All Forum Posts by: Derreck Wells

That house is gutted to the studs, which means all the sheetrock and everything is ripped out. You're probably looking at over $150k to hire it out to build it, less if you can do the work yourself. I'm assuming electrical and plumbing should all be updated while it's all ripped out. A plus would be zero cap-ex for 10 years or so because everything will be brand new. 

Jonathan... you ARE liable for any tenants that lived there before you owned the property unless you delead within 90 days. The new laws attached the liability to the property.


"Pursuant to M.G.L. c. 111, § 199, the owner of any dwelling unit or
residential premises shall be liable for all damages to a child younger than six years old who is lead poisoned as defined at 105 CMR 460.020 caused by his or her failure to comply with M.G.L. c. 111,§§ 194, 196(a) or 197 provided that:
(1) an owner shall not be liable for a period of 90 days after acquiring legal title to a dwelling unit or residential premises in which a child younger than six years old resides if the owner complies with M.G.L. c. 111, § 197(b) or § 197(c) within 90 days after acquiring legal title to the dwelling unit or residential premises;



Note it says "the owner of any premises shall be liable for all damages to a child under six years of age at the time of poisoning". That doesn't say the owner at the time of poisoning is liable, it says the owner is liable if a child was under six years of age at the time of poisoning. You can go down the rabbit hole of the lead laws that I linked to above if you wish and find everything I posted above. Section 194 says the state can get a warrant to inspect the places the victim has lived in the last 12 months. If they moved out of a property 6 months ago, and you bought it 4 months ago and didn't delead, you are the owner of the property where the child was poisoned and are liable because you didn't comply with the law that says you have 90 days to delead. 

I didn't post that part and you just didn't go deep enough into the rabbit hole that is the lead laws to follow it through. There are many sections and subsections and it's really as clear as... well... mud. 

You are not liable for future tenants after you sell. If you don't delead in 90 days, you are liable for past tenants and the tenants that live there while you own it before you delead it even after you delead it, once you sell it, the liability ends since the property is already deleaded when the new owner buys it. You literally only have the 90 days after purchase to avoid liability; and if you didn't delead within the 90 the only way to get out from under it is to sell the property. You could probably sell it to an LLC you own to get out from under, but I'm not sure as that goes into a whole different set of laws that I haven't studied.

460.180 states in part:

• 460.180: Owners in Violation Subject to Damages
  (A) Compensatory Damages. Pursuant to M.G.L. c. 111, § 199, the owner of any dwelling unit or
  residential premises shall be liable for all damages to a child younger than six years old who is lead
  poisoned as defined at 105 CMR 460.020 caused by his or her failure to comply with M.G.L. c. 111,
  §§ 194, 196(a) or 197 provided that:
  (1) an owner shall not be liable for a period of 90 days after acquiring legal title to a dwelling unit
  or residential premises in which a child younger than six years old resides if the owner complies
  with M.G.L. c. 111, § 197(b) or § 197(c) within 90 days after acquiring legal title to the dwelling
  unit or residential premises;
  
  

Let's dissect it. We'll start right at the top of that with 111 subsection 199.

M.G.L. 111, subsection 199 is titled "Liability of owner of premises; punitive damages" and states in part: 

• "Section 199. (a) Except as provided in section one hundred and ninety-seven D, the owner of any premises shall be liable for all damages to a child under six years of age at the time of poisoning, upon proof that said child's blood lead level equals or exceeds the blood lead level at which the department defines lead poisoning, that are caused by his failure to comply with the provisions and requirements of section one hundred and ninety-four, subsection (a) of section one hundred and ninety-six or section one hundred and ninety-seven, and regulations pursuant to said provisions."

• 
  * That leads us to look at 197D to see if we're excluded: "Section 197D. (a) No secured lender shall be considered an owner for purposes of sections one hundred and eighty-nine A to one hundred and ninety-nine B, inclusive, unless and until such secured lender has acquired legal title pursuant to applicable law, and takes actual physical possession, at which point he shall be considered an owner; provided, however, that a secured lender who has acquired legal title pursuant to applicable law shall be liable in any action brought pursuant to section one hundred and ninety-nine only to the following extent:—
• Within ninety days after acquiring legal title to a premises in which a child under the age of six resides, such secured lender shall either (i) obtain a letter of interim control pursuant to subsection (b) of section one hundred and ninety-seven, (ii) obtain a letter of full compliance pursuant to subsection (c) of said section one hundred and ninety-seven, or (iii) transfer the property following the procedures required by section one hundred and ninety-seven A. A secured lender who does not take one of such actions within the specified time period shall be fully liable for all damages, including punitive damages, under section one hundred and ninety-nine."

Nope, we're not excluded, 197D is for banks and actually tells us why they let houses sit in past owners names for as long as possible when they foreclose, they want to avoid the liability of section 199. They want to list and sell within 90 days.

So in plain English, an owner is still liable for all damages to a child if they don't comply with MGL 111 subsection 194, 196a, or 197, except during the first 90 days after taking title. So now you need to find Mass General Law 111 subsection 194, which is titled "Detection of sources of lead poisoning; inspection; search warrant; notice; examination of children; reports; records".

• Section 194 states, in part: "The director shall, subject to appropriation, establish a comprehensive program for detection of sources of lead poisoning. Such program shall attempt, to the extent permitted by appropriations, to locate all premises in which the paint, plaster or other accessible structural material contains dangerous levels of lead. ... 
• Upon the request of any occupant and subject to appropriation, the director shall cause to have the occupant's premises inspected, within a reasonable time, not to exceed ten days, ...  
• When the director is informed of a case of lead poisoning, he shall cause to have inspected the premises in which the victim resides, or has resided within the past twelve months, if the occupants of said premises consent, after reasonable notice, to such inspection. If the occupant refuses admittance, an agent of the director or of any local board of health or code enforcement agency may apply for a search warrant to permit entry. ... 

• A dangerous level of lead found in premises inspected pursuant to this section or otherwise, shall be reported immediately to the owner of the building, all mortgagees and lien holders of record, the director, and all affected tenants as outlined below. The owner of such building shall comply with any order to correct violations issued by the director, any local board of health or any code enforcement agency within the time established by regulations promulgated by the director." 

Okay, now we're getting somewhere, 194 says the State can force an inspection. If we don't allow the inspection, we're instantly held liable. 

So now let's look at the next law mentioned, 196(a) which is titled "Prohibited acts relating to lead-based paint, glaze or other substance; punishment; embargo of personal property" (sounds exciting, doesn't it?) it says in part;

• "No person shall apply or cause to be applied any lead-based paint, glaze or other substance to any toy, furniture, cooking, drinking, or eating utensil, or interior or exterior surface or fixture of any dwelling; and no person shall sell, expose for sale, deliver, give away or possess with intent to sell, deliver or give away any toy, furniture, cooking, drinking or eating utensil to which any lead-based paint, glaze or other substance has been applied." 

Ahh, not so exciting, it just says we can't paint stuff with lead paint, if we do we're liable.

Next up is 197, I have a good feeling about this one. Section 197 is titled "Duty of residential premises owners; interim control measures; abatement or containment of paint, plaster or other accessible structural material containing lead" and states in part:

• 
  "Section 197. (a) Whenever a child under six years of age resides in any premises in which any paint, plaster or other accessible structural material contains dangerous levels of lead, the owner shall abate or contain said paint, plaster or other accessible structural materials in accordance with the requirements of subsection (b) or (c). Except as provided in section one hundred and ninety-seven D, whenever any such premises containing said dangerous levels of lead undergoes a change of ownership and as a result a child under six years of age will become or will continue to be a resident therein, the new owner shall have ninety days to contain or abate said paint, plaster or other accessible structural material as required by this section, so as to make the premises in compliance with the provisions of sections one hundred and eighty-nine A to one hundred and ninety-nine B, inclusive...."
  

And it seems we've come full circle. The owner of the property has the liability of any child that was lead poisoned there unless they delead during the first 90 day exclusion. If you miss the 90 days, the only way to avoid the liability of any tenants that lived there before you deleaded is to sell the property. You're welcome to read all the sections and jump around them to try to follow the logic. They're 189a through 199. https://malegislature.gov/Laws... or you can just take the word of the guy who deleads apartments for a living and has to know and understand all the laws. It's your choice, but unless you plan to become an expert in a field, I'd recommend  taking the word of someone who is an expert in the field. 

Moral of the story... delead your properties within 90 days of buying them.

@Faith Gracia and @Joao Victor Souza,

Keep in mind the new lead paint laws in MA. They now only give you 90 days to delead when you buy a rental. If you don't delead within 90 days, you can be held liable for any lead poisonings that have ever happened at the building, even if it was before you owned it... and even after you delead it you would still be liable for previous issues because you didn't do it in the 90 day deadline. They basically hold the building liable rather than the owner and that liability transfers from owner to owner until someone deleads it and breaks the chain. If you delead, and maintain the standard, you will be in the clear. Since the law doesn't specify exactly how to maintain the standard (but does say you must) I recommend a Post Compliance Assessment Determination (PCAD) every 5 years or so to CYA. That's a simple walk through by a lead inspector that gives you a letter saying the property is still lead safe by the current laws. That way if you do ever get sued, you have proof that you were proactive in maintaining the standard and it's not your word against theirs.

Here's the law about the 90 days (emphasis added by me):
460.100: Duty of Owner(s) of Residential Premises
(B) Whenever any residential premises containing dangerous levels of lead in paint, plaster or other accessible structural material undergoes a change of ownership and as a result a child younger than six years old will become or will continue to be a resident therein, the new owner shall have 90 days after becoming the owner to obtain a Letter of Full Compliance or a Letter of Interim Control, except that if a child younger than six years old who is lead poisoned resides therein, the owner shall not be eligible for interim control, unless the Director grants a waiver pursuant to 105 CMR 460.100(A)(3).

Note it says "a child younger than six years old will become ... a resident therein...". It is assumed by the state that any rental larger than a 1 bedroom will fall into this category at some point because of the anti-discrimination laws that prevent landlords from refusing a family because they have a child. The law specifically excludes rentals under 250 square feet. Basically this is their way of getting all rentals lead safe. If you don't delead, you will be putting yourself in a dangerous position.

This isn't a bad thing! You can use this knowledge in your negotiations. Assume $5k per unit and count the exterior as a unit. So a 3 family is 4 units = $20k for your negotiations. They rarely cost that much, they're usually half that, but if the property needs windows and exterior doors it can get expensive. Like I said though, most come in about half that because the windows have usually already been updated, so use $5k per unit to negotiate and even if you get a 50% concession you could still potentially get it all paid for by the seller.

I can run any addresses through the database for you and see if they've been inspected or deleaded for you. Right now they’re behind on updating it though, so it may have been inspected and I just can’t see it yet but you would just negotiate as if it still needs to be inspected. 

Sometimes they get inspected but not deleaded and this creates a whole other set of problems. If that's the case, you can't do any renovations until you have it professionally deleaded or it would be flagged for Unauthorized Deleading (UD) and you can get fined and the property would never be able to get a Lead Certificate, only a letter of Environmental Protection that states you did illegal work, got caught, then had to pay a professional to clean up the mess. You don't want that.

Remember, deleading increases the amount you can get for rent, increases the value of the house, and decreases your insurance!! It's a win all the way around if you plan for it when you're buying a property. I helped a BP member save $20k off the purchase price, but the project only cost them $9k to complete, so they actually saved $11k by negotiating using the $5k estimate and then having the property deleaded!! They also got tax credits that year, so technically saved even more. There are usually grants and loans you can use also to save even more, I've seen loan programs that didn't have to be repaid until you sell the property, so if you hold the property for life, the government pays for your deleading. Do your research and get creative!!

If you don't already have a lead inspector you like to use, I recommend Anderson Lead Inspections, www.andersonlead.com. No, I don't get a referral fee or anything, I just know he's fair and works to help owners.

Let me know if you need any help or have any questions.

Good luck on your investing!

Derreck

 Hi Cameron,

I just wanted to drop you a note on the new lead paint laws in MA. They now only give you 90 days to delead when you buy a rental. If you don't delead within 90 days, you can be held liable for any lead poisonings that have ever happened at the building, even if it was before you owned it... and even after you delead it you would still be liable for previous issues because you didn't do it in the 90 day deadline. They basically hold the building liable rather than the owner and that liability transfers from owner to owner until someone deleads it and breaks the chain. If you delead, and maintain the standard, you will be in the clear. I recommend a Post Compliance Assessment Determination (PCAD) every 5 years or so.

Here's the law (emphasis added by me):
460.100: Duty of Owner(s) of Residential Premises
(B) Whenever any residential premises containing dangerous levels of lead in paint, plaster or other accessible structural material undergoes a change of ownership and as a result a child younger than six years old will become or will continue to be a resident therein, the new owner shall have 90 days after becoming the owner to obtain a Letter of Full Compliance or a Letter of Interim Control, except that if a child younger than six years old who is lead poisoned resides therein, the owner shall not be eligible for interim control, unless the Director grants a waiver pursuant to 105 CMR 460.100(A)(3).

Note it says "a child younger than six years old will become ... a resident therein...". It is assumed by the state that any rental larger than a 1 bedroom will fall into this category at some point because of the anti-discrimination laws that prevent landlords from refusing a family because they have a child. The law specifically excludes rentals under 250 square feet. Basically this is their way of getting all rentals lead safe. If you don't delead, you will be putting yourself in a dangerous position.

If you don't know if your new property had ever been inspected for lead paint, I can run the address through the state database for you and let you know what I find. 

If you need a lead inspection done, I would recommend Anderson Lead Inspections. Craig works with the owners rather than against them.

If you have any questions, feel free to let me know.

Derreck

Don't forget, it's an island and everything has to be brought in by boat. Just getting the materials to the site will be expensive.

A HELOC is a separate loan, the existing mortgage doesn't need to be in your name, nor does the HELOC for that matter.

 I'm guessing BP is working on putting together a page similar to the one with the lease agreements for Pro and Premium members.

 That's the best part Nadia, he can do both, help his parents AND get ahead in life. He has the PERFECT opportunity here. 

It would take her several years to get on the section 8 program. I wouldn't lower the rent, I would raise the rent to market rates and if the current tenant can't meet the rental criteria, she will have to move. You're running a business, not a charity.