The federal regulations, which went into effect in late 1996, require owners of residential property built before 1978 to provide certain information to prospective purchasers and tenants. In particular, property owners must disclose the presence of any known lead-based paint on the premises. They must also provide any available records or reports pertaining to the presence of lead-based paint and a federally approved information pamphlet concerning the dangers and prevention of lead hazards. Sales and leasing contracts must include certain disclosure and acknowledgment language.
The Philadelphia landlords allegedly failed to comply with one or more of these provisions. Risa M. and Philip C. Gerber leased an apartment unit to a woman with a three-year-old child in February 1998. The EPA claimed that the Gerbers failed to disclose a prior lead violation notice for the property, and that the hazard had not yet been abated. The administrative complaint against the Gerbers also claimed that they failed to provide both the required information pamphlet and the necessary disclosure language in the lease.
In proposing the Gerbers' $14,850 penalty, the EPA took into account that the Gerbers are a "small, independent lessor," and therefore reduced the initial proposed penalty of $29,700. The EPA noted in its administrative complaint that it is required to take into account "the nature, circumstances, extent and gravity of the violation or violations alleged and, with respect to the violator, ability to pay, affect on ability to continue to do business, any history of prior such violations, the degree of culpability, and such other factors as justice may require."
Philadelphia landlord William E. Smith allegedly failed only to provide the required information pamphlet to a new tenant. Although the EPA did not claim that Mr. Smith had any prior knowledge of lead-based paint on the premises, the regulations require that an information pamphlet must be provided regardless of whether the property owner has such knowledge. Like the Gerbers, Mr. Smith was identified as a "small, independent lessor" by the EPA, which reduced the initial proposed penalty of $11,000 to $5500.
These fines, and others recently proposed by the EPA, appear to be the initial enforcement efforts of the lead-based paint disclosure regulations. Enforcement efforts will likely increase due to the addition of a "Tips and Complaints" component to the Lead Information Center and Clearinghouse hotline, which allows the public to report any alleged violations of the disclosure rules. These aggressive measures constitute a wake-up call to residential property owners, leaving no doubt that failure to comply with the disclosure requirements can have serious consequences.
This paper is intended only as a partial summary of the lead-based paint disclosure regulations, which can be found in 24 CFR Part 35 and 40 CFR Part 745. Sellers and landlords should review the requirements in their entirety to ensure compliance, and may wish to seek the advice of legal counsel for questions of what constitutes full disclosure.