New lead regulations to take effect this fall.

In 1992, Congress passed the Residential Lead-Based Paint Hazard Reduction Act (the Act) to address the need to control exposure to lead-based paint hazards in housing. Pursuant to the Act, the U.S. Environmental Protection Agency (EPA) and the U.S. Department of Housing and Urban Development (HUD) recently promulgated final regulations requiring disclosure of information about the presence of lead-based paint by real estate sellers, landlords and brokers. The new regulations become effective September 6, 1996 for owners of more than four residential dwellings and December 6, 1996 for owners of one to four residential dwellings.

The regulations apply to sales and leases of all housing constructed before 1978, except for housing for the elderly or the disabled and 0-bedroom dwellings. The regulations also do not apply to properties sold at foreclosure, rental housing found to be free of lead-based paint, short-term leases for 100 days or less and lease renewals (if the information required by the regulations has previously been disclosed).

Neither the Act nor the regulations require lead-paint remediation in private housing; rather, their focus is on the disclosure of information. The regulations mandate that before a purchaser or lessee becomes obligated under any contract to purchase or lease housing subject to the regulations, the seller or lessor must provide (1) a lead hazard information pamphlet approved by the EPA (including EPA's own pamphlet entitled "Protect Your Family from Lead in Your Home;") (2) notice of the presence of lead-based paint and lead-based paint hazards of which the seller or lessor has knowledge; and (3), records and reports available to the seller or lessor on lead-based paint and/or lead-based paint hazards in the housing being sold or leased, and in common

In addition, in the case of a sale, before the purchaser is obligated under the contract, the seller must afford the purchaser 10 days to conduct a risk assessment or inspection for lead-based paint or lead-based paint hazards. The right to conduct this risk assessment or inspection may be waived by the purchaser, or the parties may agree on a different time period for it.

In addition, sales contracts and leases must contain an attachment with specified warnings, disclosures and acknowledgments. In the case of a sale, the attachment (which must be signed by the seller, the purchaser and any agent) must include: a lead warning statement mandated by the Act; a statement disclosing the presence of any known lead-based paint and lead-based paint hazards or indicating lack of knowledge of the presence of either, together with "any additional information available" concerning the known lead-based paint or lead-based paint hazards; a list of related records or reports which have been provided to the purchaser; a statement by the purchaser acknowledging receipt of the above information and the required pamphlet; a statement that the purchaser has been afforded (or has waived) the opportunity to conduct the risk assessment or inspection discussed above; and a statement by any agent involved that the agent informed the seller of its obligations under the Act and that the agent is aware of the agent's duty to ensure compliance with the requirements of the regulations.

In the case of a lease, the attachment must be signed by the lessor, the lessee and any agents, and must include a lead warning statement mandated by the regulations; the same information on known lead-based paint and lead-based paint hazards which is required in the case of sales; a statement by the lessee acknowledging receipt of the above information and the required pamphlet; and a statement by any involved agent that the agent has informed the lessor of the lessor's obligations and that the agent is aware of the agent's duty to ensure compliance with the regulations.

The seller and its agent, as well as the lessor and its agent, are required to retain copies of the completed documents for three years from the completion date of the sale or from the commencement of the leasing period, respectively. The regulations make clear that these disclosure requirements must occur prior to contract ratification and therefore do not affect the validity of any subsequent contract.

Failure to comply with the regulations can result in penalties. HUD can impose penalties of up to $10,000 for each violation. Failure to comply with the regulations is also a violation of section 409 of the Toxic Substances Control Act (TSCA), which subjects a violator to civil penalties of up to $10,000 for each violation. In addition, under TSCA, a willful and knowing violator is also subject to criminal penalties upon conviction: a fine of not more than $10,000 for each violation, or imprisonment for not more than one year, or both. The Act further provides for treble damages and joint and several liability against anyone who knowingly violates the Act. Finally, a court can award court costs, reasonable attorneys fees and expert witness fees to a prevailing plaintiff.

Sellers and lessors, and their agents, would do well to familiarize themselves with the requirements of the Act and these new regulations well in advance of their effective dates, to avoid delaying transactions and incurring significant penalties.