Local Law 38: Management's biggest challenge in new millennium.

Local Law 38 is a nightmare for New York City cooperatives and condominium associations that own buildings erected before January 1, 1960. To enforce and comply, management companies will have to hire additional administrative personnel and create an entire separate Local Law 38 file system.

They will be held liable for mistakes in maintaining these files, which must contain, among other things: (i) proof of mailing of an annual child inquiry letter; (ii) proof of distribution of an NYC DOH booklets and child inquiry letter with every new or renewal lease; (iii) inspection reports; (iv) notarized affidavits accompanying repair reports; (v) proof of mailing "no access" letters; (vi) proof of mailing "no response" letters [from the annual child's inquiry mailing]; (vii) violations; (viii) letters to HPD requesting postponements; (ix) surface dust tests and certificate of the tester; (x) laboratory result reports from dust samples; and (xi) proper garbage disposal records.

To create the files, management and boards will have to demand timely compliance from shareholders, investors, sponsors, holders of unsold shares and condominium unit owners. They, in turn, will have to cooperate and arrange for timely compliance and cooperation from their tenants. Boards will have to create a number of new internal corporate or association rules and policies.

Whenever There is a Vacancy

A copy must be on file of every rental lease, and every renewal lease, from sponsors, holders of unsold shares, and condominium unit owners (formerly not made available to boards and management). Management will have to review these leases and file copies to determine if:

* The new occupant received the NYC HPD "Notice of Inquiry" regarding the presence of a child (Form #1);

* The new occupant received the NYC Department of Health booklet "Keeping Your Home Safe from Lead-based Paint Hazards;"

* The "Landlord" (sponsor, holders of unsold shares, condo unit owners) completed a cumbersome and detailed paint inspection report on every ceiling and wall surface (including inside closets, inside cabinets, door frames and windows);

* A detailed report, along with a notarized affidavit, showing how the "Landlord" repaired pealing paint anywhere in the apartment, in compliance with Local Law 38, prior to any new occupancy;

* A copy of every sales contract from sponsors and holders of unsold shares (condo unit owners already provide copies when asking for a waiver of the right of first refusal). The sales contract will have to be examined for the same four items listed above. Previously, boards and management companies could not require copies of these contracts;

* Any sublet or sale application that would normally come before a co-op admissions committee for consent will have to be examined for the same four items listed above.

Whenever There is a Lease Renewal

Every sponsor, holder of unsold shares or condominium unit owner's renewal lease will have to be examined, copied and filed by management to determine whether:

* The occupant received the NYC HPD Notice of Inquiry (Form #2);

* The occupant again received the NYC DOH booklet on lead paint hazards.

Whenever Children Under Six Live or Will Live in the Apartment

Every sponsor, holder of unsold shares, investor, shareholder or condo unit owner who rents their unit will have to perform an immediate, and then an annual detailed inspection (described in item #3 above) and give a copy to management for filing. The "owner" can't limit the inspection time to "reasonable business hours." They must accommodate parents by offering evening or weekend inspections.

All residents must be given a proper notice, advising them to inform their landlord and management in writing if they have a new baby, or if a child 6 years old or under comes to reside with them, in the months between the annual mailing.

If the inspection reveals the slightest pealing paint, the inspection report must indicate every surface that was inspected, and where the pealing paint was found.

The owner or landlord must then obtain notarized affidavits from a contractor or building employee, or from their own employee, describing the exact procedure, repair and then correction of this pealing paint. This affidavit must also be given to and filed by management.

For co-op or condo "owner-occupants" who report children six or under in the apartment, management will have to perform or hire someone to perform the inspection. This last item will apply if pealing paint is found.

Building Staff Ceiling and/or Wall Repair, and Ceiling and/or Wall Painting

If a board or management intends to use building staff to repair ceilings, walls or pealing paint damaged due to water leaks, burst pipes, negligent overflows, negligent tile or grout maintenance, building settlement, radiator leaks or just normal aging, then the staff must be carefully trained and supervised to follow the new procedures of Local Law 38. These procedures involve sealing areas, covering furnishings and the floor, HEPA vacuuming before a repair, after a repair and after painting.

Items to be purchased and used include: Disposable clothing; Plastic scraper and moisture spray (for wet scraping); HEPA vacuum equipment; Protective barriers, yellow warning tape and signage; No. 6 gauge plastic garbage bags; and 6-mil. polyurethane sheeting.

Proper removal of garbage/waste from these repairs and painting jobs involve: sealing the plastic sheeting, disposable clothing, plaster, sheet rock, paint chips, dust and any other waste in 6-mil. garbage bags. However, what to do with these garbage bags is as complex as Local Law 38 itself! Local Law 38 simply says that hazardous waste should be disposed of following "proper procedures."

Disposing of Hazardous Waste

Small jobs that are properly bagged may fall under hazardous waste disposal laws (which involve testing, transport manifests, etc.), but enforcement may be lax.

Various state and city agencies, such as the New York State Department of Environmental Conservation (NYS DEC), the New York City Department of Sanitation, and the New York City Department of Environmental Preservation (NYC DEP) have jurisdiction and procedures for transporting and disposing of hazardous waste. It is safe to say that practically no one who has not been involved in a major lead paint abatement (as opposed to the paint and repair jobs that are now included under Local Law 38) would have any idea how to dispose of this waste generated from small repair jobs.

There are some exceptions to the agencies' rules if an owner performs the repair or painting work himself. However, if an outside contractor is used, the waste must be sampled and tested under the Federal Hazardous Waste Disposal Laws, using a test such as the Toxic Characteristic Leachate Procedure (TCLP). Again, the average painter might not be familiar with this test or requirement.

Corporate Resolutions

DPM recommends that, to the extent that the law allows, the boards of cooperatives and condominiums adopt rules and resolutions that require the new occupant (buyer or renter) or renewing tenant to sign the inspection reports or other forms, indicating that they have inspected and approved all painted surfaces.

To shield the boards and the cooperative or condominium associations from some liability, the new resident should be required to take responsibility for stating that the painted surfaces are not pealing or binding.

Rules and resolutions should also be adopted requiring sponsors, holders of unsold shares, investors or condominium unit owners who rent their apartments to follow this law. Such rules and corporate resolutions should clearly state that any penalties or costs incurred due to failure to follow Local Law 38 will be immediately be billed back to their account, and charged as additional rent (maintenance), or as additional common charges.

Finally, management companies should register their properties, do the management company name and address, with the New York City Department of Health (by certified mail) because there is no other way to guarantee that the NYC DOH will be able to contact management in the event of a complaint.