIN
RESIDENTIAL STRUCTURES
1. The authority citation for part 35 is revised to read as
follows:
Authority: 42 U.S.C. 3535(d), 4821-4846 and 4852d.
2. A new subpart H is added to part 35 to read as follows:
Subpart H--Disclosure of Known Lead-Based Paint and/or Lead-Based Paint
Hazards Upon Sale or Lease of Residential Property
Sec.
35.80 Purpose.
35.82 Scope and applicability.
35.84 Effective dates.
35.86 Definitions.
35.88 Disclosure requirements for sellers and lessors.
35.90 Opportunity to conduct an evaluation.
35.92 Certification and acknowledgment of disclosure.
35.94 Agent responsibilities.
35.96 Enforcement.
35.98 Impact on State and local requirements.
Subpart H--Disclosure of Known Lead-Based Paint and/or Lead-Based Paint
Hazards Upon Sale or Lease of Residential Property
Sec. 35.80 Purpose.
This subpart implements the provisions of 42 U.S.C. 4852d, which
impose certain requirements on the sale or lease of target housing.
Under this subpart, a seller or lessor of target housing shall disclose
to the purchaser or lessee the presence of any known lead-based paint
and/or lead-based paint hazards; provide available records and reports;
provide the purchaser or lessee with a lead hazard information
pamphlet; give purchasers a 10-day opportunity to conduct a risk
assessment or inspection; and attach specific disclosure and warning
language to the sales or leasing contract before the purchaser or
lessee is obligated under a contract to purchase or lease target
housing.
Sec. 35.82 Scope and applicability.
This subpart applies to all transactions to sell or lease target
housing, including subleases, with the exception of the following:
(a) Sales of target housing at foreclosure.
(b) Leases of target housing that have been found to be lead-based
paint free by an inspector certified under the Federal certification
program or under a federally accredited State or tribal certification
program. Until a Federal certification program or federally accredited
State certification program is in place within the State, inspectors
shall be considered qualified to conduct an inspection for this purpose
if they have received certification under any existing State or tribal
inspector certification program. The lessor has the option of using the
results of additional test(s) by a certified inspector to confirm or
refute a prior finding.
(c) Short-term leases of 100 days or less, where no lease renewal
or extension can occur.
(d) Renewals of existing leases in target housing in which the
lessor has previously disclosed all information required under
Sec. 35.88 and where no new information described in Sec. 35.88 has
come into the possession of the lessor. For the purposes of this
[[Page 9083]]
paragraph, renewal shall include both renegotiation of existing lease
terms and/or ratification of a new lease.
Sec. 35.84 Effective dates.
The requirements in this subpart take effect in the following
manner:
(a) For owners of more than four residential dwellings, the
requirements shall take effect on September 6, 1996.
(b) For owners of one to four residential dwellings, the
requirements shall take effect on December 6, 1996.
Sec. 35.86 Definitions.
The following definitions apply to this subpart.
The Act means the Residential Lead-Based Paint Hazard Reduction Act
of 1992, 42 U.S.C. 4852d.
Agent means 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, for the purpose of selling or
leasing target housing. This term does not apply to purchasers or any
purchaser's representative who receives all compensation from the
purchaser.
Available means in the possession of or reasonably obtainable by
the seller or lessor at the time of the disclosure.
Common area means a portion of a building generally accessible to
all residents/users including, but not limited to, hallways, stairways,
laundry and recreational rooms, playgrounds, community centers, and
boundary fences.
Contract for the purchase and sale of residential real property
means any contract or agreement in which one party agrees to purchase
an interest in real property on which there is situated one or more
residential dwellings used or occupied, or intended to be used or
occupied, in whole or in part, as the home or residence of one or more
persons.
EPA means the Environmental Protection Agency.
Evaluation means a risk assessment and/or inspection.
Foreclosure means any of the various methods, statutory or
otherwise, known in different jurisdictions, of enforcing payment of a
debt, by the taking and selling of real property.
Housing for the elderly means retirement communities or similar
types of housing reserved for households composed of one or more
persons 62 years of age or more at the time of initial occupancy.
Inspection means:
(1) A surface-by-surface investigation to determine the presence of
lead-based paint as provided in section 302(c) of the Lead-Based Paint
Poisoning and Prevention Act [42 U.S.C. 4822], and
(2) The provision of a report explaining the results of the
investigation.
Lead-based paint means paint or other surface coatings that contain
lead equal to or in excess of 1.0 milligram per square centimeter or
0.5 percent by weight.
Lead-based paint free housing means target housing that has been
found to be free of paint or other surface coatings that contain lead
equal to or in excess of 1.0 milligram per square centimeter or 0.5
percent by weight.
Lead-based paint hazard means any condition that causes exposure to
lead from lead-contaminated dust, lead-contaminated soil, or lead-
contaminated paint that is deteriorated or present in accessible
surfaces, friction surfaces, or impact surfaces that would result in
adverse human health effects as established by the appropriate Federal
agency.
Lessee means any entity that enters into an agreement to lease,
rent, or sublease target housing, including but not limited to
individuals, partnerships, corporations, trusts, government agencies,
housing agencies, Indian tribes, and nonprofit organizations.
Lessor means any entity that offers target housing for lease, rent,
or sublease, including but not limited to individuals, partnerships,
corporations, trusts, government agencies, housing agencies, Indian
tribes, and nonprofit organizations.
Owner means any entity that has legal title to target housing,
including but not limited to individuals, partnerships, corporations,
trusts, government agencies, housing agencies, Indian tribes, and
nonprofit organizations, except where a mortgagee holds legal title to
property serving as collateral for a mortgage loan, in which case the
owner would be the mortgagor.
Purchaser means an entity that enters into an agreement to purchase
an interest in target housing, including but not limited to
individuals, partnerships, corporations, trusts, government agencies,
housing agencies, Indian tribes, and nonprofit organizations.
Reduction means measures designed to reduce or eliminate human
exposure to lead-based paint hazards through methods including interim
controls and abatement.
Residential dwelling means:
(1) A single-family dwelling, including attached structures such as
porches and stoops; or
(2) A single-family dwelling unit in a structure that contains more
than one separate residential dwelling unit, and in which each such
unit is used or occupied, or intended to be used or occupied, in whole
or in part, as the residence of one or more persons.
Risk assessment means an on-site investigation to determine and
report the existence, nature, severity, and location of lead-based
paint hazards in residential dwellings, including:
(1) Information gathering regarding the age and history of the
housing and occupancy by children under age 6;
(2) Visual inspection;
(3) Limited wipe sampling or other environmental sampling
techniques;
(4) Other activity as may be appropriate; and
(5) Provision of a report explaining the results of the
investigation.
Seller means any entity that transfers legal title to target
housing, in whole or in part, in return for consideration, including
but not limited to individuals, partnerships, corporations, trusts,
government agencies, housing agencies, Indian tribes, and nonprofit
organizations. The term ``seller'' also includes:
(1) An entity that transfers shares in a cooperatively owned
project, in return for consideration; and
(2) An entity that transfers its interest in a leasehold, in
jurisdictions or circumstances where it is legally permissible to
separate the fee title from the title to the improvement, in return for
consideration.
Target housing means any housing constructed prior to 1978, except
housing for the elderly or persons with disabilities (unless any child
who is less than 6 years of age resides or is expected to reside in
such housing) or any 0-bedroom dwelling.
TSCA means the Toxic Substances Control Act, 15 U.S.C. 2601.
0-bedroom dwelling means any residential dwelling in which the
living area is not separated from the sleeping area. The term includes
efficiencies, studio apartments, dormitory housing, military barracks,
and rentals of individual rooms in residential dwellings.
Sec. 35.88 Disclosure requirements for sellers and lessors.
(a) The following activities shall be completed before the
purchaser or lessee is obligated under any contract to purchase or
lease target housing that is not otherwise an exempt transaction
pursuant to Sec. 35.82. Nothing in this section implies a positive
obligation on the seller or lessor to conduct any evaluation or
reduction activities.
(1) The seller or lessor shall provide the purchaser or lessee with
an EPA-approved lead hazard information
[[Page 9084]]
pamphlet. Such pamphlets include the EPA document entitled Protect Your
Family From Lead in Your Home (EPA #747-K-94-001) or an equivalent
pamphlet that has been approved for use in that State by EPA.
(2) The seller or lessor shall disclose to the purchaser or lessee
the presence of any known lead-based paint and/or lead-based paint
hazards in the target housing being sold or leased. The seller or
lessor shall also disclose any additional information available
concerning the known lead-based paint and/or lead-based paint hazards,
such as the basis for the determination that lead-based paint and/or
lead-based paint hazards exist, the location of the lead-based paint
and/or lead-based paint hazards, and the condition of the painted
surfaces.
(3) The seller or lessor shall disclose to each agent the presence
of any known lead-based paint and/or lead-based paint hazards in the
target housing being sold or leased and the existence of any available
records or reports pertaining to lead-based paint and/or lead-based
paint hazards. The seller or lessor shall also disclose any additional
information available concerning the known lead-based paint and/or
lead-based paint hazards, such as the basis for the determination that
lead-based paint and/or lead-based paint hazards exist, the location of
the lead-based paint and/or lead-based paint hazards, and the condition
of the painted surfaces.
(4) The seller or lessor shall provide the purchaser or lessee with
any records or reports available to the seller or lessor pertaining to
lead-based paint and/or lead-based paint hazards in the target housing
being sold or leased. This requirement includes records and reports
regarding common areas. This requirement also includes records and
reports regarding other residential dwellings in multifamily target
housing, provided that such information is part of an evaluation or
reduction of lead-based paint and/or lead-based paint hazards in the
target housing as a whole.
(b) If any of the disclosure activities identified in paragraph (a)
of this section occurs after the purchaser or lessee has provided an
offer to purchase or lease the housing, the seller or lessor shall
complete the required disclosure activities prior to accepting the
purchaser's or lessee's offer and allow the purchaser or lessee an
opportunity to review the information and possibly amend the offer.
Sec. 35.90 Opportunity to conduct an evaluation.
(a) Before a purchaser is obligated under any contract to purchase
target housing, the seller shall permit the purchaser a 10-day period
(unless the parties mutually agree, in writing, upon a different period
of time) to conduct a risk assessment or inspection for the presence of
lead-based paint and/or lead-based paint hazards.
(b) Notwithstanding paragraph (a) of this section, a purchaser may
waive the opportunity to conduct the risk assessment or inspection by
so indicating in writing.
Sec. 35.92 Certification and acknowledgment of disclosure.
(a) Seller requirements. Each contract to sell target housing shall
include an attachment containing the following elements, in the
language of the contract (e.g., English, Spanish):
(1) A Lead Warning Statement consisting of the following language:
Every purchaser of any interest in residential real property on
which a residential dwelling was built prior to 1978 is notified
that such property may present exposure to lead from lead-based
paint that may place young children at risk of developing lead
poisoning. Lead poisoning in young children may produce permanent
neurological damage, including learning disabilities, reduced
intelligence quotient, behavioral problems, and impaired memory.
Lead poisoning also poses a particular risk to pregnant women. The
seller of any interest in residential real property is required to
provide the buyer with any information on lead-based paint hazards
from risk assessments or inspections in the seller's possession and
notify the buyer of any known lead-based paint hazards. A risk
assessment or inspection for possible lead-based paint hazards is
recommended prior to purchase.
(2) A statement by the seller disclosing the presence of known
lead-based paint and/or lead-based paint hazards in the target housing
being sold or indicating no knowledge of the presence of lead-based
paint and/or lead-based paint hazards. The seller shall also provide
any additional information available concerning the known lead-based
paint and/or lead-based paint hazards, such as the basis for the
determination that lead-based paint and/or lead-based paint hazards
exist, the location of the lead-based paint and/or lead-based paint
hazards, and the condition of the painted surfaces.
(3) A list of any records or reports available to the seller
pertaining to lead-based paint and/or lead-based paint hazards in the
housing that have been provided to the purchaser. If no such records or
reports are available, the seller shall so indicate.
(4) A statement by the purchaser affirming receipt of the
information set out in paragraphs (a)(2) and (a)(3) of this section and
the lead hazard information pamphlet required under section 15 U.S.C.
2696.
(5) A statement by the purchaser that he/she has either:
(i) Received the opportunity to conduct the risk assessment or
inspection required by Sec. 35.90(a); or
(ii) Waived the opportunity.
(6) When any agent is involved in the transaction to sell target
housing on behalf of the seller, a statement that:
(i) The agent has informed the seller of the seller's obligations
under 42 U.S.C. 4852d; and
(ii) The agent is aware of his/her duty to ensure compliance with
the requirements of this subpart.
(7) The signatures of the sellers, agents, and purchasers,
certifying to the accuracy of their statements, to the best of their
knowledge, along with the dates of signature.
(b) Lessor requirements. Each contract to lease target housing
shall include, as an attachment or within the contract, the following
elements, in the language of the contract (e.g., English, Spanish):
(1) A Lead Warning Statement with the following language:
Housing built before 1978 may contain lead-based paint. Lead
from paint, paint chips, and dust can pose health hazards if not
managed properly. Lead exposure is especially harmful to young
children and pregnant women. Before renting pre-1978 housing,
lessors must disclose the presence of lead-based paint and/or lead-
based paint hazards in the dwelling. Lessees must also receive a
federally approved pamphlet on lead poisoning prevention.
(2) A statement by the lessor disclosing the presence of known
lead-based paint and/or lead-based paint hazards in the target housing
being leased or indicating no knowledge of the presence of lead-based
paint and/or lead-based paint hazards. The lessor shall also disclose
any additional information available concerning the known lead-based
paint and/or lead-based paint hazards, such as the basis for the
determination that lead-based paint and/or lead-based paint hazards
exist in the housing, the location of the lead-based paint and/or lead-
based paint hazards, and the condition of the painted surfaces.
(3) A list of any records or reports available to the lessor
pertaining to lead-based paint and/or lead-based paint hazards in the
housing that have been provided to the lessee. If no such records or
reports are available, the lessor shall so indicate.
[[Page 9085]]
(4) A statement by the lessee affirming receipt of the information
set out in paragraphs (b)(2) and (b)(3) of this section and the lead
hazard information pamphlet required under 15 U.S.C. 2696.
(5) When any agent is involved in the transaction to lease target
housing on behalf of the lessor, a statement that:
(i) The agent has informed the lessor of the lessor's obligations
under 42 U.S.C. 4852d; and
(ii) The agent is aware of his/her duty to ensure compliance with
the requirements of this subpart.
(6) The signatures of the lessors, agents, and lessees certifying
to the accuracy of their statements to the best of their knowledge,
along with the dates of signature.
(c) Retention of certification and acknowledgment information.
(1) The seller, and any agent, shall retain a copy of the completed
attachment required under paragraph (a) of this section for no less
than 3 years from the completion date of the sale. The lessor, and any
agent, shall retain a copy of the completed attachment or lease
contract containing the information required under paragraph (b) of
this section for no less than 3 years from the commencement of the
leasing period.
(2) This recordkeeping requirement is not intended to place any
limitations on civil suits under the Act, or to otherwise affect a
lessee's or purchaser's rights under the civil penalty provisions of 42
U.S.C. 4852d(b)(3).
(d) The seller, lessor, or agent shall not be responsible for the
failure of a purchaser's or lessee's legal representative (where such
representative receives all compensation from the purchaser or lessee)
to transmit disclosure materials to the purchaser or lessee, provided
that all required parties have completed and signed the necessary
certification and acknowledgment language required under paragraphs (a)
and (b) of this section.
Sec. 35.94 Agent responsibilities.
(a) Each agent shall ensure compliance with all requirements of
this subpart. To ensure compliance, the agent shall:
(1) Inform the seller or lessor of his/her obligations under
Secs. 35.88, 35.90, and 35.92.
(2) Ensure that the seller or lessor has performed all activities
required under Secs. 35.88, 35.90, and 35.92, or personally ensure
compliance with the requirements of Secs. 35.88, 35.90, and 35.92.
(b) If the agent has complied with paragraph (a)(1) of this
section, the agent shall not be liable for the failure to disclose to a
purchaser or lessee the presence of lead-based paint and/or lead-based
paint hazards known by a seller or lessor but not disclosed to the
agent.
Sec. 35.96 Enforcement.
(a) Any person who knowingly fails to comply with any provision of
this subpart shall be subject to civil monetary penalties in accordance
with the provisions of 42 U.S.C. 3545 and 24 CFR part 30.
(b) The Secretary is authorized to take such action as may be
necessary to enjoin any violation of this subpart in the appropriate
Federal district court.
(c) Any person who knowingly violates the provisions of this
subpart shall be jointly and severally liable to the purchaser or
lessee in an amount equal to 3 times the amount of damages incurred by
such individual.
(d) In any civil action brought for damages pursuant to 42 U.S.C.
4852d(b)(3), the appropriate court may award court costs to the party
commencing such action, together with reasonable attorney fees and any
expert witness fees, if that party prevails.
(e) Failure or refusal to comply with Secs. 35.88 (disclosure
requirements for sellers and lessors), Sec. 35.90 (opportunity to
conduct an evaluation), Sec. 35.92 (certification and acknowledgment of
disclosure), or Sec. 35.94 (agent responsibilities) is a violation of
42 U.S.C. 4852d(b)(5) and of TSCA section 409 (15 U.S.C. 2689).
(f) Violators may be subject to civil and criminal sanctions
pursuant to TSCA section 16 (15 U.S.C. 2615) for each violation. For
purposes of enforcing this subpart, the penalty for each violation
applicable under 15 U.S.C. 2615 shall be not more than $10,000.
Sec. 35.98 Impact on State and local requirements.
Nothing in this subpart shall relieve a seller, lessor, or agent
from any responsibility for compliance with State or local laws,
ordinances, codes, or regulations governing notice or disclosure of
known lead-based paint and/or lead-based paint hazards. Neither HUD nor
EPA assumes any responsibility for ensuring compliance with such State
or local requirements.
40 CFR Chapter I
1. Part 745 is added to read as follows:
PART 745-LEAD-BASED PAINT POISIONING PREVENTION IN CERTAIN
RESIDENTIAL STRUCTURES
Subparts A--E [Reserved]
Subpart F -- Disclosure of Known Lead-Based Paint and/or Lead-Based
Paint Hazards Upon Sale or Lease of Residential Property
Sec.
745.100 Purpose.
745.101 Scope and applicability.
745.102 Effective dates.
745.103 Definitions.
745.107 Disclosure requirements for sellers and lessors.
745.110 Opportunity to conduct an evaluation.
745.113 Certification and acknowledgment of disclosure.
745.115 Agent responsibilities.
745.118 Enforcement.
745.119 Impact on State and local requirements.
Authority: 15 U.S.C. 2615, 15 U.S.C. 2689, and 42 U.S.C. 4852d.
Subparts A--E [Reserved]
Subpart F--Disclosure of Known Lead-Based Paint and/or Lead-Based
Paint Hazards Upon Sale or Lease of Residential Property
Sec. 745.100 Purpose.
This subpart implements the provisions of 42 U.S.C. 4852d, which
impose certain requirements on the sale or lease of target housing.
Under this subpart, a seller or lessor of target housing shall disclose
to the purchaser or lessee the presence of any known lead-based paint
and/or lead-based paint hazards; provide available records and reports;
provide the purchaser or lessee with a lead hazard information
pamphlet; give purchasers a 10-day opportunity to conduct a risk
assessment or inspection; and attach specific disclosure and warning
language to the sales or leasing contract before the purchaser or
lessee is obligated under a contract to purchase or lease target
housing.
Sec. 745.101 Scope and applicability.
This subpart applies to all transactions to sell or lease target
housing, including subleases, with the exception of the following:
(a) Sales of target housing at foreclosure.
(b) Leases of target housing that have been found to be lead-based
paint free by an inspector certified under the Federal certification
program or under a federally accredited State or tribal certification
program. Until a Federal certification program or federally accredited
State certification program is
[[Page 9086]]
in place within the State, inspectors shall be considered qualified to
conduct an inspection for this purpose if they have received
certification under any existing State or tribal inspector
certification program. The lessor has the option of using the results
of additional test(s) by a certified inspector to confirm or refute a
prior finding.
(c) Short-term leases of 100 days or less, where no lease renewal
or extension can occur.
(d) Renewals of existing leases in target housing in which the
lessor has previously disclosed all information required under
Sec. 745.107 and where no new information described in Sec. 745.107 has
come into the possession of the lessor. For the purposes of this
paragraph, renewal shall include both renegotiation of existing lease
terms and/or ratification of a new lease.
Sec. 745.102 Effective dates.
The requirements in this subpart take effect in the following
manner:
(a) For owners of more than four residential dwellings, the
requirements shall take effect on September 6, 1996.
(b) For owners of one to four residential dwellings, the
requirements shall take effect on December 6, 1996.
Sec. 745.103 Definitions.
The following definitions apply to this subpart.
The Act means the Residential Lead-Based Paint Hazard Reduction Act
of 1992, 42 U.S.C. 4852d.
Agent means 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, for the purpose of selling or
leasing target housing. This term does not apply to purchasers or any
purchaser's representative who receives all compensation from the
purchaser.
Available means in the possession of or reasonably obtainable by
the seller or lessor at the time of the disclosure.
Common area means a portion of a building generally accessible to
all residents/users including, but not limited to, hallways, stairways,
laundry and recreational rooms, playgrounds, community centers, and
boundary fences.
Contract for the purchase and sale of residential real property
means any contract or agreement in which one party agrees to purchase
an interest in real property on which there is situated one or more
residential dwellings used or occupied, or intended to be used or
occupied, in whole or in part, as the home or residence of one or more
persons.
EPA means the Environmental Protection Agency.
Evaluation means a risk assessment and/or inspection.
Foreclosure means any of the various methods, statutory or
otherwise, known in different jurisdictions, of enforcing payment of a
debt, by the taking and selling of real property.
Housing for the elderly means retirement communities or similar
types of housing reserved for households composed of one or more
persons 62 years of age or more at the time of initial occupancy.
HUD means the U.S. Department of Housing and Urban Development.
Inspection means:
(1) A surface-by-surface investigation to determine the presence of
lead-based paint as provided in section 302(c) of the Lead-Based Paint
Poisoning and Prevention Act [42 U.S.C. 4822], and
(2) The provision of a report explaining the results of the
investigation.
Lead-based paint means paint or other surface coatings that contain
lead equal to or in excess of 1.0 milligram per square centimeter or
0.5 percent by weight.
Lead-based paint free housing means target housing that has been
found to be free of paint or other surface coatings that contain lead
equal to or in excess of 1.0 milligram per square centimeter or 0.5
percent by weight.
Lead-based paint hazard means any condition that causes exposure to
lead from lead-contaminated dust, lead-contaminated soil, or lead-
contaminated paint that is deteriorated or present in accessible
surfaces, friction surfaces, or impact surfaces that would result in
adverse human health effects as established by the appropriate Federal
agency.
Lessee means any entity that enters into an agreement to lease,
rent, or sublease target housing, including but not limited to
individuals, partnerships, corporations, trusts, government agencies,
housing agencies, Indian tribes, and nonprofit organizations.
Lessor means any entity that offers target housing for lease, rent,
or sublease, including but not limited to individuals, partnerships,
corporations, trusts, government agencies, housing agencies, Indian
tribes, and nonprofit organizations.
Owner means any entity that has legal title to target housing,
including but not limited to individuals, partnerships, corporations,
trusts, government agencies, housing agencies, Indian tribes, and
nonprofit organizations, except where a mortgagee holds legal title to
property serving as collateral for a mortgage loan, in which case the
owner would be the mortgagor.
Purchaser means an entity that enters into an agreement to purchase
an interest in target housing, including but not limited to
individuals, partnerships, corporations, trusts, government agencies,
housing agencies, Indian tribes, and nonprofit organizations.
Reduction means measures designed to reduce or eliminate human
exposure to lead-based paint hazards through methods including interim
controls and abatement.
Residential dwelling means:
(1) A single-family dwelling, including attached structures such as
porches and stoops; or
(2) A single-family dwelling unit in a structure that contains more
than one separate residential dwelling unit, and in which each such
unit is used or occupied, or intended to be used or occupied, in whole
or in part, as the residence of one or more persons.
Risk assessment means an on-site investigation to determine and
report the existence, nature, severity, and location of lead-based
paint hazards in residential dwellings, including:
(1) Information gathering regarding the age and history of the
housing and occupancy by children under age 6;
(2) Visual inspection;
(3) Limited wipe sampling or other environmental sampling
techniques;
(4) Other activity as may be appropriate; and
(5) Provision of a report explaining the results of the
investigation.
Secretary means the Secretary of Housing and Urban Development.
Seller means any entity that transfers legal title to target
housing, in whole or in part, in return for consideration, including
but not limited to individuals, partnerships, corporations, trusts,
government agencies, housing agencies, Indian tribes, and nonprofit
organizations. The term ``seller'' also includes:
(1) An entity that transfers shares in a cooperatively owned
project, in return for consideration; and
(2) An entity that transfers its interest in a leasehold, in
jurisdictions or circumstances where it is legally permissible to
separate the fee title from the title to the improvement, in return for
consideration.
Target housing means any housing constructed prior to 1978, except
housing for the elderly or persons with disabilities (unless any child
who is less than 6 years of age resides or is expected to reside in
such housing) or any 0-bedroom dwelling.
TSCA means the Toxic Substances Control Act, 15 U.S.C. 2601.
[[Page 9087]]
0-bedroom dwelling means any residential dwelling in which the
living area is not separated from the sleeping area. The term includes
efficiencies, studio apartments, dormitory housing, military barracks,
and rentals of individual rooms in residential dwellings.
Sec. 745.107 Disclosure requirements for sellers and lessors.
(a) The following activities shall be completed before the
purchaser or lessee is obligated under any contract to purchase or
lease target housing that is not otherwise an exempt transaction
pursuant to Sec. 745.101. Nothing in this section implies a positive
obligation on the seller or lessor to conduct any evaluation or
reduction activities.
(1) The seller or lessor shall provide the purchaser or lessee with
an EPA-approved lead hazard information pamphlet. Such pamphlets
include the EPA document entitled Protect Your Family From Lead in Your
Home (EPA #747-K-94-001) or an equivalent pamphlet that has been
approved for use in that State by EPA.
(2) The seller or lessor shall disclose to the purchaser or lessee
the presence of any known lead-based paint and/or lead-based paint
hazards in the target housing being sold or leased. The seller or
lessor shall also disclose any additional information available
concerning the known lead-based paint and/or lead-based paint hazards,
such as the basis for the determination that lead-based paint and/or
lead-based paint hazards exist, the location of the lead-based paint
and/or lead-based paint hazards, and the condition of the painted
surfaces.
(3) The seller or lessor shall disclose to each agent the presence
of any known lead-based paint and/or lead-based paint hazards in the
target housing being sold or leased and the existence of any available
records or reports pertaining to lead-based paint and/or lead-based
paint hazards. The seller or lessor shall also disclose any additional
information available concerning the known lead-based paint and/or
lead-based paint hazards, such as the basis for the determination that
lead-based paint and/or lead-based paint hazards exist, the location of
the lead-based paint and/or lead-based paint hazards, and the condition
of the painted surfaces.
(4) The seller or lessor shall provide the purchaser or lessee with
any records or reports available to the seller or lessor pertaining to
lead-based paint and/or lead-based paint hazards in the target housing
being sold or leased. This requirement includes records or reports
regarding common areas. This requirement also includes records or
reports regarding other residential dwellings in multifamily target
housing, provided that such information is part of an evaluation or
reduction of lead-based paint and/or lead-based paint hazards in the
target housing as a whole.
(b) If any of the disclosure activities identified in paragraph (a)
of this section occurs after the purchaser or lessee has provided an
offer to purchase or lease the housing, the seller or lessor shall
complete the required disclosure activities prior to accepting the
purchaser's or lessee's offer and allow the purchaser or lessee an
opportunity to review the information and possibly amend the offer.
Sec. 745.110 Opportunity to conduct an evaluation.
(a) Before a purchaser is obligated under any contract to purchase
target housing, the seller shall permit the purchaser a 10-day period
(unless the parties mutually agree, in writing, upon a different period
of time) to conduct a risk assessment or inspection for the presence of
lead-based paint and/or lead-based paint hazards.
(b) Not withstanding paragraph (a) of this section, a purchaser may
waive the opportunity to conduct the risk assessment or inspection by
so indicating in writing.
Sec. 745.113 Certification and acknowledgment of disclosure.
(a) Seller requirements. Each contract to sell target housing shall
include an attachment containing the following elements, in the
language of the contract (e.g., English, Spanish):
(1) A Lead Warning Statement consisting of the following language:
Every purchaser of any interest in residential real property on
which a residential dwelling was built prior to 1978 is notified
that such property may present exposure to lead from lead-based
paint that may place young children at risk of developing lead
poisoning. Lead poisoning in young children may produce permanent
neurological damage, including learning disabilities, reduced
intelligence quotient, behavioral problems, and impaired memory.
Lead poisoning also poses a particular risk to pregnant women. The
seller of any interest in residential real property is required to
provide the buyer with any information on lead-based paint hazards
from risk assessments or inspections in the seller's possession and
notify the buyer of any known lead-based paint hazards. A risk
assessment or inspection for possible lead-based paint hazards is
recommended prior to purchase.
(2) A statement by the seller disclosing the presence of known
lead-based paint and/or lead-based paint hazards in the target housing
being sold or indicating no knowledge of the presence of lead-based
paint and/or lead-based paint hazards. The seller shall also provide
any additional information available concerning the known lead-based
paint and/or lead-based paint hazards, such as the basis for the
determination that lead-based paint and/or lead-based paint hazards
exist, the location of the lead-based paint and/or lead-based paint
hazards, and the condition of the painted surfaces.
(3) A list of any records or reports available to the seller
pertaining to lead-based paint and/or lead-based paint hazards in the
housing that have been provided to the purchaser. If no such records or
reports are available, the seller shall so indicate.
(4) A statement by the purchaser affirming receipt of the
information set out in paragraphs (a)(2) and (a)(3) of this section and
the lead hazard information pamphlet required under 15 U.S.C. 2696.
(5) A statement by the purchaser that he/she has either:
(i) Received the opportunity to conduct the risk assessment or
inspection required by Sec. 745.110(a); or
(ii) Waived the opportunity.
(6) When one or more agents are involved in the transaction to sell
target housing on behalf of the seller, a statement that:
(i) The agent has informed the seller of the seller's obligations
under 42 U.S.C. 4852d; and
(ii) The agent is aware of his/her duty to ensure compliance with
the requirements of this subpart.
(7) The signatures of the sellers, agents, and purchasers
certifying to the accuracy of their statements to the best of their
knowledge, along with the dates of signature.
(b) Lessor requirements. Each contract to lease target housing
shall include, as an attachment or within the contract, the following
elements, in the language of the contract (e.g., English, Spanish):
(1) A Lead Warning Statement with the following language:
Housing built before 1978 may contain lead-based paint. Lead
from paint, paint chips, and dust can pose health hazards if not
managed properly. Lead exposure is especially harmful to young
children and pregnant women. Before renting pre-1978 housing,
lessors must disclose the presence of lead-based paint and/or lead-
based paint hazards in the dwelling. Lessees must also receive a
federally approved pamphlet on lead poisoning prevention.
(2) A statement by the lessor disclosing the presence of known
lead-based paint and/or lead-based paint
[[Page 9088]]
hazards in the target housing being leased or indicating no knowledge
of the presence of lead-based paint and/or lead-based paint hazards.
The lessor shall also disclose any additional information available
concerning the known lead-based paint and/or lead-based paint hazards,
such as the basis for the determination that lead-based paint and/or
lead-based paint hazards exist, the location of the lead-based paint
and/or lead-based paint hazards, and the condition of the painted
surfaces.
(3) A list of any records or reports available to the lessor
pertaining to lead-based paint and/or lead-based paint hazards in the
housing that have been provided to the lessee. If no such records or
reports are available, the lessor shall so indicate.
(4) A statement by the lessee affirming receipt of the information
set out in paragraphs (b)(2) and (b)(3) of this section and the lead
hazard information pamphlet required under 15 U.S.C. 2696.
(5) When one or more agents are involved in the transaction to
lease target housing on behalf of the lessor, a statement that:
(i) The agent has informed the lessor of the lessors obligations
under 42 U.S.C. 4852d; and
(ii) The agent is aware of his/her duty to ensure compliance with
the requirements of this subpart.
(6) The signatures of the lessors, agents, and lessees, certifying
to the accuracy of their statements, to the best of their knowledge,
along with the dates of signature.
(c) Retention of Certification and Acknowledgment Information.
(1) The seller, and any agent, shall retain a copy of the completed
attachment required under paragraph (a) of this section for no less
than 3 years from the completion date of the sale. The lessor, and any
agent, shall retain a copy of the completed attachment or lease
contract containing the information required under paragraph (b) of
this section for no less than 3 years from the commencement of the
leasing period.
(2) This recordkeeping requirement is not intended to place any
limitations on civil suits under the Act, or to otherwise affect a
lessee's or purchaser's rights under the civil penalty provisions of 42
U.S.C. 4852d(b)(3).
(d) The seller, lessor, or agent shall not be responsible for the
failure of a purchaser's or lessee's legal representative (where such
representative receives all compensation from the purchaser or lessee)
to transmit disclosure materials to the purchaser or lessee, provided
that all required parties have completed and signed the necessary
certification and acknowledgment language required under paragraphs (a)
and (b) of this section.
Sec. 745.115 Agent responsibilities.
(a) Each agent shall ensure compliance with all requirements of
this subpart. To ensure compliance, the agent shall:
(1) Inform the seller or lessor of his/her obligations under
Secs. 745.107, 745.110, and 745.113.
(2) Ensure that the seller or lessor has performed all activities
required under Secs. 745.107, 745.110, and 745.113, or personally
ensure compliance with the requirements of Secs. 745.107, 745.110, and
745.113.
(b) If the agent has complied with paragraph (a)(1) of this
section, the agent shall not be liable for the failure to disclose to a
purchaser or lessee the presence of lead-based paint and/or lead-based
paint hazards known by a seller or lessor but not disclosed to the
agent.
Sec. 745.118 Enforcement.
(a) Any person who knowingly fails to comply with any provision of
this subpart shall be subject to civil monetary penalties in accordance
with the provisions of 42 U.S.C. 3545 and 24 CFR part 30.
(b) The Secretary is authorized to take such action as may be
necessary to enjoin any violation of this subpart in the appropriate
Federal district court.
(c) Any person who knowingly violates the provisions of this
subpart shall be jointly and severally liable to the purchaser or
lessee in an amount equal to 3 times the amount of damages incurred by
such individual.
(d) In any civil action brought for damages pursuant to 42 U.S.C.
4852d(b)(3), the appropriate court may award court costs to the party
commencing such action, together with reasonable attorney fees and any
expert witness fees, if that party prevails.
(e) Failure or refusal to comply with Sec. 745.107 (disclosure
requirements for sellers and lessors), Sec. 745.110 (opportunity to
conduct an evaluation), Sec. 745.113 (certification and acknowledgment
of disclosure), or Sec. 745.115 (agent responsibilities) is a violation
of 42 U.S.C. 4852d(b)(5) and of TSCA section 409 (15 U.S.C. 2689).
(f) Violators may be subject to civil and criminal sanctions
pursuant to TSCA section 16 (15 U.S.C. 2615) for each violation. For
purposes of enforcing this subpart, the penalty for each violation
applicable under 15 U.S.C. 2615 shall be not more than $10,000.
Sec. 745.119 Impact on State and local requirements.
Nothing in this subpart shall relieve a seller, lessor, or agent
from any responsibility for compliance with State or local laws,
ordinances, codes, or regulations governing notice or disclosure of
known lead-based paint or lead-based paint hazards. Neither HUD nor EPA
assumes any responsibility for ensuring compliance with such State or
local requirements.
[FR Doc. 96-5243 Filed 3-5-96; 8:45 am]
BILLING CODE 6560-50-F