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Attorneys ready clients for lead disclosure rule.

While local legislation is still pending, real estate attornies are busy educating their clients about an upcoming federal regulation that will require disclosure of lead paint hazards when selling or leasing any residential property built before 1978.

The regulation is called for in the Housing and Community Development Act of 1992, which was one of the last pieces of legislation signed by former President Bush. The new law, passed in October, amends the National Affordable Housing Act.

While the act as it applies to privately-owned housing is, for the most part, transaction-based, there is also a provision that calls for rules for the inspection and abatement of lead paint hazards in public or government subsidized housing of

The rules are to be promulgated no later than October of 1994, two years after the act's passing.

Owners who are about to enter into a contract to transfer property will have to:

* Issue the buyer or renter a lead hazard information pamphlet

* Inform the purchaser or renter of any known lead hazards in the housing

* Provide a lead hazard evaluation report

* Permit the purchaser or renter to inspect the property over a 10-day period to determine lead paint hazards

* Insert a "lead warning statement" in the contract for sale

Violation of the regulations will result in civil fines of up to $10,000 for each offense and the offender may be liable to the purchaser or lessee for treble damages.

While two years away, attornies believe early awareness is critical to avoiding panic. In addition, the industry should be aware that the language of the act applies not only to owners entering into contracts but 'agents' as well. Though not defined in the act, this is presumed to mean realtors and management companies, and it is expeaed that when regulations are promulgated the term agent will be defined as such.

If you are selling or leasing target housing you are going to have certain obligations," said Glen Geiger, an attorney with Pitney, Hardin, Kipp & Szuch in Morristown, New Jersey.

Due to the potential liability, Geiger said, it's going to be important for owners to work with well-trained agents and managers who will take the disclosure requirements seriously.

Geiger said the information pamphlet that will be developed is expected to contain: Recommendations for inspection, suggestions for detection and remediating method and instructions


Jack Freund of the Rent Stabil ization Association said, in terms of obtaining financing, the regulations are "potentially disastrous."

Geiger agreed that this is a new worry for 'gun-shy' lenders, and that it will complicate the transaction process.

"This is going to add another checklist to buyers' environmental concerns,' he said.

Joseph Giamboi, an attorney with Strook, Strook & Lavan, believes the greatest hardship would fall on those who own "marginal" housing. Leadbased paint for interior use was out. lawed in New York City in 1960, bu it is conceivable that some peeple use outdoor paint on the inside after that date.

Giamboi said they are also reminding clients to watch for two bills pendinl before the City Council to go furthel than this federal regulation. One would mandate inspections and the other targets abatement. These would some. how have to "dovetail" with the federa requirements.

"The city is taking a somewhat more proactive approach," he said.

Keep it Civil

Don Cambell, senior vice president for government affairs, National MultiHousing Council, said he was encouraged that the portion of the act that requires inspection and abatement of lead hazard conditions in public housing focused on dangerous conditions and not the mere presence of lead.

This, he said, sets the tone for future inspection and abatement legislation that may be passed for private-sector owners.

Cambell's organization and the National Apartment Association, he said, worked with the environment subcommittees of both the Senate and the Congress on the private- and public-sector provisions.

The real estate industry realizes, he said, that legislation is inevitable, but they are concerned that it not be "hostile or uncertain' in nature.

'The industry generally wants to work to come up with legislation,' he said,' that is, one, cost effective and those who are acting responsibly."
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Title Annotation:upcoming federal regulation requiring disclosure of lead paint hazards in sale or lease of residential property built before 1978, called for in Housing and Community Development Act of 1992
Author:Fitzgerald, Therese
Publication:Real Estate Weekly
Date:Feb 24, 1993
Previous Article:NJ group re-organizes.
Next Article:Finance jumps gun on J-51 law change.

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