Everyone in the apartment business is aware that chipped, flaking lead paint presents a health hazard. Recent studies show that essentially any amount of lead is harmful to a child’s brain. Even tiny amounts seem to have strong effects.
Most owners and managers have learned to deal with lead paint found in their older buildings through operations and maintenance (O&M) plans – removing flaking or chipped paint and providing renters with written lead-paint hazard warnings. But now there is a trend to hold landlords liable for the lead-paint-related health problems of their tenants even where the landlord was not guilty of what most of us think of as “negligence.”
In a growing number of “strict- liability” jurisdictions, the renter need not prove the traditional elements of a negligence claim – the simple fact that the hazard existed in violation of an ordinance that requires owners to keep their properties free of lead hazards is all the evidence required. Once a renter has shown that the paint condition violated local codes, the burden of proof shifts to the owner to somehow prove non-negligence.
For example, the Maryland Court of Appeals, in Brooks v. Lewin Realty, held that once the paint was shown to be defective, the owners had to show they had taken “reasonable steps.” The court’s partial list included written and oral notification of the tenants that the property had potential lead hazards; asking the tenant to notify management whenever they found loose, chipped or flaking paint; and scheduling regular inspections of the property for damaged paint. The court recognized that while total removal of the lead paint was the best solution, economics dictated that other reasonable risk-control methods must sometimes be used instead.
Owners and purchasers of buildings constructed before 1978 should test for the presence of lead paint and decide what steps they will take to mitigate any health risks to their tenants. Under the Federal Housing Administration’s (FHA) substantial rehabilitation program (Sec. 221(d)(4)) owners can include abatement costs for lead paint (and even for asbestos) in the cost basis for the mortgage. You might think that this was most important when converting an old facility to residential use, but even removing old cabinets in an existing apartment can trigger the rules for worker safety and environmental clearance after the completion of the work.
Another FHA mortgage product that can cover costs for lead-paint or asbestos abatement is the purchase or refinance program known as Sec. 223(f). In most cases, the owner wants to get units occupied as soon as possible. The Department of Housing and Urban Development (HUD) accommodates this by allowing (on a case-by-case basis) for lead-paint abatement to continue past the final closing of the loan. So, for example, when the plan is acceptable to HUD, an owner might use interim measures to keep the project in operation, and perform complete abatement on each unit when it turns over.
The new flexibility for capital-needs assessments in the FHA’s Multifamily Accelerated Processing (MAP) program allows the lender and owner to craft a funding schedule for abatement that matches the business plan for the property. In our earlier example, the owner wanted to avoid disruption of the tenants by stretching out the abatement process over time. Under the new methods allowed by MAP, a funding schedule for the capital reserves could be modified to anticipate the timing of the abatement. Another owner may want to pay for complete abatement in the first year after closing to avoid ongoing O&M costs. In this case, MAP will allow abatement costs to be included in the required repairs.
Although federal regulations have definitions for terms like “abatement” and “interim controls,” a plain-English version is simply that abatement methods should last at least 20 years; any lead-paint protection that lasts less than 20 years is an interim control.
There is more to abatement than dry-scraping deteriorated paint, repainting, and sweeping up afterwards. The usual methods for paint removal are known to make leaded dust more accessible to young children and therefore can actually increase lead exposures to children. In much the same way, attempting to encapsulate the lead hazard by painting over it can be a mistake if not done right. For example, common latex paint shrinks rapidly and is more flexible than older paint. The new coat of latex can actually pull the old paint right off the wall, creating a code violation instead of preventing one.
Recognizing the complexity of successfully abating the hazard and avoiding the introduction of new hazards to existing tenants, many states have enacted special licensing or certification requirements for lead-paint contractors. To complicate matters further, sometimes a state government does “certify” these contractors but a city or county might not accept the certification as a license to conduct the work. The Environmental Protection Agency recommends that you not only ensure that the contractor is trained and certified, but also that the person is experienced in abatement activities.
Finally, don’t forget that the law also requires you to keep records of your lead-paint control. Good records are not only the law, but a handy defense when confronted with a suit by a renter damaged by lead paint. If you live in a strict-liability state, where the mere presence of damaged paint is a prima facie case for negligence, these records may allow you to establish that you