Older homes & lead paint. Should I avoiD?

Question

Hi everyone. I'm a new wholesaler.  I was driving a neighborhood the other day looking for vacant homes. When I got home to find who the owners were ( and other data) I found out that all of the homes in this whole neighborhood were built around 1959. Because of the lead paint issue, would it be my responsibility if I put one under contract to disclose this, do I personally have to have it tested, or is it something I should just stay away from? Pro's and con's. Thank you.

Rob K. · Answer

When I sell a home built before 1978 (most of them in my area), I fill out the lead paint disclosure and mark that I don't know of any lead paint (I don't check for it, so how would I know?), I then have the buyer sign and initial the form. I tell them that I have no knowledge of lead paint (the truth) and I give them a lead paint book (required by law). I let them know that this book contains a whole bunch of boring information and the bottom line is DO NOT EAT PAINT CHIPS. I tell them that any house built before 1978 can have lead paint. I also tell them that if there is lead paint in the house, it's probably under 15 layers of paint by now. I then tell them that they're welcome to have a lead paint expert come in (at their own expense) and look for lead paint. I then tell them that if they choose to do this test, I have no idea who they should call as I've never had someone perform this test.

Nobody ever has a problem with this. If they do have a problem, tell them to go buy a brand new house.

This whole lead paint issue is ridiculous. I remember in the 90's, you heard about radon. Everyone wanted a radon test. Now you rarely hear about it. Next was mold. Eveyone was freaked out about mold. Now it's lead. I'm sure at one time, asbestos was the scare tactic.

BTW, I had to get certified in lead paint remediation for the EPA. It's all nonsense. I've been around lead paint for my whole career. The only way you will get lead poisoning is if you're eating paint chips, or you deal with lead dust on a daily basis.

Steve Babiak · Answer

Federal law requires a lead paint disclosure be completed by the seller (or by a landlord) for properties built before 1978.  That may or may not be you as a wholesaler, depending on how you close these.

I recommend avoiding testing for lead based paint; it is not required by Federal law, only disclosure of the already known lead based paint areas in the house.  If you don't test, the "unknown" box can be checked off on the form.

Jon Klaus · Answer

Ha!  Vote Rob K for Secretary of HUD.

Steve Babiak · Answer

At one point there was another type of owner occupant exemption that is no longer allowed; that one allowed an owner occupant to hire a non-certified contractor.  This existed for a short duration during the initial year of the Federal law taking effect, just because it seemed that there may not have been enough certified contractors.  Now that many more contractors became RRP certified, this exemption was discontinued.

BTW - I did say "I believe" that the "lead free" and "owner occupied doing own labor" exemptions are all over the country - this is something that should be verified in each state, because some states (like Wisconsin) have regulations that are far more stringent than the Federal requirements.

Lynn McGeein · Answer

It was a short sale that had to be approved by the bank (BB&T).  The seller was still living in the property and had an agent, and the zillion-page MD contract specifically stated to check the box whether you were waiving your right to a home inspection and also waiving your right to a lead paint inspection, or reserving your right to have them.  I just checked the box reserving my right to have them, and there was also a part where you checked the box for doing the inspection before or after bank approval, so I asked for after the approval.  We didn't even start the inspection contingency period until after the bank approved the short sale, as I didn't want to pay the money for the inspections unless the bank agreed to the sale.   It is the only property I own older than 1978, so I wanted to be sure I was avoiding the lead paint problem or I wouldn't have bought it.

Nice to know it's across the country for the "lead free."  When I talked to the state people in MD, they told me the owner occupied repairs were legal across the country (for now), but not the lead free certificate waiving the need for certification, that it was different in each state, but I may have misunderstood.

Steve Babiak · Answer

@Lynn M. - I believe the "lead free" and "owner occupied doing own labor" exemptions are all over the country.  And there are local (city, county, and state) requirements that are more stringent than the Federal requirements - not only for performing work, but also for disclosures.

My question is: What type of seller actually agreed to perform lead paint testing?  I doubt a bank would, and most investors know better than to agree to that (unless they knew in advance that they were truly lead free).  Did the seller have an agent representing them?  And if so did the agent think it was a good idea?  Agents hate having to revise the seller's disclosures ... testing for lead paint would require the disclosures to be updated.

Lynn McGeein · Answer

Christy, I would check your state to see if there are any special rules other than HUD pre-1978 disclosures.  In my state of MD, you can still work on your own owner-occupied house without special certification, but if you are a landlord or flipping, you have to have the certification yourself and follow all practices or hire certified contractors, which mean higher prices.   However, MD has a rule that if the home tests lead-free and you can have a lead-free certificate issued, no certification or using special contractors is required.   Knowing that, I made it part of the contract that I wanted the test, and it came back lead-free.   If nothing else, knowing your state's requirements will help in negotiations.

David Niles · Answer

Actually depending on your part of the country radon is quite real and an issue, many parts of our area have serious radon issues and radon mitigation systems are quite the norm due to the area being above large marellus shale deposits.

David Beard · Answer

All the houses in an area tend to be of a similar age.  If the buyer is interested in the area, they well know that the lead disclosures go right along with investing there.  If you get a naive owner-occupant buyer, they may want testing, etc.  But as a wholesaler, you're selling to investors who know how these things work (meaning, don't test for lead!).

Christy Gilliam · Answer

Hi Steve. Thanks so much for replying. I would be putting the property under contract and flipping it to an end buyer. So, I can just mark "unknown" on contract if I don't test it? End buyers don't have a problem with this? Thank you.

Older homes & lead paint. Should I avoiD?

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