9064 Federal Register /Vol. 61, No. 45/Wednesday, … · 06.03.1996 · 9064 Federal Register/Vol. 61, No. 45/Wednesday, March 6, 1996/Rules and Regulations DEPARTMENT OF HOUSING

9064 Federal Register / Vol. 61, No. 45 / Wednesday, March 6, 1996 / Rules and Regulations

DEPARTMENT OF HOUSING ANDURBAN DEVELOPMENT

24 CFR Part 35

RIN 2501–AB58

ENVIRONMENTAL PROTECTIONAGENCY

40 CFR Part 745

[OPPTS–62130A; FRL–5347–9]

RIN 2070–AC75

Lead; Requirements for Disclosure ofKnown Lead-Based Paint and/or Lead-Based Paint Hazards in Housing

AGENCIES: Department of Housing andUrban Development (HUD) and theEnvironmental Protection Agency(EPA).ACTION: Final rule.

SUMMARY: As a result of past Federal,State, and local efforts to reduce lead inthe environment, the percentage ofchildren with elevated levels of lead intheir blood has declined considerablyover the last 20 years. Approximately1.7 million children, however, still haveblood-lead levels high enough to raisehealth concerns. Studies suggest thatlead exposure from deterioratedresidential lead-based paint,contaminated soil, and lead in dust areamong the major existing sources of leadexposure among children in the UnitedStates. Section 1018 of the ResidentialLead-Based Paint Hazard Reduction Actof 1992 directs EPA and HUD to jointlyissue regulations requiring disclosure ofknown lead-based paint and/or lead-based paint hazards by persons sellingor leasing housing constructed beforethe phaseout of residential lead-basedpaint use in 1978. Under that authority,EPA and HUD are establishing thefollowing requirements: (1) Sellers andlessors of most residential housing builtbefore 1978 must disclose the presenceof known lead-based paint and/or lead-based paint hazards in the housing; (2)sellers and lessors must providepurchasers and lessees with anyavailable records or reports pertaining tothe presence of lead-based paint and/orlead-based paint hazards; (3) sellers andlessors must provide purchasers andlessees with a federally approved leadhazard information pamphlet; (4) sellersmust provide purchasers with a 10-dayopportunity to conduct a riskassessment or inspection for thepresence of lead-based paint and/orlead-based paint hazards before thepurchaser is obligated under anypurchase contract; (5) sales and leasingcontracts must include certain

disclosure and acknowledgmentlanguage; and (6) agents must ensurecompliance with these requirements.These provisions ensure that familiesreceive both specific information on thehousing’s lead history and generalinformation on lead exposureprevention. With this information,consumers can make more informeddecisions concerning home purchase,lease, and maintenance to protect theirfamilies from lead hazard exposure.DATES: Effective date: March 6, 1996except for 24 CFR 35.88, 35.90, 35.92,and 35.94 and 40 CFR 745.107, 745.110,745.113, and 745.115 which containinformation collection requirements thathave not been approved by OMB. OnceOMB has approved these informationcollection requirements, EPA and HUDwill publish a document giving notice ofthe effective date and adding the OMBapproval number to 24 CFR part 35 and40 CFR part 9.

The requirements in this final rule areapplicable in the following manner: (1)For owners of more than four residentialdwellings, the requirements areapplicable on September 6, 1996 and (2)For owners of one to four residentialdwellings, the requirements areapplicable on December 6, 1996.FOR FURTHER INFORMATION CONTACT: Forgeneral information or to obtain copiesof the final rule, pamphlet, orbackground materials, contact theNational Lead InformationClearinghouse (NLIC), toll free, at (800)424-LEAD or fax requests to the NLIC at(202) 659-1192. Copies of the final rule,a brief question-and-answer document,and the pamphlet Protect Your FamilyFrom Lead In Your Home, are availableon the Internet at the National SafetyCouncil’s gopher at cais.com and on theWorld Wide Web at http://www.nsc.org/nsc/ehc/ehc.html. Fortechnical information: At HUD, contactConrad C. Arnolts, Office of Lead-BasedPaint Abatement and PoisoningPrevention, Department of Housing andUrban Development, 451 7th St., SW.,Washington, DC 20410, Telephone:(202) 755-1810, E-mail: conrad—c.—[email protected] (use underscorecharacters), or John B. Shumway, Officeof General Counsel, Telephone: (202)708-9988, E-mail: John—B.—[email protected] (use underscorecharacters). Persons who are hearingimpaired may access these telephonenumbers by calling the FederalInformation Relay Service at 1-800-877-TDDY.

At EPA, contact Charles Franklin,Chemical Management Division, Officeof Pollution Prevention and Toxics,Environmental Protection Agency, 401

M St., SW., Washington, DC 20460,Telephone: (202) 260-1781, E-mail:[email protected].

For general information or to obtaincopies of the final rule, pamphlet, orbackground materials, contact theNational Lead InformationClearinghouse (NLIC), toll free, at (800)424–LEAD or fax requests to the NLICat (202) 659–1192.

Copies of the final rule, a briefquestion-and-answer document, and thepamphlet Protect Your Family FromLead In Your Home, are available on theInternet at the National Safety Council’sgopher at cais.com and on the WorldWide Web at http://www.nsc.org/nsc/ehc/ehc.html.SUPPLEMENTARY INFORMATION:

I. AuthorityThis final rule is issued under the

authority of section 1018 of theResidential Lead-Based Paint HazardReduction Act of 1992 (42 U.S.C.4852d). The Residential Lead-BasedPaint Hazard Reduction Act is Title X ofthe Housing and CommunityDevelopment Act of 1992, Pub. L. 102-550.

II. Background

A. Legal Background

Congress passed the Residential Lead-Based Paint Hazard Reduction Act of1992 (hereafter referred to as Title X orthe Act) to address the need to controlexposure to lead-based paint hazards. Inaddition to amending the ToxicSubstances Control Act (TSCA) and theLead-Based Paint Poisoning PreventionAct (LBPPPA), Title X established theinfrastructure and standards necessaryto reduce lead-based paint hazards inhousing. Within this law, Congressrecognized lead poisoning as aparticular threat to children under age 6and emphasized the needs of thisvulnerable population (section 1003 ofTitle X).

Section 1018 of Title X requires EPAand HUD to promulgate jointregulations for disclosure of any knownlead-based paint or any known lead-based paint hazards in target housingoffered for sale or lease. (Target housingis defined in section 1004(27) of Title X,section 401(17) of TSCA, and isdiscussed in Unit IV.C. of thispreamble.) Specifically, section 1018requires the following activities before apurchaser or lessee is obligated under acontract to purchase or lease targethousing: (1) Sellers and lessors mustprovide purchasers and lessees with alead hazard information pamphlet, asdeveloped under section 406(a) ofTSCA; (2) sellers and lessors must

9065Federal Register / Vol. 61, No. 45 / Wednesday, March 6, 1996 / Rules and Regulations

disclose the presence of known lead-based paint and/or lead-based painthazards in such housing and providepurchasers and lessees with any leadhazard evaluation report available to theseller or lessor; (3) sellers must permitpurchasers a 10-day opportunity toconduct a risk assessment or inspectionfor the presence of lead-based painthazards; and (4) sales contracts mustinclude an attached Lead WarningStatement and acknowledgment, signedby the purchaser.

Violation of section 1018 may resultin civil and criminal penalties andpotential triple damages in a privatecivil suit.

Section 1018 mandated that EPA andHUD promulgate these requirements nolater than 2 years after the date ofenactment of Title X (October 28, 1994),to take effect 3 years after enactment ofTitle X (October 28, 1995). Due topromulgation delays, EPA and HUDhave revised the effective dateprovisions for this rule.

This rule represents one of a broadrange of interrelated lead exposurereduction activities mandated underTitle X. Many of these other activitiessupport and affect the development ofthe section 1018 rule. Several of theactivities most closely related to thedisclosure requirements are brieflydiscussed below.

The statutory provision most closelytied to section 1018 is section 406(a) ofTSCA. Section 406(a) directs EPA todevelop and publish, after notice andcomment, a lead hazard informationpamphlet on lead-based paint hazardsin the home. EPA developed thepamphlet in consultation with HUD, theCenters for Disease Control andPrevention (CDC), and the ConsumerProduct Safety Commission (CPSC),which has joined as a co-sponsor of thepamphlet. EPA issued a notice ofavailability in the Federal Register ofAugust 1, 1995 (60 FR 39167), toannounce the pamphlet’s completion.As mandated under section 1018 ofTitle X, this lead hazard informationpamphlet must be given to purchasersand lessees of target housing.

Under section 403 of TSCA, EPA ischarged with issuing regulations thatidentify lead-based paint hazards, lead-contaminated dust, and lead-contaminated soil, based on thedefinitions provided in section 401 ofTSCA. In July 1994, EPA released aninterim guidance document to providepublic and private decisionmakers withguidance on identifying and prioritizinglead-based paint hazards for controlbefore the issuance of the final section403 standards. EPA subsequently issuedthe interim guidance document in the

Federal Register of September 11, 1995(60 FR 47248). EPA is in the process ofdeveloping the proposed section 403standards.

Section 402 of TSCA directs EPA (inconsultation with HUD, the Departmentof Labor (DOL), and the Department ofHealth and Human Services (HHS)) topromulgate regulations on accreditationof training programs and training andcertification of individuals andcontractors engaging in lead-based paintevaluation and reduction activities. Thissection also requires that EPA, inconsultation with the above agencies,develop standards for performance ofsuch lead-based paint evaluation andreduction activities. EPA issued theproposed section 402 rule on September2, 1994 (59 FR 45872), and expects toissue the final rule shortly. Under thesection 1018 disclosure requirementsissued today, available reports resultingfrom such evaluation and reductionactivities must be provided to thepurchaser or lessee.

Pursuant to sections 1012 and 1013 ofTitle X, HUD is drafting regulationssetting out procedures for all federallyowned residential property and housingreceiving Federal assistance. Theseprocedures concern occupantnotification as well as evaluation (suchas inspection and risk assessment) andreduction (such as interim controls andabatement) of lead-based paint and/orlead-based paint hazards. Theregulations implementing sections 1012and 1013 will not address the provisionof a lead hazard information pamphletto new purchasers and lessees of targethousing, nor any of the otherrequirements under section 1018. HUDwill release these regulations inproposed form as soon as possible forpublic comment.

Pursuant to section 1015 of Title X,HUD and EPA established a Task Forceon Lead-Based Paint Hazard Reductionand Financing, made up of private andpublic organizations representing thespectrum of interests affected by thelead-based paint issue. The Task Forcedeveloped recommendations onevaluating and reducing lead-basedpaint hazards in private housing. TheTask Force released itsrecommendations on July 11, 1995, in areport entitled Putting the PiecesTogether: Controlling Lead Hazards inthe Nation’s Housing. A copy of thisreport has been entered into the publicrecord for this rule.

Pursuant to section 1017 of Title X,HUD and EPA, in cooperation withother Federal Agencies, have revisedHUD’s guidelines for lead-based painthazard evaluation and reductionactivities. These revised guidelines,

entitled Guidelines for the Evaluationand Control of Lead-Based PaintHazards in Housing (hereafter referredto as the ‘‘HUD Guidelines’’), werereleased to the public in June 1995. Acopy of the HUD Guidelines is includedin the public record for this rule.

B. Lead Poisoning in the United StatesLead affects virtually every system of

the body. While it is harmful toindividuals of all ages, lead exposurecan be especially damaging to children,fetuses, and women of childbearing age.As recent studies have identifiedpreviously unrecognized effects, therehas been increasing concern aboutblood-lead levels once thought to besafe. Since 1978, CDC has lowered theblood-lead level of concern from 60 µg/dL (micrograms per deciliter) to 10 µg/dL (Ref. 2).

Lead poisoning has been called ‘‘thesilent disease’’ because its effects mayoccur gradually and imperceptibly,often showing no obvious symptoms.Blood-lead levels as low as 10 µg/dLhave been associated with learningdisabilities, growth impairment,permanent hearing and visualimpairment, and other damage to thebrain and nervous system. In largedoses, lead exposure can cause braindamage, convulsions, and even death.Lead exposure before or duringpregnancy can also alter fetaldevelopment and cause miscarriages.

In 1991, the Secretary of HHScharacterized lead poisoning as the‘‘number one environmental threat tothe health of children in the UnitedStates’’ (Ref. 1). Although the percentageof children with elevated blood-leadlevels has declined over the last 20years, millions of U.S. children stillhave blood-lead levels high enough tothreaten their health (Ref. 1). The ThirdNational Health and NutritionExamination Survey (NHANES III)indicates that over the past two decades,the average child’s blood-lead level hasdecreased from 12.8 µg/dL to 2.8 µg/dL(Ref. 8). NHANES III also indicates,however, that in 1991 approximately 1.7million U.S. children under the age of6 still had blood-lead levels thatexceeded the CDC 10 µg/dL level ofconcern (Ref. 8).

C. Hazards from Past Uses of Lead-Based Paint

Efforts to reduce exposure to leadfrom sources like gasoline and food canshave played a large role in the pastreductions of blood-lead levels in theUnited States. Despite these successes, asignificant human health hazardremains from improperly managed lead-based paint. From the turn of the


century through the 1940’s, paintmanufacturers used lead as a primaryingredient in many oil-based interiorand exterior house paints. Usagegradually decreased through the 1950’sand 1960’s, as largely lead-free latexpaints became more popular. Althoughthe CPSC banned lead-based paints fromresidential use in 1978 (currently, paintsmay not have greater than 0.06 percentlead by weight (Ref. 3)), EPA and HUDestimate that 83 percent of the privatelyowned housing units built in the UnitedStates before 1980 contain some lead-based paint. By these estimations,approximately 64 million homes maycontain lead-based paint that may posea hazard to the occupants if notmanaged properly (Ref. 4).

Lead from exterior house paint canflake off or leach into the soil aroundthe outside of a home, contaminatingchildren’s playing areas. Dust causedduring normal lead-based paint wear(especially around windows and doors)can create a hard-to-see film oversurfaces in a house. In some cases,cleaning and renovation activities canincrease the threat of lead-based paintexposure by dispersing fine lead dustparticles in the air and over accessiblehousehold surfaces. If managedimproperly, both adults and childrencan receive hazardous exposures byinhaling the fine dust or by ingestingpaint dust during hand-to-mouthactivities. Children under age 6 areespecially susceptible to lead poisoning(Ref. 2).

III. Summary of Proposed Rule andPublic Comments

Under the authority of Title X, EPAand HUD issued a proposed rule in theFederal Register of November 2, 1994(59 FR 54984). The proposed ruledescribed the basic approach forimplementing the requirements undersection 1018, including draft regulatorytext, definitions, and standardized formlanguage for use in all transactions. Inmany cases, EPA and HUD alsoincluded a range of options forimplementing the rule along withrequests for comment on specificimplementation issues.

In response to the proposed rule,identified by docket number OPPTS-62130A, EPA and HUD receivedresponses from 198 commenters duringthe 60-day comment period. The largestnumber of responses (approximately 25percent) came from the real estateindustry. Other commenter groupsincluded representatives from thebanking/financial industry (9 percent),letters from State and local officialsinvolved with public health orenvironmental protection (8 percent),

comments from advocacy groups (8percent), letters from attorneysrepresenting various groups (9 percent),and concerned private citizens (23percent). Approximately 10 percent ofthe responses came from educationofficials, housing authorities, andgroups involved with real estatedevelopment and construction. Theparagraphs that follow briefly describesome of the key areas that wereaddressed by the commenters.

A number of comments addressed thescope and applicability of the rule.Commenters discussed a range oftransaction types for specific exclusionor inclusion.

While numerous comments addressedthe various definitions contained in therule, most suggestions involvedrevisions and modifications to existingterms as opposed to requests thatadditional terms be defined. A prevalenttheme was consistency of terminologyacross different rules such as those forsections 402, 404, and 406 of TSCA.

Comments concerning the disclosurerequirement targeted issues such as thescope of disclosed information; theprecise stage at which disclosuresshould be made; recordkeepingparameters; and the ways in whichcommon areas of multi-unit buildingswill be affected by disclosure.

The lead hazard informationpamphlet requirements generatedcomments in the following threecategories: strategies for States andtribes (hereafter, all references to Statesinclude Indian tribes) with their ownnotification materials; making thepamphlet available in other languages;and requests for more varied and activedistribution strategies.

The proposed disclosure andacknowledgment form generatedrequests for simplification andavailability in non-English languages.Some suggestions involved revisingportions of the Lead Warning Statement.

The section of the proposed rule thatreceived the most comments concernedthe proposed 10-day evaluation period.Of particular concern were thecommencement and length of theevaluation period; the practicalavailability of certified inspectors or riskassessors to do the testing; and thepracticality and logistics of obligatingpurchasers to provide a report to sellers.

Other topics that elicited somecomment included the role of the agent,the effective date of the rule, andpotential penalties for noncompliance.

A more complete summary of thecomments received, along with EPA’sand HUD’s responses, is available in thepublic record for this rulemaking.

IV. Final Rule Provisions and KeyComments Addressed

EPA and HUD have revised theproposed rule to reflect the Agencies’desire to maximize the rule’s clarity,flexibility, consistency with otherFederal activities, and consistency withexisting real estate practice. These goalsare important considerations to ensurequick and widespread implementationof the rule.

In particular, many of the changes tothe final rule fall into five generalcategories. These areas include: (1)Clarifications of the rule’s applicability,(2) modification of key definitions, (3)establishment of a clear and commonsense disclosure process, (4)development of a concise disclosurerecord, and (5) development of a flexibleframework for the 10-day evaluationperiod.

Throughout the preamble for this finalrule, there are citations to 24 CFR part35 and 40 CFR part 745. Thesereferences reflect the location that thefinal regulatory text will occupy in theCode of Federal Regulations (CFR)following the rule’s promulgation. EPAand HUD are adding this final jointEPA/HUD regulation to both titles toensure that the public can easily locatethe requirements. Where the preamblereferences the actual rule language,therefore, it will regularly includereferences to the requirements as theyappear in each title. While therequirements are identical, in somecases the nomenclature for the two titlesmay be slightly different.

A. Clarifying the Rule’s Scope andApplicability

Section 1018 mandated that the ruleapply to sales and leases of targethousing. The proposed rule alsodiscussed certain unique types ofhousing transactions that deservedspecial attention in implementing theregulations. For example, the preambleof the proposed rule explained the rule’sexclusion of the following from thestatutory definition of target housing:housing built after 1977, housing for theelderly, housing for the disabled, 0-bedroom dwellings, and commerciallodging. Many commentersrecommended that the regulatory text ofthe final rule clearly designate types oftransactions that are included andexcluded.

EPA and HUD have expanded thescope and applicability section of theregulatory text to better define the rule’simpact on certain types of transactions.Below is a brief discussion of the uniquetransactions addressed under the scopeand applicability section and the


rationale for including or excludingthem.

1. Transactions to sell properties atforeclosure. The final rule retains theexclusion for foreclosure sales presentedin the proposed rule. While somecommenters opposed exemptingforeclosure transactions due to the lackof protection for the purchaser, EPA andHUD believe that the circumstancestypically surrounding foreclosuretransactions make pre-sale disclosureand evaluation unworkable andimpractical. Access to properties duringforeclosure proceedings is often limited,making evaluations impossible. Suchproperties typically are sold on an ‘‘asis’’ basis with regard to all structuraland environmental factors. Further,these transactions do not necessarilyinvolve direct interaction between theproperty owner and the purchaser, andthe mortgage holder or trustee isunlikely to have information on thepresence of lead-based paint and/orlead-based paint hazards. In light ofthese circumstances, EPA and HUDbelieve that it would be inappropriate toextend Federal disclosure andevaluation requirements to foreclosuretransactions.

This exclusion does not apply,however, to the sale of housingoriginally acquired through aforeclosure sale and subsequently resold(an expansion of the exclusionrecommended by some commenters). Insuch cases, EPA and HUD believe thatthe rule’s provisions can beincorporated into the sales process sincemany of the extenuating circumstancesof foreclosure sales no longer apply.

2. Rental housing found to be free oflead-based paint. The final rule exemptsfrom coverage leasing transactionsinvolving target housing that is free oflead-based paint, as determined by acertified inspector. For the purposes ofthis rule, EPA and HUD have defined‘‘lead-based paint free’’ as the absence ofpaint with lead levels above thoseprovided in Title X.

In addition to receiving support bymany public commenters, this exclusionwas recommended by the Task Force onLead Hazard Reduction and Financing.EPA and HUD strongly encourage theconcept of lead-based paint evaluationin rental housing. Evaluations can helplessors to detect the presence of lead-based paint and to determine whethercertain management practices andoccupant education efforts arenecessary. Where evaluations discoverlead-based paint, such results willprovide lessors and/or lessees with theinformation necessary to takeappropriate hazard reduction steps. EPAand HUD also believe that the

exemption will provide a valuableincentive to building owners to conductinspections and remove lead-basedpaint where present.

Under the provisions of theregulation, disclosure during rentaltransactions is limited to the disclosureof known lead-based paint and/or lead-based paint hazards, provision ofavailable records and reports, provisionof a lead hazard information pamphlet,and creation and retention of leadwarning and acknowledgment language.These activities provide substantiallyfewer benefits in cases where reliableinformation indicates that the housing islead-based paint free. At the same time,EPA and HUD expect that theexemption for lead-based paint freeunits will not dissuade many lessorsfrom providing their inspection reportsto prospective lessees on a voluntarybasis. Given the value that lead-safehousing would have to an informedconsumer, EPA and HUD expect thatowners will see a great benefit ininforming lessees of the housing’s lead-based paint free status.

Because of the distinct disclosureobligations the statute imposes onsellers, obligations that purchasersassume upon purchase of the housing,EPA and HUD are not allowing the lead-based paint free exemption for salestransactions. Unlike lessees, purchaserstake on new obligations to comply withthe disclosure provisions during allsubsequent sales or leasing transactions.Exempting sales transactions coulddisrupt the flow of information fromowner to owner regarding the status ofthe target housing and the purchaser’spotential disclosure obligations.Further, Title X guarantees purchasersmore than just known information andavailable reports. Title X guaranteeseach purchaser the opportunity toconduct an evaluation for lead-basedpaint and/or lead-based paint hazards,regardless of the information disclosedby the seller. Exempting salestransactions based on the information inthe possession of the seller would denythe purchaser that evaluation right.While many purchasers will accept theseller’s information and waive theirevaluation opportunity (especially if theseller provides an evaluation by acertified inspector), some purchasersmay prefer to have their own evaluationperformed.

Because the Federal training andcertification program will not take effectuntil some time after the effective dateof this rule, EPA and HUD recognize theneed for a process to allow propertyowners to seek exclusions for lead-basedpaint free housing in States withoutfederally authorized certification

programs. In the interim period beforethe Federal certification program (to beissued under subpart L of 40 CFR part745) takes effect, inspectors qualifiedunder any existing State certificationprogram, and using State-approvedmethods, are considered qualified toconduct inspections for the purpose ofdetermining whether housing is lead-based paint free. In States withoutexisting certification programs, lessorsmay use the services of inspectorscertified in other States. Once theFederal or federally authorized Statecertification program has taken effect ina particular State, however, this interimprovision will expire and subsequentinspections for the purposes of thisexclusion will have to be performed byinspectors with Federal or federallyauthorized State certification.

Some commenters asked whetherlessors hoping to meet the lead-freeexemption could correct for possiblefalse (or outdated) positive findingsduring lead-based paint inspections.The lessor always retains the option ofhaving additional tests performed bycertified inspectors. Nothing in eitherthe law or the regulation is intended torevoke or restrict that right. Anadditional test can sometimes clarifywhether or not lead-based paint ispresent. For example, if a lessorbelieved that a previous inspection hadrendered a false-positive result (allmeasurement techniques involve somesmall degree of sampling and analyticalerror), the lessor could choose to havea certified inspector retest the area inquestion. If the additional testing by acertified inspector indicated that theinitial positive results were false (i.e.,that there was in fact no lead-basedpaint present), then the lessor wouldqualify for the lead-based paint freeexemption. Similarly, suppose a lessorfirst had a test done in 1982 using an X-ray fluorescence (XRF) device thatindicated the presence of lead-basedpaint. Because testing procedures wereless reliable at that time (standardpractice often failed to consider theeffect of the substrate underneath thepaint on the accuracy of themeasurement and instrumentcalibration checks were often deficient),the lessor might choose to conduct anew test using the improvedmethodology available today. If thissecond test indicated that lead-basedpaint was not present, then the lessorwould qualify for the lead-based paintfree exemption. As a third example, alessor who had all lead-based paintremoved from a rental propertyfollowing an earlier inspection couldchoose to have a new inspection or


clearance examination conducted on theabated property. If the new informationindicated that lead-based paint was nolonger present, then the lessor wouldqualify for the lead-based paint freeexemption. In all three cases, if thesecond test confirmed the originalfindings, or if the test was notconducted by a certified inspector, theexemption would not be available.

3. Short-term leases of 100 days orless. Many commenters recommendedthat the final rule clarify the distinctionbetween short-term lodgings and longerterm residential housing. The final ruleaddresses these comments by excludinghousing transactions involving leasingagreements of 100 days or less, whereno lease renewal or extension can occur.This time period is intended to captureall leasing transactions of 3 months orless, while providing several additionaldays to allow flexibility in thetransaction. Building upon the logicdiscussed in the proposed rule, the finalrule’s short-term lease exclusioncaptures most seasonal vacation rentalsand hotel and motel transactions, aswell as other forms of short-termlodging. During such transactions,which are typified by short stays andquick occupant turnover, EPA and HUDbelieve that the disclosure provisionsare impractical and counter toCongressional intent. The notificationrequirements of this rule would apply tovacation rentals in cases where the stayextends beyond a 100-day period. Undersuch circumstances, EPA and HUDbelieve that the potential for occupantexposure to lead-based paint and/orlead-based paint hazards merits thedisclosure of information required bythe rule, regardless of whether the statedpurpose of the lease is temporary orpermanent housing.

In addition, EPA and HUD haveplaced a limitation on extensions andrenewals of such short-term leases toensure that month-to-month leasingtransactions remain covered by the finalrule. Commenters noted that manyrental transactions incorporate an open-ended month-to-month leasingagreement. These transactions will stillbe covered by the final rule unless theparties establish in advance that theterm of rental will be no longer than 100days. In an open-ended month-to-monthlease arrangement, for example, the rulestill applies since the leasing agreementfails to limit the lease term to 100 daysor less, i.e., the lease agreement couldpossibly be extended beyond 100 days.If both parties wish to extend apreviously exempted short-term leasebeyond the 100-day limit, all provisionsof this rule must be satisfied in fullbefore any such ‘‘extension’’ occurs.

4. Lease renewals. The final rule doesnot require repeated disclosure duringthe renewal of existing leases in whichthe lessor has previously disclosed allinformation required under 24 CFR35.88 and 40 CFR 745.107 and where nonew information has come into thepossession of the lessor. As stated in theproposed rule, EPA and HUD do notbelieve that duplicative disclosureprovides significant benefits.

Several commenters noted that inmany residential leasing transactions,leasing arrangements switch to month-to-month ‘‘at-will’’ arrangements afteran initial period of occupancy. In suchcases, the leasing arrangement maycontinue indefinitely without any‘‘renewal process.’’ Under suchcircumstances, EPA and HUD interpretrenewal to occur at the point when theparties agree to a significant writtenchange in the terms of the lease, such asa rental rate adjustment. Following suchalteration of terms, the disclosurerequirements apply to any newinformation obtained subsequent to theoriginal disclosure.

5. The purchase, sale, or servicing ofmortgages. The final rule does notcover, and was never intended to cover,the purchase, sale, or servicing ofmortgages. During the comment period,many commenters expressed concernthat the proposed rule could beinterpreted to hold liable personsinvolved in the purchase, sale, orservicing of mortgages where the title ofthe housing does not change hands aspart of the transaction.

6. The sale or lease of 0-bedroomdwellings. The final rule does not applyto transactions involving 0-bedroomdwellings, in keeping with thedefinition of ‘‘target housing’’ providedin section 1004 of Title X. Thisdefinition, at the heart of the section1018 provisions, specifically excludes 0-bedroom dwellings of all types.

7. Informal rental agreements. In theproposed rule, EPA and HUD proposedexcluding ‘‘informal rental agreementswhich do not involve a lease’’ (a phrasemeant to capture oral leases) because‘‘such arrangements, by virtue of theirinformality, make the administrationand enforcement of these requirementsextremely difficult.’’ EPA and HUD haveremoved any implied exclusion for oralleases. In deciding not to exclude suchleases, EPA and HUD drew heavilyupon the public comments. Many ofthese comments suggested that theabsence of a written lease may not havebearing on the ‘‘formality’’ of thehousing arrangement. Commentersnoted that oral leases make up asignificant portion of the housing

arrangements in certain areas, especiallythose that lack rental housing codes.

Further, although the absence of awritten lease provides challenges forcertain Federal enforcement andcompliance monitoring approaches,EPA and HUD now believe thatenforcement is possible. Other evidencemay exist, for example, to demonstratethat a leasing agreement exists betweentwo parties. Congress also providedlessees with opportunities for redressunder its civil penalty provisions atsection 1018(b)(3). These safeguards arenot dependent upon Agency actions andtherefore should not be constrained byEPA and HUD limitations.

EPA and HUD have also consideredpolicy reasons for not excluding oralleases. First, EPA and HUD aresympathetic to commenter concerns thatan explicit exclusion for oral leasingtransactions could create incentives forlessors to avoid written leases. If therule’s exclusion were to indirectlydiscourage the use of written leases,lessees would lose both their right toinformation on lead-based paintpoisoning prevention and the manyother protections afforded by writtenleases. Commenters also noted that adisproportionate number of oraltransactions occur in low-income,disadvantaged communities. Thesecommunities are already at greater riskof exposure to lead-based paint hazards.

Nevertheless, while the final rule doesnot provide an explicit exclusion fororal leasing arrangements, EPA andHUD expect that many oral leasetransactions may be excluded for otherreasons (length of arrangements, rentalof 0-bedroom dwelling, etc.).

B. Effective DateIn the proposed rule, EPA and HUD

requested comment on the issue ofextending the effective date for the finalrule beyond October 28, 1995, in lightof the promulgation delays. EPA andHUD noted Congress’ inclusion of a 1-year window between the statutorypromulgation deadline and thestatutorily mandated effective deadline.EPA and HUD received comments insupport of and in opposition to anextension.

Commenters opposed to delaying theeffective date generally argued that anydelay in implementation would increasethe number of preventable exposures tolead-based paint hazards. According tothese commenters, given the importanceof educating consumers about theiroptions for reducing lead hazards, thepositive effects of early implementationoutweigh the practical difficulties.

While agreeing that this ruleaddresses an important consumer


protection and empowerment goal, EPAand HUD believe that the rule’s effectiveimplementation requires an informedand prepared general public andregulated community. EPA and HUDbelieve that a phase-in period isnecessary to provide adequate time forthe real estate industry, private lessors,and independent housing sellers andlessors to become familiar with the rulerequirements and to set up proceduresfor compliance.

Sellers and lessors who own morethan four residential dwellings willhave 6 months from the final rule’spromulgation to implement fulldisclosure during sales and leasingtransactions. This phase-in scheduleensures that all such property owners,sellers, lessors, and agents will haveadequate notice of the new requirementsbefore they take effect. Believing thatproperty owners with four or fewerdwellings are more likely to be non-professional sellers and lessors, EPAand HUD are providing a 9-monthphase-in period for such owners. EPAand HUD encourage all sellers andlessors to begin voluntary disclosure inadvance of their relevant effective date.

EPA and HUD also receivedcomments recommending delaying theeffective date until after EPA issues itsstandards for lead hazards in paint,dust, and soil. These commenters statedthat the regulated community would beunable to disclose adequately thepresence of lead-based paint and lead-based paint hazards in the absence ofFederal standards.

EPA and HUD do not believe that thisrule requires Federal lead hazardstandards to be effective. In section1018, Congress mandated that sellersand lessors disclose not just lead-basedpaint hazards but also the presence oflead-based paint, a far more inclusivemandate (since not all lead-based paintis necessarily a hazard).

Further, EPA and HUD expect thatrecords will likely provide purchasersand lessees with information on lead-based paint and, where they exist, lead-based paint hazards. Accordingly, ifrecords pertaining to lead-based paintare fully disclosed, disclosure of lead-based paint hazards should also beaccomplished.

The statute and now this rule providea clear definition for the levels of leadin paint that constitute lead-based paint.The statute also provides a qualitativedefinition of lead-based paint hazard,including certain exposures to lead-based paint that is peeling or chipping;lead-based paint that is on friction,impact, or chewable surfaces; and lead-contaminated dust and soil.

EPA and HUD have augmented thesedefinitions by providing guidance onidentifying lead hazards in paint, dust,and soil (60 FR 47248).

Regarding the need for guidance tohelp prospective purchasers and lesseeswith the interpretation of disclosedinformation, EPA and HUD believe thatthe statutory definition of ‘‘lead-basedpaint hazard,’’ combined with EPA’slead hazard guidance and the HUDGuidelines, provides sellers, purchasers,lessors, and lessees with valuableinformation for interpreting anydisclosed information.

Some commenters have alsorecommended delaying the effectivedate of the final rule until after theactivation of the Federal standards fortraining and certifying lead workers,being developed under section 402 ofTSCA. After considering the commentsand reexamining the statute, EPA andHUD have determined that such a delayis unnecessary. EPA and HUD believethat the HUD Guidelines will provideadequate interim guidance for theevaluation and management of lead-based paint hazards in target housing,prior to the release of the section 402training and certification standards.

C. DefinitionsEPA and HUD received comments on

many of the proposed definitions.Below is a brief discussion of thesignificant definitions beingpromulgated under this final rule.

1. Agent means any party who entersinto a contract with a seller or lessor,including any party who enters into acontract with a representative of theseller or lessor, for the purpose ofselling or leasing target housing. Thisterm does not apply to purchasers orany purchaser’s representative whoreceives all compensation from thepurchaser.

EPA and HUD initially defined‘‘agent’’ to be ‘‘any party who enters intoa contract with a seller or lessor torepresent the seller or lessor for thepurpose of selling or leasing targethousing.’’ Several commenters statedthat the language in this definition wasneedlessly vague. Listing agentstypically enter into a contract with theseller and represent the seller. ‘‘Buyer’’agents, however, often enter into acontractual relationship with a seller orthe seller’s agent but may represent boththe seller and the purchaser in the realestate transaction. EPA and HUD haverevised this definition so that any partyentering into a contractual relationshipdirectly with the seller or lessor (orindirectly with a representative of theseller or lessor) for the purpose ofselling or leasing the target housing, is

an ‘‘agent’’ for the purposes of this rule.As a consequence, listing agents, sellingagents, and buyer agents (if paid by theseller or through a cooperativebrokerage agreement with the listingagent), are ‘‘agents’’ and are responsiblefor ensuring compliance under the rule.Since section 1018 refers only to agentshaving entered into a contract with theseller or lessor, buyer’s agents paidentirely by the purchaser are notconsidered ‘‘agents’’ under this rule.

2. Available means in the seller’s orlessor’s possession or reasonablyobtainable by the seller or lessor at thetime of the disclosure.

Section 1018(a)(1) requires that sellersand lessors provide the purchasers andlessees with ‘‘any lead hazardevaluation reports available to the selleror lessor.’’ EPA and HUD interpretavailable lead hazard evaluation reportsto mean records and reports that pertainto lead-based paint and/or lead-basedpaint hazards in the target housing andthat are in the possession of the selleror lessor or that are reasonablyobtainable by the seller or lessor at thetime of the disclosure.

EPA and HUD expect that most sellersand lessors will retain copies of relevantinformation in their possession alongwith other important housing files (title,outstanding leases, etc.). In some cases,however, the seller or lessor may nolonger have possession of the recordsbut may have reasonable access to theinformation. Examples of ‘‘reasonablyobtainable’’ records include recordsretained by a separate or outside entityon behalf of the seller or lessor andcopies of reports retained by the originalinspector or risk assessor that would beavailable to the owner in cases wherethe original records were destroyed orlost. The term ‘‘reasonably obtainable’’is not intended to impose an obligationon the seller or lessor to conduct furtherevaluation of the housing.

3. Common area means a portion ofa building generally accessible to allresidents/users including, but notlimited to, hallways, stairways, laundryand recreational rooms, playgrounds,community centers, and boundaryfences.

This definition is unchanged from theproposed rule. The term ‘‘common area’’will be used in other TSCA Title IVregulations, some of which may requirea broader interpretation of commonarea. The final rule provides onebroadly interpreted term applicableunder all of the TSCA rules, to avoid theconfusion of multiple rule-specificdefinitions. Though several commentersrecommended minor changes to adjustthe scope of the definition, EPA andHUD believe that other regulatory


provisions adequately clarify therelevant scope of the term ‘‘commonarea’’ as it relates to target housing.

4. Foreclosure means any of thevarious methods, statutory or otherwise,known in different jurisdictions, ofenforcing payment of a debt, by thetaking and selling of real property.

EPA and HUD added this definitionin response to requests that the finalrule include a regulatory definition ofthe term. EPA and HUD believe that thisdefinition will help property ownersdetermine the applicability of theforeclosure exemption to theirtransactions. Recognizing that differentjurisdictions may have differinginterpretations of what constitutes‘‘foreclosure,’’ EPA and HUD havedeveloped a general definition thatprovides flexibility to work withinestablished local laws and customs.

5. Housing for the elderly meansretirement communities or similar typesof housing specifically designed forhouseholds composed of one or morepersons 62 years of age or more at thetime of initial occupancy.

In response to public comments, EPAand HUD have added a definition forthis term to the regulatory text. Thisdefinition is consistent with thedefinition used by HUD’s SupportiveHousing for the Elderly Program (See 24CFR 277.1(f)). While some commentersrecommended the use of a ‘‘55 years orolder’’ standard (as used to define‘‘older person’’ in the Fair Housing Act),HUD believes that the current definitionis more consistent with HUD’s otherprograms for the elderly.

6. Lead-based paint means paint orother surface coatings that contain leadequal to or in excess of 1.0 milligramper square centimeter or 0.5 percent byweight.

This term has been modified slightlyfrom the language provided in Title Xand TSCA to retain consistency with themany HUD programs already using thelevels defined under section 302(c) ofthe Lead-Based Paint PoisoningPrevention Act.

7. Lead-based paint free housingmeans target housing that has beenfound to be free of paint or other surfacecoatings that contain lead equal to or inexcess of 1.0 milligram per squarecentimeter or 0.5 percent by weight.

EPA and HUD have added thisdefinition in support of the provision ofthe rule that allows rental transactionsin ‘‘lead-based paint free’’ rentalhousing to be excluded from the section1018 requirements. EPA and HUDprovide further discussion of thisprovision in unit IV.A.2. of thispreamble.

8. Lead-based paint hazard meansany condition that causes exposure tolead from lead-contaminated dust, lead-contaminated soil, or lead-contaminatedpaint that is deteriorated or present inaccessible surfaces, friction surfaces, orimpact surfaces that would result inadverse human health effects asestablished by the appropriate Federalagency.

This term, defined in section 1004 ofTitle X, is unchanged from the proposedrule. EPA has released guidance onidentifying lead hazards in paint, dust,and soil (60 FR 47248) and is currentlydeveloping Federal standards. Inaddition, HUD has releasedcomprehensive guidelines forevaluation and control of lead-basedpaint hazards in housing (Ref. 7).

9. Lessee means any entity that entersinto an agreement to lease, rent, orsublease target housing, including butnot limited to individuals, partnerships,corporations, trusts, governmentagencies, housing agencies, Indiantribes, and nonprofit organizations.

EPA and HUD received limitedcomments on this definition and havemade minor revisions to the language ofthe definition to clarify its applicabilityto trusts and subleases.

10. Lessor means any entity that offerstarget housing for lease, rent, orsublease, including but not limited toindividuals, partnerships, corporations,trusts, government agencies, housingagencies, Indian tribes, and nonprofitorganizations.

EPA and HUD received limitedcomments on this definition and havemade minor revisions to the language ofthe definition to clarify its applicabilityto trusts and subleases.

11. Owner means any entity that haslegal title to target housing, includingbut not limited to individuals,partnerships, corporations, trusts,government agencies, housing agencies,Indian tribes, and nonprofitorganizations, except where a mortgageeholds legal title to property serving ascollateral for a mortgage loan, in whichcase the owner is considered themortgagor.

EPA and HUD have revised thedefinition provided in the proposed ruleto clarify its applicability to trusts andto clarify one situation in whichmortgage lenders (mortgagees), ratherthan borrowers (mortgagors), hold titleand are therefore owners.

12. Purchaser means an entity thatenters into an agreement to purchase aninterest in target housing, including butnot limited to individuals, partnerships,corporations, trusts, governmentagencies, housing agencies, Indiantribes, and nonprofit organizations.

EPA and HUD received limitedcomments on this definition and havemade minor revisions to the language ofthe definition to clarify its applicabilityto trusts.

13. Risk assessment means an on-siteinvestigation to determine and reportthe existence, nature, severity, andlocation of lead-based paint hazards inresidential dwellings, including: (1)Information gathering regarding the ageand history of the housing andoccupancy by children under age 6; (2)visual inspection; (3) limited wipesampling or other environmentalsampling techniques; (4) other activityas may be appropriate; and (5) provisionof a report explaining the results of theinvestigation.

This definition, provided in section1004 of Title X, is unchanged from theproposed rule. Under section 402 ofTSCA, EPA will promulgate separateregulations regarding the conduct ofsuch activities, as well as a program fortraining and certifying workers engagedin these activities. Under section 404 ofTSCA, these regulations will alsoinclude a process for authorizing Statesto implement their own training andcertification programs.

14. Seller means any entity thattransfers legal title to target housing, inwhole or in part, in return forconsideration, including but not limitedto individuals, partnerships,corporations, trusts, governmentagencies, housing agencies, Indiantribes, and nonprofit organizations. Theterm ‘‘seller’’ also includes: (1) Anentity that transfers shares in acooperatively owned project, in returnfor consideration and (2) an entity thattransfers its interest in a leasehold injurisdictions or circumstances where itis legally permissible to separate the feetitle from the title to the improvement,in return for consideration.

EPA and HUD received limitedcomments on this definition and havemade minor revisions to the language ofthe definition to clarify its applicabilityto trusts.

15. Target housing means any housingconstructed prior to 1978, excepthousing for the elderly or persons withdisabilities (unless any child who is lessthan 6 years of age resides or is expectedto reside in such housing) or any 0-bedroom dwelling.

This definition was provided bysection 1004 of Title X and isunchanged. Where commentersprovided recommendations for revisingor clarifying the definition, EPA andHUD have addressed those commentswithin the scope and applicabilitysection of the final rule. Commentersalso noted that the proposed rule


misstated the statutory definition bylimiting the 0-bedroom dwellingexception to housing where no childrenunder 6 reside or are expected to reside.EPA and HUD have modified thedefinition to reflect the statutorylanguage.

16. 0-bedroom dwelling means anyresidential dwelling in which the livingarea is not separated from the sleepingarea. Such term includes efficiencies,studio apartments, dormitory housing,military barracks, and rentals ofindividual rooms in residentialdwellings.

In the preamble of the proposed rule,EPA and HUD clarified theirinterpretation of this term by identifyingefficiencies, studio apartments,dormitory housing, military barracks,and other such housing in which theliving area is unseparated from thesleeping area as types of dwellings thatare not covered under the rule. EPA andHUD have added rentals of individualrooms in a residential dwelling to thetypes of transactions that would involvea 0-bedroom dwelling. All of theseclarifications are included in theregulatory definition in the final rule’sregulatory text.

D. Changes to the DisclosureRequirements

Section 1018(a)(1)(B) requires that‘‘before the purchaser or lessee isobligated under any contract topurchase or lease the housing, . . .theseller or lessor shall. . .disclose to thepurchaser or lessee the presence of anyknown lead-based paint or any lead-based paint hazards, in such housing,and provide any lead hazard evaluationreport available to the seller or lessor.’’

EPA and HUD received more than 150comments on their proposedrequirements for such informationdisclosure, addressing both theproposed disclosure process and theissue of what information should becovered. In particular, recurring themesamong the comments included: (1) Theneed for greater specificity regarding thenecessary timing for disclosureactivities; (2) concerns over whichactivities should constitute disclosure;and (3) what kinds of informationshould be disclosed under this rule. Thefollowing is a brief discussion of thesekey points and a summary of theregulatory requirements.

1. Timing of disclosure events. Inaddressing the need for greater clarityregarding the timing of disclosureactivities, EPA and HUD have attemptedto maximize the parties’ flexibility inincorporating these requirements duringnegotiations. EPA and HUD believe thatthis flexibility is important given the

many types of transactions covered bythese provisions and the existence ofdistinct local requirements and customs.Therefore, the final rule identifies onlythe latest point at which full disclosuremust occur. Using the statute as a guide,EPA and HUD have identified this pointas before the purchaser or lesseebecomes obligated under any contract topurchase or lease the housing.

Some commenters raised the concern,however, that without additionalclarification regarding how and wheninformation must be disclosed, the finalrule could cause unnecessary confusionregarding how the requirements willwork in actual practice. After reviewingthe framework set out in the proposedrule, EPA and HUD have revised andclarified the requirements in a numberof ways. First, the final rule containsnumerous minor changes to the wordingof definitions and requirements toclarify that the rule does not requiremass disclosure to all prospectivepurchasers, regardless of their degree ofinterest. Second, the rule requires thatcertain disclosure and acknowledgmentlanguage become part of the final sale orlease contract. In making these changes,EPA and HUD have considered thetypical negotiation process involved inleasing and sales transactions.

During sales transactions, forexample, purchasers often take the firststep toward formalizing a salesagreement by providing a written offerto purchase the housing. If accepted andsigned by the seller, this offer typicallybecomes the sales contract. The statute’smandate that disclosure and notificationtake place before the purchaser isobligated imposes a requirement on theseller to disclose information beforeaccepting the purchaser’s offer, therebyallowing the purchaser an opportunityto review the information and topossibly amend the offer. If a seller wereto accept a purchaser’s offer andobligate the purchaser before disclosingknown information, such a seller wouldbe in violation of Title X and this rule.Of course, the parties can always agreeto conduct the disclosure activities inadvance of contract discussions,provided that the final contract includesthe signed and dated disclosureelements mandated by this rule.

In leasing transactions, the disclosureprocess is even simpler. While theparties are free to negotiate when thedisclosure process occurs, lessors mustprovide the information and completethe disclosure portions of the lease (orattachment) before the lessee becomesobligated under a contract to lease thehousing. By requiring that thedisclosure information be included in oras an attachment to the lease, EPA and

HUD seek to ensure that the disclosureprocess automatically occurs duringlease negotiations.

The requirement that the contract oran attachment include disclosurelanguage fulfills two additionalfunctions. First, the process ofcompleting and signing these sectionsensures that all parties are aware of theirrights and obligations and are able toconfirm that the appropriate actionshave already occurred. Second, thisdisclosure language provides a clearrecord of compliance.

While sections 1018(a)(2) and (3)mandate lead warning language for allsales transactions, the inclusion of suchlanguage as an attachment to leases isnot specifically mandated by Title X.EPA and HUD, however, believe that itis necessary to include the warninglanguage in leases as well. Further, thecompletion and retention of disclosureand acknowledgment language is anecessary component of any effective,enforceable disclosure requirement forleasing transactions.

2. Components of full disclosure. EPAand HUD consider full disclosure tohave occurred when the seller or lessorhas provided the following items to thepurchaser or lessee.

a. A lead hazard informationpamphlet approved by EPA. As requiredby TSCA section 406, EPA hasdeveloped a lead hazard informationpamphlet, entitled Protect Your Familyfrom Lead in Your Home, and has madeit available through governmentchannels and private sources. EPAissued the final notice of the pamphlet’savailability in the Federal Register ofAugust 1, 1995 (60 FR 39167). Inaddition to providing detailedinformation on how to obtain copies(individually, in bulk, and as camera-ready reprints), the notice describes theprocess of developing the pamphlet,including considerable public reviewand comment.

The statute also allows States todevelop their own lead hazardinformation pamphlets under section406, provided that they obtainauthorization and approval from EPA.Several States that already havedisclosure provisions have expressedtheir desire to seek approval to use theirown pamphlets in lieu of the Federalpamphlet. EPA and HUD encourageStates interested in developing theirown materials to seek approval of theirpamphlets for distribution under thesection 1018 regulations.

b. Notice of the presence of knownlead-based paint and/or lead-basedpaint hazards. Sellers and lessors mustdisclose, based on their actualknowledge, whether the target housing


is known to contain lead-based paintand/or lead-based paint hazards. EPAand HUD received many comments onthe types of information underconsideration for disclosure under theserequirements. Many of the commentersexpressed concern that the proposedrule was too vague about whatconstituted ‘‘known information.’’ Forexample, did EPA and HUD intend forthe disclosure requirements todistinguish between information alreadyin the possession of the seller or lessorand information that could be obtainedonly by some further investigation orinference? Several commentersdescribed this distinction in terms ofactual knowledge (knowledge stemmingfrom existing facts and information)versus constructive knowledge(knowledge that could be inferred orobtained by further inquiry). Anexpectation that the property ownersmeet a constructive standard forknowledge could create an impliedtesting requirement.

While the Agencies hope to encouragelead hazard evaluation and reductionefforts through all of their regulatoryand non-regulatory programs, neitherAgency believes that Congress intendedto mandate additional lead hazardevaluation activities in private housing.EPA and HUD believe that Congressintended to limit the disclosureobligation to actual knowledge. Thefinal rule, therefore, embraces an actualknowledge standard as well. With thisclear standard, property owners andtheir agents will be able to takeaffirmative steps to comply fully withthe rule and be confident that they havemet the requirements of the law and itsimplementing regulations. EPA andHUD believe that such finality is anecessary part of this regulation, giventhe diverse makeup of the regulatedcommunity.

c. Provision of records and reports onlead-based paint and/or lead-basedpaint hazards available to the seller orlessor. As mandated by section1018(a)(1)(B), sellers and lessors must‘‘provide to the purchaser or lessee anylead hazard evaluation report availableto the seller or lessor.’’ EPA and HUDhave interpreted ‘‘available evaluationreports’’ to mean records and reportsthat pertain to lead-based paint and/orlead-based paint hazards in the targethousing and that are in the possessionof the seller or lessor or that arereasonably obtainable by the seller orlessor at the time of the disclosure.

During the proposed rule phase, EPAand HUD requested comment regardingthe disclosure of known lead-basedpaint and/or lead-based paint hazards inother units within target housing. EPA

and HUD received both supporting andopposing comments on thisrequirement. Opponents argued thatdistinct dwelling units can have verydifferent painting histories, makinginformation on one unit an unreliableindicator of other units. Proponentsargued that regardless of differences thatmay exist, the painting histories ofdifferent units in a building are usuallysimilar enough to provide valuableinformation for individuals consideringwhether lead hazard exposureprecautions are prudent.

EPA and HUD believe thatinformation and reports on other unitsin the target housing are directlyrelevant to prospective purchasers andlessees if the information stems fromevaluation or reduction efforts in thetarget housing as a whole. In largemultifamily properties, evaluations donot necessarily examine every dwellingunit in the housing. Rather, inspectorsor risk assessors examine arepresentative sample of the dwellingunits and apply the findings to thehousing as a whole. While suchevaluations might not include data on aspecific unit, the fact that the evaluationwas designed to provide information onthe housing as a whole makes thereport’s findings relevant.

The proposed rule also requestedcomment on whether sellers and lessorsshould have to disclose information onpast elevated blood-lead levels in otheroccupants of target housing. Based onthe comments and further deliberation,EPA and HUD decided against requiringdisclosure of medical information forseveral reasons. As commenters pointedout, lead exposure, elevated blood-leadlevels, or lead poisoning may come fromsources other than lead-based painthazards in the housing. Where elevatedblood-lead levels were determined tostem from lead-based paint hazards inthe housing, the follow-upenvironmental assessment activities inthe affected person’s housing will likelygenerate more germane recordsregarding lead-based paint exposurehazards in the housing.

Commenters also questioned whetherdisclosure requires the actual transfer ofall documentation from the seller orlessor, or whether simply making theinformation accessible for thepurchaser’s or lessee’s evaluation isadequate. Based on the mandate insection 1018(a)(1)(B), EPA and HUDbelieve that Congress clearly intendedfor purchasers and lessees to receivetheir own copies of the records andreports available to the seller or lessor.Therefore, the seller or lessor remainsobligated to provide copies of all

relevant materials to the purchaser orlessee.

d. Completed Lead WarningStatement and acknowledgmentlanguage, attached to the sales or leasecontract. This information, set out in 24CFR 35.92 and 40 CFR 745.113,documents the disclosure andacknowledgment process, and serves asthe primary confirmation tool for allparties in ensuring full compliance withthe regulatory requirements. Thisinformation is especially important incases where purchasers or lesseesconduct contract negotiations throughtheir own representatives (requiringsellers, lessors, or their agents toprovide documents to the representativeinstead of the purchaser or lessee). Insuch cases, the attachment provides arecord that sellers, lessors, and agentscan use to confirm that purchasers andlessees have received the necessarydisclosure materials.

The proposed rule required the use ofdisclosure forms as attachments to eachcontract to purchase or lease targethousing. These forms would haveserved as the key mechanisms fordocumenting compliance with therequirements. EPA and HUD carefullyconsidered the merits of each element,limiting the rule to informationnecessary for demonstrating fullcompliance.

The final rule includes some changesto the information that must be includedin the contract. Where the proposed rulerequired that sellers and lessors usefederally developed disclosure forms,the final rule provides greater flexibilityfor negotiating parties to develop theirown language, provided that it containsthe mandated elements. EPA and HUDeliminated the requirement that partiesuse a single form. Instead, the final rulemandates only the information elementsthat must be included withoutmandating specific formats or forms.

This flexibility is especially importantto States that have developed, or areconsidering developing, their owndisclosure requirements. During thecomment period, several Statesrequested that the final rule provideflexibility for States to merge their formswith the Federal form, eliminatingunnecessary duplication. Under thefinal rule, States and jurisdictions willbe able to make changes to the formatas necessary to retain consistency withState and local laws and customs.

The following is a discussion of therequired elements.

(i) Seller, agent, and purchaserrequirements. The final rule requiresthat each contract to sell target housinginclude an attachment containingspecific disclosure and acknowledgment


elements, in the language of the contract(e.g., English, Spanish). The elementsrequired are described below:

(A) The first required element is theLead Warning Statement, consisting ofthe following language:

Every purchaser of any interest inresidential real property on which aresidential dwelling was built prior to 1978is notified that such property may presentexposure to lead from lead-based paint thatmay place young children at risk ofdeveloping lead poisoning. Lead poisoning inyoung children may produce permanentneurological damage, including learningdisabilities, reduced intelligence quotient,behavioral problems, and impaired memory.Lead poisoning also poses a particular risk topregnant women. The seller of any interest inresidential real property is required toprovide the buyer with any information onlead-based paint hazards from riskassessments or inspections in the seller’spossession and notify the buyer of anyknown lead-based paint hazards. A riskassessment or inspection for possible lead-based paint hazards is recommended prior topurchase.

Congress mandated this language insection 1018(a)(3) of Title X. Whileseveral commenters recommendedproviding simpler language, EPA andHUD are constrained by the mandateand have retained the statement asproposed.

(B) The second required element is astatement disclosing the presence of anyknown lead-based paint and/or lead-based paint hazards in the targethousing or indicating no knowledge ofthe presence of lead-based paint and/orlead-based paint hazards. The sellermust also provide any additionalinformation available concerning theknown lead-based paint and/or lead-based paint hazards, such as the basisfor the determination that lead-basedpaint and/or lead-based paint hazardsexist in the housing, the location of thelead-based paint and/or lead-basedpaint hazards, and the condition of thepainted surfaces. The statement mustalso list all records and reportspertaining to lead-based paint and/orlead-based paint hazards that areavailable to the seller and that havebeen provided to the purchaser. If nosuch records or reports are available tothe seller, the statement must soindicate.

(C) The third element is a statementaffirming that the purchaser hasreceived the information noted inparagraph (B) above and the lead hazardinformation pamphlet required undersection 406 of TSCA (15 U.S.C. 2696).

The pamphlet described above may bethe Federal pamphlet entitled ProtectYour Family from Lead in Your Homeor a State-developed pamphlet that hasbeen approved by EPA.

(D) The fourth required element is astatement that the purchaser hasreceived a 10-day opportunity toconduct a risk assessment or inspectionfor the presence of lead-based paintand/or lead-based paint hazards (unlessthe parties have mutually agreed to adifferent period of time), beforebecoming obligated under the contractto purchase the housing. Alternatively,a purchaser who chooses to waive therisk assessment or inspectionopportunity must so indicate in writing.

(E) The fifth required element is astatement by any agent involved in thetransaction that the agent has informedthe seller of the seller’s obligationsunder 42 U.S.C. 4852d and that theagent is aware of his/her duty to ensurecompliance with the requirements ofthis rule.

(F) The sixth required element is thesignatures of the seller(s), agent(s), andpurchaser(s), certifying the accuracy oftheir statements on the attachment,along with their dates of signature.These signatures document theacceptance by the parties of theinformation they have provided on theattachment as a whole and alert thevarious parties to their respective rolesand responsibilities.

(ii) Lessor, agent, and lesseerequirements. Each contract to leasetarget housing must include thefollowing elements, as an attachment orwithin the contract, in the language ofthe contract (e.g., English, Spanish).

(A) The first required element is aLead Warning Statement with thefollowing language:

Housing built before 1978 may containlead-based paint. Lead from paint, paintchips, and dust can pose health hazards ifnot managed properly. Lead exposure isespecially harmful to young children andpregnant women. Before renting pre-1978housing, lessors must disclose the presenceof known lead-based paint and/or lead-basedpaint hazards in the dwelling. Lessees mustalso receive a federally approved pamphleton lead poisoning prevention.

EPA and HUD received a considerableamount of comment regarding thelanguage of the Lead Warning Statementused in the leasing disclosureattachment. EPA and HUD havedeveloped a modified Lead WarningStatement for leasing transactions thatuses simpler words and syntax than the

purchase warning statement required byTitle X.

(B) The second required element is astatement disclosing the presence of anyknown lead-based paint and/or lead-based paint hazards in the targethousing or indicating no knowledge ofthe presence of lead-based paint and/orlead-based paint hazards. The lessorshall also provide any additionalinformation available concerning theknown lead-based paint and/or lead-based paint hazards, such as the basisfor the determination that lead-basedpaint and/or lead-based paint hazardsexist; the location of the lead-basedpaint and/or lead-based paint hazards;and the condition of the paintedsurfaces. The statement must also listany records or reports pertaining tolead-based paint and/or lead-basedpaint hazards that are available to thelessor and that have been provided tothe lessee. If no such records or reportsare available to the lessor, the statementmust so indicate.

(C) The third required element is astatement affirming that the lesseereceived the information noted inparagraph (B) above and the lead hazardinformation pamphlet required undersection 406 of TSCA (15 U.S.C. 2686).

(D) The fourth required element is astatement by any agent involved in thetransaction that the agent has informedthe lessor of the lessor’s obligationsunder the law and that the agent isaware of his/her duty to ensurecompliance with the requirements ofthis rule.

(E) The fifth required element is thesignatures of the lessor(s), agent(s), andlessee(s), certifying the accuracy of theirstatements, along with their dates ofsignature. These signatures documentthe acceptance by the parties of theinformation they have provided as awhole and alert the various parties tothe roles and responsibilities of eachparty.

3. Sample disclosure attachments.Recognizing that many parties mayprefer having access to a sample format,EPA and HUD have developed sampledisclosure formats for sales and leasingcontracts for public reference. Thesesamples are not included in theregulatory text itself. Nothing in the rulerequires the use of these specific formatsif a seller or lessor wishes to develop aseparate format that includes all of therequired elements.


(Sample Disclosure Format for Target Housing Sales)

Disclosure of Information on Lead-Based Paint and/or Lead-Based Paint Hazards

Lead Warning StatementEvery purchaser of any interest in residential real property on which a residential dwelling was built prior to1978 is notified that such property may present exposure to lead from lead-based paint that may placeyoung children at risk of developing lead poisoning. Lead poisoning in young children may produce perma-nent neurological damage, including learning disabilities, reduced intelligence quotient, behavioral prob-lems, and impaired memory. Lead poisoning also poses a particular risk to pregnant women. The seller ofany interest in residential real property is required to provide the buyer with any information on lead-basedpaint hazards from risk assessments or inspections in the seller’s possession and notify the buyer of anyknown lead-based paint hazards. A risk assessment or inspection for possible lead-based paint hazards isrecommended prior to purchase.

Seller’s Disclosure(a) Presence of lead-based paint and/or lead-based paint hazards (check (i) or (ii) below):

(i)—— Known lead-based paint and/or lead-based paint hazards are present in the housing (explain).

—————————————————————————————————————————————(ii)——Seller has no knowledge of lead-based paint and/or lead-based paint hazards in the housing.

(b) Records and reports available to the seller (check (i) or (ii) below):(i)——Seller has provided the purchaser with all available records and reports pertaining to lead-basedpaint and/or lead-based paint hazards in the housing (list documents below).

—————————————————————————————————————————————(ii)—— Seller has no reports or records pertaining to lead-based paint and/or lead-based paint hazards inthe housing.

Purchaser’s Acknowledgment (initial)(c)——Purchaser has received copies of all information listed above.(d)——Purchaser has received the pamphlet Protect Your Family from Lead in Your Home.(e)——Purchaser has (check (i) or (ii) below):

(i)—— received a 10-day opportunity (or mutually agreed upon period) to conduct a risk assessment or in-spection for the presence of lead-based paint and/or lead-based paint hazards; or(ii)—— waived the opportunity to conduct a risk assessment or inspection for the presence of lead-basedpaint and/or lead-based paint hazards.

Agent’s Acknowledgment (initial)(f)——Agent has informed the seller of the seller’s obligations under 42 U.S.C. 4852d and is aware of his/her

responsibility to ensure compliance.

Certification of AccuracyThe following parties have reviewed the information above and certify, to the best of their knowledge, thatthe information they have provided is true and accurate.

—————————— —————————— ————————— —————————Seller Date Seller Date

—————————— —————————— ————————— —————————Purchaser Date Purchaser Date

—————————— —————————— ————————— —————————Agent Date Agent Date


(Sample Disclosure Format for Target Housing Rentals and Leases)

Disclosure of Information on Lead-Based Paint and/or Lead-Based Paint Hazards

Lead Warning StatementHousing built before 1978 may contain lead-based paint. Lead from paint, paint chips, and dust can pose

health hazards if not managed properly. Lead exposure is especially harmful to young children and preg-nant women. Before renting pre-1978 housing, lessors must disclose the presence of known lead-basedpaint and/or lead-based paint hazards in the dwelling. Lessees must also receive a federally approvedpamphlet on lead poisoning prevention.

Lessor’s Disclosure(a) Presence of lead-based paint and/or lead-based paint hazards (Check (i) or (ii) below):

(i)—— Known lead-based paint and/or lead-based paint hazards are present in the housing (explain).

————————————————————————————————————(ii)——Lessor has no knowledge of lead-based paint and/or lead-based paint hazards in the housing.

(b) Records and reports available to the lessor (Check (i) or (ii) below):(i)—— Lessor has provided the lessee with all available records and reports pertaining to lead-based paintand/or lead-based paint hazards in the housing (list documents below).

—————————————————————————————————————(ii)——Lessor has no reports or records pertaining to lead-based paint and/or lead-based paint hazards inthe housing.

Lessee’s Acknowledgment (initial)(c)——Lessee has received copies of all information listed above.(d)——Lessee has received the pamphlet Protect Your Family from Lead in Your Home.Agent’s Acknowledgment (initial)

(e)——— Agent has informed the lessor of the lessor’s obligations under 42 U.S.C. 4852d and is aware ofhis/her responsibility to ensure compliance.

Certification of AccuracyThe following parties have reviewed the information above and certify, to the best of their knowledge, that

the information they have provided is true and accurate.

—————————— —————————— —————————— —————————Lessor Date Lessor Date

—————————— —————————— —————————— ————————Lessee Date Lessee Date

—————————— —————————— —————————— —————————Agent Date Agent Date


4. Recordkeeping requirements. EPAand HUD have retained therecordkeeping requirements under thisrule largely as proposed. The seller andany agent are required to retain a copyof the completed disclosure andacknowledgment contract attachment(discussed below), required under§§ 35.92(a) and 745.113(a), for 3 yearsfrom the completion date of the sale.Similarly, the lessor and any agent arerequired to retain a copy of thecompleted lease or attachment, requiredunder § 35.92(b) and § 745.113(b) of thisrule for 3 years from the commencementof the leasing period. EPA and HUDhave determined that a 3-year period isan appropriate amount of time to ensurecompliance with the requirements ofTitle X and to support Federalcompliance monitoring efforts. Thisrecordkeeping requirement is notintended to place any limitations oncivil suits under Title X or to otherwiseaffect a lessee’s or purchaser’s rightsunder the civil penalty provisions ofsection 1018(b)(3) of Title X.

EPA and HUD requested comment onwhether the rule should include anadditional recordkeeping provisionrequiring that property owners retain allrecords and reports of lead-based paintand/or lead-based paint hazards in thehousing for the length of theirownership. Based on the statute’s use ofthe term ‘‘available’’ lead hazardevaluation reports, EPA and HUD havedetermined that a specificrecordkeeping requirement for suchreports is beyond the scope of thisregulation. EPA and HUD have,however, clarified ‘‘available’’ leadhazard evaluation reports to encompassrecords and reports in the possession ofthe seller or lessor or reasonablyobtainable by the seller or lessor at thetime of the disclosure. This approachrecognizes that third parties may insome cases play an independentrecordkeeping role for the seller orlessor.

While the Agencies do not mandatethe retention of these records, EPA andHUD encourage sellers and lessors toretain relevant records in anticipation offuture sale or lease. The informationprovided can help purchasers andoccupants take exposure preventionprecautions during later ownership oroccupancy. The requirement to disclosethe presence of known lead-based paintand/or lead-based paint hazards remainseven if the seller or lessor is unable tolocate the original reports quantifyingthe data. Section 1018 requires sellersand lessors to both (1) disclose thepresence of known lead-based paintand/or lead-based paint hazards in thehousing and (2) provide available

written records and reports to thepurchaser or lessee. By mandating thatboth actions occur, Congress recognizedthe distinction between the two actions,and the fact that the seller or lessormight have actual knowledge of lead-based paint and/or lead-based painthazards above and beyond that presentin available reports.

5. Failure to fully disclose beforeratification of contracts. As mandatedby Title X, the disclosure ofinformation, the provision of the leadhazard information pamphlet, and thepurchaser’s opportunity to conduct arisk assessment or inspection mustoccur before the purchaser or lesseebecomes obligated under any contract topurchase or lease the dwelling. Section1018(c) prohibits regulatory provisionsthat would ‘‘affect the validity orenforceability of any sale or contract forthe purchase and sale or lease of anyinterest in residential real property orany loan, loan agreement, mortgage, orlien made or arising in connection witha mortgage loan’’ and states that nothingin the rule ‘‘shall create a defect intitle.’’ The disclosure requirementscontained in this rule must occur priorto contract ratification and, as such, donot affect the validity of the subsequentcontract. Nor does failure to conductfull disclosure before sale or lease affectthe validity of the sales or leasingcontract itself. Rather, purchasersseeking remedy for the non-disclosuremay avail themselves of the civilremedies afforded by section 1018 ofTitle X.

6. Opportunity to conduct a riskassessment or inspection. Section1018(a) requires that sellers providepurchasers with a 10-day opportunity toconduct a risk assessment or inspectionfor the presence of lead-based paintand/or lead-based paint hazards beforebecoming obligated under a purchasecontract. The length of time may beshortened or lengthened by mutualagreement. In the proposed rule, EPAand HUD offered several approaches forimplementing this provision of section1018: (1) Establishing Federal standardsfor the implementation of the evaluationperiod, providing flexibility foradjustment by mutual consent; (2)limiting the regulatory text to thestatutory language, thereby maximizingthe discretion of the two parties innegotiating the terms; (3) codifyingcontract contingency language for use incomplying with the final rule; and (4)establishing requirements for providingevaluation opportunities before thepreparation of contracts.

Recognizing that home inspections forvarious hazards and housing defects arecommon occurrences during housing

transactions around the country, EPAand HUD believe that the market canincorporate this requirement into futuretransactions without detailed regulatorylanguage. The final rule, therefore,steers away from the proposed rule’spreferred approach of codifying Federalstandards for the performance of the 10-day evaluation period provision.

However, EPA and HUD alsorecognize that some private sellers maychoose to conduct their housing saleswithout the aid of a trained agent andmay lack familiarity with the standardprocesses for conducting suchevaluations in the sales transaction. Forsuch persons, EPA and HUD areproviding the following discussion ofseveral likely approaches forimplementing this provision.

First, some purchasers may choose towaive the opportunity for a riskassessment or inspection. Purchasersmay be especially inclined to waive theopportunity in cases where the sellerprovides significant amounts of relevantinformation on the property during thedisclosure process, or in cases where nochildren are expected to reside in thehousing. If the purchaser chooses towaive the evaluation opportunity, thepurchaser is still obligated toacknowledge receipt of the evaluationopportunity on the attachment,documenting this voluntary decision towaive the opportunity.

EPA and HUD expect that in mostcases where the purchaser chooses toexercise his or her evaluationopportunity, the parties will developand incorporate into the contractmutually agreeable terms for theconduct and completion of theevaluation opportunity. The final ruleprovides sellers and purchasers withbroad flexibility to develop terms forperforming the risk assessment orinspection.

As many commenters noted, homeinspections are already common aspectsof housing transactions. Frequently,these inspections are incorporated intothe sales contracts as contingencyclauses, providing mutual agreement onthe timing, terms, and conduct of theinspection. Common terms addressed inthese clauses include: (i) The startingand ending day of the inspection period;(ii) any contingencies and conditionstied to the contract regarding theinspection period; (iii) the process forremoving any contingency or conditionfollowing the completion of theinspection; and (iv) the disposition ofany earnest money provided by thepurchaser before the opportunity toinspect. This general framework is onepossible approach that parties canconsider when developing mutually


agreeable terms for the evaluationperiod required by section 1018(a) ofTitle X.

While most commenters stressed theimportance of providing flexibility forthe parties to develop mutually

agreeable evaluation terms, many alsorecommended the inclusion of samplelanguage as a reference. For the purposeof providing guidance on creatingcontract language, EPA and HUD haveincluded the following sample contract

contingency clause for optional use.This language is offered as a sampleonly, and nothing in this rule imposesa requirement on either party to acceptor reject this language in the current ormodified form.

Sample Contract Contingency Language

This contract is contingent upon a risk assessment or inspection of the property for the presence of lead-based paint and/or lead-based paint hazards at the Purchaser’s expense until 9 p.m. on the tenth cal-endar-day after ratification [Insert date 10 days after contract ratification or a date mutually agreed upon].(Intact lead-based paint that is in good condition is not necessarily a hazard. See the EPA pamphlet Pro-tect Your Family From Lead in Your Home for more information.) This contingency will terminate at theabove predetermined deadline unless the Purchaser (or Purchaser’s agent) delivers to the Seller (or Sell-er’s agent) a written contract addendum listing the specific existing deficiencies and corrections needed,together with a copy of the inspection and/or risk assessment report. The Seller may, at the Seller’s op-tion, within ——— days after Delivery of the addendum, elect in writing whether to correct the condition(s)prior to settlement. If the Seller will correct the condition, the Seller shall furnish the Purchaser with certifi-cation from a risk assessor or inspector demonstrating that the condition has been remedied before thedate of the settlement. If the Seller does not elect to make the repairs, or if the Seller makes a counter-offer, the Purchaser shall have ——— days to respond to the counter-offer or remove this contingency andtake the property in ‘‘as is’’ condition or this contract shall become void. The Purchaser may remove thiscontingency at any time without cause.

E. Agent Responsibilities

Title X specifically addresses theresponsibilities of agents, requiringthem to ensure compliance with theprovisions of the law. Agents fulfill thisrequirement by informing sellers orlessors of their obligations and bymaking sure that these activities arecompleted either by the seller or lessoror by the agent personally. Accordingly,24 CFR 35.94(b) and 40 CFR 745.107(c)identify the seller’s affirmative duty todisclose to the agent any known lead-based paint and/or lead-based painthazards on the property. Provided thatthe agent has actually informed theseller or lessor of his/her obligation, thefinal rule notes that the agent will notbe responsible for information withheldfrom the agent by the seller or lessor.

V. Non-Compliance and EnforcementEPA and HUD received considerable

comment on the enforcement provisionsdiscussed in the statute and theproposed rule. Many commentersrequested more guidance regarding theAgencies’ plans for enforcement of theprovisions, as well as assurances thatthe Agencies recognize the importanceof active education and outreach to theregulated community. As allenforcement authority for EPA and HUD

derives directly from the authorizingstatutory language, both the proposedrule and the final rule containenforcement language that is essentiallythe same as language provided in TitleX and TSCA. The following is adiscussion of the general enforcementauthority provided by Congress, alongwith some discussion of the process thatEPA and HUD will use in developing asensible, effective enforcementapproach.

A. HUD Authority

Section 1018(b)(1) of Title Xauthorizes HUD to impose civilmonetary penalties on any person whoknowingly violates section 1018. Thisauthority applies to violations of thisfinal rule as well. HUD can imposepenalties under section 102 of theDepartment of Housing and UrbanDevelopment Reform Act of 1989 (42U.S.C. 3545). These penalties may be upto $10,000 for each violation. Inaddition, section 1018(b)(2) of Title Xauthorizes the Secretary to ‘‘take suchlawful action as may be necessary toenjoin any violation’’ of the law’sprovisions.

B. EPA Authority

1. Civil. Section 1018(b)(5) of Title Xprovides that failure or refusal tocomply with section 1018 or itsimplementing regulations is a violationof TSCA section 409. Violations ofTSCA section 409 are subject to TSCAsection 16 penalties. Thus, a violator ofsection 1018 can be subject to thepenalty provisions under TSCA section16 of up to $10,000 for each violation.

2. Criminal. TSCA section 16(b)provides that any person whoknowingly or willfully violates section409 (and thus section 1018) could, inaddition to or instead of any civilpenalty, be subject, upon conviction, toa fine of not more than $25,000 for eachday of violation or to imprisonment fornot more than 1 year, or both. For thepurposes of enforcement under section1018, Congress has modified theapplication of TSCA section 16, limitingthe fine to $10,000 ‘‘for each violation.’’

C. Enforcement Responses

Because the enforcement provisionsof section 1018 are clearly set forth inthe statute, the final rule retains largelyunchanged the discussion of theenforcement authority.

However, it is EPA’s and HUD’s intentthat outreach and compliance assistance


will be a major component of thesection 1018 compliance program sothat individuals are fully informed ofthe new requirements and theirobligations. EPA and HUD also intendto bring clarity and predictability to theenforcement process for section 1018, inacknowledgment of the large anddiverse population affected by this rule.Concurrent with this rule’s release, EPAwill issue a short ‘‘Statement ofApproach’’ as it relates to ensuringcompliance with the requirements ofsection 1018, for the information of thegeneral public. This informationaldocument will discuss the Agency’sapproach to the section 1018compliance assurance program. EPA isalso developing a policy for use by EPAenforcement personnel to achieve acommon sense result between aparticular violation of section 1018 anda particular enforcement response. Thispolicy includes, but is not limited to,issuing notices of warning (withoutpenalties) as appropriate to let peopleknow that they are out of complianceand to give them an opportunity tocome into compliance, whilemaintaining provisions that will ensurethat willful and repeat violators areappropriately penalized. This result isreached in the context of an‘‘Enforcement Response Policy’’ (ERP),which EPA is developing separately forthis rule.

Regarding HUD enforcement actions,HUD’s civil money penalty proceduresare set out in 24 CFR part 30. Theseprocedures include notices of intent torequest civil money penalties, civilmoney penalty panels, administrativehearings and appeals, judicial review,and collection of penalties. A civilmoney penalty panel developsguidelines to determine the appropriatepenalty for a violation of section 1018.These guidelines include the followingfactors: the gravity of the offense,awareness of procedures, any history ofprior offenses, the ability to pay thepenalty, the injury to the public, anybenefits received by the violator, anypotential benefits to other persons,deterrence of future violators, theviolator’s culpability, and such othermatters as justice may require.

D. Civil Liability--Direct CompensationIn addition to the EPA and HUD

enforcement authority for the provisionsof this final rule, section 1018(b)(3) ofTitle X states that ‘‘[A]ny person whoknowingly violates the provisions ofthis section shall be jointly andseverally liable to the purchaser orlessee in an amount equal to 3 times theamount of damages incurred by suchindividual.’’ This provision allows the

purchaser or lessee to seek directcompensation for any damages incurredbased on the seller’s or lessor’snoncompliance. Section 1018(b)(4)authorizes the court to award courtcosts, reasonable attorney fees, andexpert witness fees to a prevailingplaintiff.

E. Validity of Contracts and Liens

Section 1018(c) provides that nothingin section 1018 (or its implementingrules) ‘‘shall affect the validity orenforceability of any sale or contract forthe purchase and sale or lease of anyinterest in residential real property orany loan, loan agreement, mortgage, orlien made or arising in connection witha mortgage loan. . . .’’ It also providesthat nothing in section 1018 (or itsimplementing rules) shall ‘‘create adefect in title.’’

EPA and HUD have looked at section1018(c) in the context of other section1018 provisions, which outline specificclauses that must be attached tocontracts for the purchase and sale oftarget housing and specific proceduralprotections that must be given to thepurchaser or lessee.

The provisions of section 1018 cannotvoid or nullify the contract afterratification and cannot void any transferof real estate, even if it can be proventhat the seller or lessor violated section1018 provisions. In such circumstances,the purchaser or lessee is limited to theremedies provided in section 1018. Ofcourse, traditional causes of actionunder State law would still exist, andpossibly could be applied to somesection 1018 violations. Also, violationsof section 1018 could be subject to civiland criminal penalties administered byEPA and HUD under section 1018(b).

VI. Federal Effect on State and LocalDisclosure Requirements

Several commenters noted that someStates and municipalities already haverequirements for the disclosure ofinformation on lead-based paint inhousing. In developing the Federaldisclosure requirements, several keyquestions have been raised regardingsuch programs: (1) Can States obtainauthorization to administer and enforcetheir programs in lieu of the Federalprogram? and (2) What effect do theFederal requirements have on the abilityof States to run their own programs?

EPA and HUD have determined thatTitle X does not provide authority todelegate the administration andenforcement of these section 1018requirements to State programs. Wheresuch authority to authorize Stateprograms was anticipated by Congress

(as in TSCA section 402), Congressprovided specific authority.

Where possible, EPA and HUD havedeveloped these requirements to make itpossible for State and Federalrequirements to complement each other.For example, EPA and HUD had Stateprograms in mind when addingflexibility in the development ofdisclosure and acknowledgmentattachments.

Finally, nothing in this rule isintended to relieve a seller, lessor, oragent from any responsibility forcompliance with State or local laws,ordinances, codes, or regulationsgoverning notice or disclosure of knownlead-based paint and/or lead-basedpaint hazards.

VII. Summary of Regulatory ImpactAnalysis

EPA and HUD have prepared aRegulatory Impact Analysis (RIA) thatexamines the potential costs, benefits,and impacts of regulations for thedisclosure of known lead-based painthazards in residential property upon thetransfer of the property for sale or rental.The analysis is presented in fivesections:

• Background and Framework forAnalysis

• Profile of Sectors Affected• Estimated Costs to Private Parties

and Government• Effect of the Lead-Based Paint

Hazard Disclosure Rule for Real EstateTransfers on Small Businesses—Regulatory Flexibility Analysis

• Assessment of Benefits

A. Background and Framework forAnalysis

Those parties directly affected by therule are the seller, lessor, agent,property manager, purchaser, andlessee. The required activities thatimpose regulatory burden on theaffected parties fall into four categoriesfor cost estimation purposes:

1. Start-up costs, which includelearning the rule’s requirements andestablishing compliance procedures;

2. Disclosure costs, which refer to thecosts resulting from the actual transferof information and obtaining neededsignatures;

3. Recordkeeping costs, which resultprincipally from the requirement thatsigned acknowledgment forms must beretained by the provider of theinformation; and

4. Materials costs, which are linkedprimarily to the disclosure requirement,as the lead hazard information pamphletmust be purchased or photocopied(acknowledgment forms must also beduplicated). Costs may also be incurred


for filing where a large number ofacknowledgment statements ordocuments for disclosure are generated(e.g., by agents), though such burdenwas estimated to be quite modest.

The requirements of section 1018 ofthe Act fall primarily on the seller orlessor of ‘‘target housing,’’ which isdefined to be any housing constructedprior to 1978, except housing for theelderly or persons with disabilities(unless any child who is less than 6years of age resides or is expected toreside in such housing) or any 0-bedroom dwelling. However, if an agentor property manager acts on behalf ofthe seller or lessor, which EPA and HUDhave estimated to be the case in mosttransfers, responsibilities to ensurecompliance fall to such agents ormanagers as well.

To estimate the impacts of the rule,EPA and HUD sought data pertaining tothe number of affected parties in eachclassification listed above, the frequencywith which affected purchase and leasetransactions are completed, and theincremental costs, in labor andmaterials, added to each transaction bythe regulations.

B. Profile of Sectors AffectedThe larger of the two affected sectors

expected to bear the principal effects of

the rule falls within Standard IndustrialClassification (SIC) code 651, RealEstate Operators and Lessors. EPAestimates there to be 92,000establishments potentially affected bythe rule. Also affected are businessestablishments falling within SIC code653, Real Estate Agents and Managers.An additional 92,000 establishmentscould be affected by the rule in thissector.

Employment data were obtained forthe occupations most likely to beinvolved in transactions subject to therule. EPA and HUD estimate that324,000 real estate agents and 243,000property managers will be affected.

With regard to transaction volume, 2.9million sales transactions and 9.3million rental transactions wereestimated to occur annually in targethousing.

C. Estimated Costs to Private Parties andGovernment

Table 1 below summarizes theestimated annual costs associated withthe rule. The four costs to privateparties, or compliance costs, arediscussed briefly below. Costs togovernment represent ruleadministration activities.

The first private party cost category,start-up costs, represents about one-

third of overall annual compliancecosts. Factors affecting the magnitude ofthese costs include the number ofemployees having to familiarizethemselves with the regulations, bothinitially (employees in the existingworkforce) and over time (new entrantsto the affected sectors); the timerequired to learn the activities that mustbe undertaken in order to comply; andthe hourly compensation of affectedemployees.

As Table 1 shows, disclosure eventcosts constitute the greatest portion ofoverall compliance costs. Factorsaffecting the magnitude of these costsinclude the frequencies of regulatedevents; the time involved in performingrequired activities, such as providing tothe prospective purchaser/lessee therequired information and obtaining therequired signatures; and the hourlycompensation of all involved parties.EPA and HUD also took into account thefact that a number of States have similarrequirements pertaining to informationtransfer regarding potential lead hazardsin the sale of residential property. Thus,an allowance was made in the burdenestimates for transactions occurring insuch States to reflect a certain level ofcurrent compliance.

Table 1—Summary of Annual Costs of the Disclosure Rule for Residential Property Transfer

Estimated Annual Costs to Private Parties - Sales TransactionsStart-up Costs* $25.8 millionDisclosure Event Costs 20.2 millionRecordkeeping Costs 0.6 millionMaterials Costs 2.8 million

Total for Sales Transactions: $49.4 millionEstimated Annual Costs to Private Parties - Rental TransactionsStart-up Costs* $ 1.1 millionDisclosure Event Costs $25.6 millionRecordkeeping Costs $1.9 millionMaterials Costs $3.4 million

Total for Rental Transactions: $32.0 million

Total Estimated Annual Costs to Private Parties: $81.4 millionCosts to GovernmentLow Estimate $2.4 millionHigh Estimate $4.3 millionTotal Estimated Annual Costs:Based on Low Estimate of Government Costs: $83.8 millionBased on High Estimate of Government Costs: $85.7 million* First-year costs annualized at 3 percent rate over 6 years.

Recordkeeping and materials costsaccount for a relatively modest share of

overall annual costs. Factors affectingthe magnitude of these costs include the

number of affected parties pertransaction; the frequency of


transactions, the costs of acquiring/duplicating documents, which includethe lead hazard information pamphletand signed acknowledgment forms; andcosts to maintain documents.

Additional, indirect costs resultingfrom actions taken by consumers inresponse to the information madeavailable by the rule were notquantified, for reasons detailed in UnitVII.E. of this preamble.

To administer the final regulation,resources will be required to conduct anumber of activities, including:inspections; violation case management;establishment and maintenance ofcooperative agreements; complianceassistance, development of performancemeasurement criteria; and management.

D. Effect of the Lead-Based PaintHazard Disclosure Rule for Real EstateTransfers on Small Businesses--Regulatory Flexibility Analysis

EPA and HUD investigated thepotential impacts of the rule on smallbusinesses and have prepared aRegulatory Flexibility Analysis (RFA).Although a large number of smallestablishments may be affected by therule, cost impacts were not found to beof sufficient magnitude to cause undueharm to such establishments. The RFAis summarized separately in Unit X.B. ofthis preamble.

E. Assessment of BenefitsThe market imperfection that the rule

is intended to correct is the lack ofinformation available to prospectivehome purchasers and lessees concerninglead-based paint hazards in homes theymay be considering for purchase or rent.Under the rule, general informationabout the risks associated with lead-based paint will be provided throughthe provision of a brochure. Whenavailable, information about thepresence of or abatement of lead in thespecific unit being considered forpurchase or rent must also be disclosed(e.g., information concerning previoustesting for the presence of lead-basedpaint, abatement history, etc.). Thefailure of the marketplace to providethis information or to provideprospective home purchasers andlessees the opportunity to develop suchinformation means that prospectivepurchasers and lessees might purchaseor lease a property, or make pricing orrental payment decisions regardingproperties, without understandingpossible lead-related health risks or riskmanagement costs accompanying thetransaction.

EPA and HUD expect that thisrulemaking will generate benefits bygiving prospective home purchasers and

lessees access to information that mightotherwise have been unavailable (e.g.,information pertaining to abatementactivities for a specific residence) or thatthey might have been able to acquireonly through their own effort and atsome cost. In addition, EPA believes theinformation will generate healthbenefits by leading many purchasersand lessees to modify their behavior ina way that will reduce risks from lead-based paint. For example, purchaserscould undertake abatement activitiessubsequent to taking ownership of adwelling, change household cleaningpractices, or request professionalassistance when undertaking renovationactivities. The rule may also promptproperty owners, due to reluctance onthe part of prospective purchasers/lessees to select housing containinglead-based paint, to act to reduce lead-related hazards associated with theirresidential dwellings. Health benefitsresulting from such activities aredistinguishable from the more directbenefits of the rule, i.e., the value ofimproved information. Further, in caseswhere action is taken to remediate alead-based paint hazard, additionalcosts would be incurred, and wouldhave to be subtracted from the expectedbenefits associated with theremediation.

EPA and HUD note that the regulationdoes not require actions to reduce lead-based paint hazards in residentialhousing. Thus, the extent to which leadexposure decreases depends upon howtransaction participants (i.e., sellers/lessors and prospective purchasers/lessees) value and respond to theadditional information.

The RIA details three approaches thatare evolving and that can be seen as astarting point in an effort to expand thelevel of understanding of how benefitsfrom information products can bevalued. However, an information baseand the associated accepted analyticalmethods necessary to predict consumerreaction to information products onlead-based paint hazards are not readilyavailable; thus, quantifying the expectedbenefits of this rule, either in terms ofefficiency gains from improveddecisionmaking or risk reduction,would be extremely difficult. Given thehigh level of uncertainty associated withthe results from such a quantitativeanalysis, and given the prescriptivenature of section 1018 of the Act, EPAand HUD believe that the informationprovided in the qualitative analysispresented in the RIA served to informdecisionmaking.

VIII. Rulemaking RecordA record for this final rule has been

established for both EPA and HUDunder docket number ‘‘OPPTS-62130.’’The public version of this record forboth agencies (which does not containany information claimed as ConfidentialBusiness Information) is available forinspection from 12 noon to 4 p.m.,Monday through Friday, excluding legalholidays. The public record is located inEPA’s TSCA NonconfidentialInformation Center (NCIC), Rm. NE-B607, 401 M St., SW., Washington, DC20460.

The docket contains reference worksthat EPA and HUD referred to indeveloping this regulation. In addition,other documents, including theRegulatory Impact Analysis, InformationCollection Request, and copies of allcomments on the proposed rule, areincluded in the docket for publicreview. The draft of the final rulesubmitted by EPA and HUD to OMB forreview prior to the final rule’spromulgation will also be contained inthe docket.

IX. References1. Alliance to End Childhood Lead

Poisoning, 1991. Preventing ChildhoodLead Poisoning: The FirstComprehensive National Conference;Final Report. Washington, DC.

2. CDC, 1991. U.S. Centers for DiseaseControl and Prevention, Preventing LeadPoisoning in Young Children: AStatement by the Centers for DiseaseControl. Atlanta, GA.

3. CPSC, 1977. Notice ReducingAllowable Levels of Lead in Lead-BasedPaint. Federal Register. September 1,1977: 42 FR 44199.

4. EPA, 1995. U.S. EnvironmentalProtection Agency, Report on theNational Survey of Lead-Based Paint inHousing: Base Report. Washington, DC:EPA747-R95-003.

5. HUD, 1995. U.S. Department ofHousing and Urban Development, TaskForce on Lead-Based Paint HazardReduction and Financing, Putting thePieces Together: Controlling LeadHazards in the Nation’s Housing: FinalReport. Washington, DC: HUD-1542-LBP.

6. HUD, 1990. Lead-Based Paint;Interim Guidelines for HazardIdentification and Abatement in Publicand Indian Housing; Notice. FederalRegister. April 18, 1990: 55 FR 14556.

7. HUD, 1995. Department of Housingand Urban Development, Guidelines forthe Evaluation and Control of Lead-Based Paint Hazards in Housing.Washington, DC.

8. Pirkle, 1994. Pirkle, J.L., D.J. Brody,E.W. Gunter, R.A. Kramer, D.C. Paschal,


K.M. Flegal, T.D. Matte, The Decline inBlood Lead Levels in the United States.Journal of the American MedicalAssociation, 272(4): 284-291.

X. Regulatory AssessmentRequirements

A. Executive Order 12866

Pursuant to Executive Order 12866(58 FR 51735, October 4, 1993), it hasbeen determined that this is a‘‘significant regulatory action’’ becauseof potential novel legal or policy issuesarising out of the new legal mandatesthis action implements. This action wassubmitted to OMB for review, and anycomments or changes made during thatreview have been documented in thepublic record.

In addition, EPA and HUD haveprepared a Regulatory Impact Analysis(RIA) in conjunction with their leadinformation disclosure rule for realestate transfers. EPA and HUD find thatthe rule will not have an effect on theeconomy of $100 million or more, willnot result in major increases in costs orprices, and is not anticipated to havesignificant adverse effects oncompetition, employment, investment,or productivity in the relevant sectors.

EPA and HUD estimate the overallcosts to affected entities to be $81.4million and costs to government torange from $2.4 to $4.3 million. Theseestimates include costs for rulefamiliarization, information disclosureand obtaining required signatures,recordkeeping, materials costs, andgovernment administration costs. EPAand HUD estimate that the provisions ofthe rule will add about $2.00 to $6.00to the cost of each transaction.

A copy of the RIA is available in theTSCA Public Docket Office for reviewand public comment. For informationon the public docket, see Unit VIII. ofthis preamble, entitled RulemakingRecord.

B. Regulatory Flexibility Act

The Regulatory Flexibility Act (5U.S.C. 601 et seq.) requires Federalagencies to consider whether aregulatory action will have an adverseeconomic impact on small entities.Section 605(b) requires the agencies toeither certify that the regulatory actionwill not have a significant economicimpact on a substantial number of smallentities, or prepare a RegulatoryFlexibility Analysis. Under the EPApolicy that implements the RegulatoryFlexibility Act, EPA performs aRegulatory Flexibility Analysiswhenever a regulatory action isanticipated to have any economicimpact on any small entities, and will

also seek to involve these small entitiesin the development of the regulatoryaction to the extent possible. As such,in an effort to identify and characterizethe rule’s effects on small business, EPAand HUD have prepared a RegulatoryFlexibility Analysis. This assessmenthas been included as part of the RIA andis summarized below.

In preparing the RFA, EPA and HUDfirst developed an establishment profilefor each major sector (SIC 651 and SIC653). This profile indicated thatapproximately 75 percent of allestablishments in SIC 651 (Real EstateOperators and Lessors) andapproximately 73 percent of allestablishments in SIC 653 (Real EstateAgents and Managers) fell within the 1to 4 employee size class. Theseproportions increased to 90 percent and87 percent, respectively, whenemployee size class 1 to 9 wasexamined.

To measure the cost impacts of therule on these small establishments,representative or model establishmentswere designed. These modelestablishments corresponded to typicalestablishments in each affected sector,with respect to number of employeesand annual transaction volume. Sincetransaction activity was reported to varywidely, a range of transaction volumewas estimated for each establishmenttype.

For each model establishment, annualregulatory costs were then calculatedand compared to annual labor andoverhead costs. Ratios were computedfor both high and low estimates of therange of transaction activity. In the caseof a real estate sales organization,regulatory costs were found to representfrom 0.20 to 0.42 percent of labor andoverhead costs. In the case of a rentalestablishment, impacts were slightlyhigher, ranging from 0.21 to 0.47percent. An establishment engaged inboth activities was projected to sustainimpacts of 0.28 to 0.63 percent.

Thus, while a large number of smallestablishments will be potentiallyaffected by the rule, cost impacts werenot found to be of sufficient magnitudeto cause undue harm to suchestablishments. Consequently, noregulatory alternatives are beingproposed in connection with smallbusiness impacts.

C. Paperwork Reduction ActThe information collection

requirements in this rule have beensubmitted for approval to the Office ofManagement and Budget (OMB) underthe Paperwork Reduction Act, 44 U.S.C.3501 et seq. An Information CollectionRequest (ICR) document has been

prepared by EPA (EPA ICR No. 1710.02)and a copy may be obtained from SandyFarmer, OPPE Regulatory InformationDivision, Environmental ProtectionAgency (2136), 401 M St., SW.,Washington, DC 20460 or by calling(202) 260-2740. The informationrequirements are not effective untilOMB approves them.

The information collectionrequirements of this rule apply tosellers, lessors, and agents of targethousing. Before selling or leasing targethousing, the following informationcollection activities must occur: (1)Disclosure of known lead-based paintand/or lead-based paint hazards; (2)provision of any available records andreports pertaining to lead-based paint inthe housing; (3) provision of a federallyapproved lead hazard informationpamphlet; (4) completion andsubsequent retention of disclosure andacknowledgment language for 3 years,and (5) provision of a 10-day evaluationopportunity to purchasers beforeobligation under purchase contracts(this time period can be adjusted orwaived by mutual consent).

These requirements will help to: (1)Ensure that purchasers and renters ofolder housing make informed housingand maintenance decisions before theybecome obligated under purchase orlease contracts; (2) ensure that allparticipants in target housing sales andleasing transactions fully understandtheir rights and obligations undersection 1018 and the implementingregulations; (3) document thecompletion of all disclosure activities bythe responsible parties; and (4) providea record of compliance for use by EPAand HUD enforcement officials. Underthe authority of section 1018 of Title X,the information collection requirementsof this rule are mandatory for allapplicable sales and leasingtransactions.

The annual costs to private parties tocomply with the requirements of therule are estimated to be $81.4 million,with an associated burden of 7.1 millionhours. Annual costs may be brokendown into two components:Initialization or start-up costs, estimatedto be $26.9 million (annualized at 3percent over 3 years); and costs forinformation disclosure and maintenanceof records, estimated to be $54.5million. Annual burden is estimated tobe distributed among 35.1 millionresponses, averaging 12.2 minutes perresponse. The number of respondents isestimated to be 15.5 million. Burdenmeans the total time, effort, or financialresources expended by persons togenerate, maintain, retain, or disclose orprovide information to or for a Federal


agency. This includes the time neededto review instructions; develop, acquire,install, and utilize technology andsystems for the purposes of collecting,validating, and verifying information,processing and maintaininginformation, and disclosing andproviding information; adjust theexisting ways to comply with anypreviously applicable instructions andrequirements; train personnel torespond to a collection of information;search data sources; complete andreview the collection of information;and transmit or otherwise disclose theinformation.

An Agency may not conduct orsponsor, and a person is not required torespond to, a collection of informationunless it displays a currently valid OMBcontrol number. The OMB controlnumbers for EPA’s regulations are listedin 40 CFR part 9 and 48 CFR Chapter15. Upon OMB approval, EPA will issuea notice in the Federal Register toannounce OMB’s approval and to makea technical amendment to include areference to this approval in 40 CFR part9.

Send comments on the burdenestimates and any suggested methodsfor minimizing respondent burden,including through the use of automatedcollection techniques, to the Director,OPPE Regulatory Information Division,Environmental Protection Agency(2136), 401 M St., SW., Washington, DC20460, and to the Office of Informationand Regulatory Affairs, Office ofManagement and Budget, 725 17th St.,NW., Washington, DC 20503, marked‘‘Attention: Desk Officer for EPA.’’Include the ICR number in anycorrespondence.

D. Environmental Impact

In accordance with 40 CFR 1508.4 ofthe regulations of the Council onEnvironmental Quality and 24 CFR50.19 and 50.20(o)(2) of the HUDregulations, the policies and procedurescontained in this final rule relate onlyto information services and are,therefore, categorically excluded fromthe requirements of the NationalEnvironmental Policy Act.

E. HUD’s Regulatory Agenda

This rule was listed as Item No. 1517in HUD’s Semiannual Agenda ofRegulations published on April 25, 1994(59 FR 20424), in accordance withExecutive Order 12866 and theRegulatory Flexibility Act, and wasrequested by and submitted to theCommittee on Banking, Finance andUrban Affairs of the House ofRepresentatives under section 7(o) of

the Department of Housing and UrbanDevelopment Act.

F. Unfunded Mandates Reform Act

Pursuant to Title II of the UnfundedMandates Reform Act of 1995, whichthe President signed into law on March22, 1995, EPA and HUD have assessedthe effects of this regulatory action onState, local, and tribal governments, andthe private sector. This action is not an‘‘unfunded mandate’’ as defined by thatstatute and will not result in theexpenditure of $100 million or more byany State, local, or tribal government, orby the private sector. Nevertheless, EPAand HUD consulted with several State,local, and tribal governments during thedevelopment.

A copy of the RIA is available forpublic review. For information on thepublic docket, see Unit VIII. of thispreamble, entitled Rulemaking Record.

List of Subjects in 24 CFR Part 35Environmental protection, Grant

programs-housing and communitydevelopment, Hazardous substances,Lead, Lead poisoning, Mortgageinsurance, Rent subsidies, Reportingand recordkeeping requirements.

List of Subjects in 40 CFR Part 745Environmental protection, Hazardous

substances, Lead, Recordkeeping andnotification requirements.

Dated: February 29, 1996.Henry Cisneros,Secretary, Department of Housing and UrbanDevelopment.

Dated: February 29, 1996.Carol M. Browner,Administrator, Environmental ProtectionAgency.

Therefore, 24 CFR subtitle A and 40CFR Chapter I are amended as follows:

24 CFR Subtitle A

PART 35—LEAD-BASED PAINTPOISONING PREVENTION IN CERTAINRESIDENTIAL STRUCTURES

1. The authority citation for part 35 isrevised to read as follows:

Authority: 42 U.S.C. 3535(d), 4821-4846and 4852d.

2. A new subpart H is added to part35 to read as follows:

Subpart H—Disclosure of Known Lead-Based Paint and/or Lead-Based PaintHazards Upon Sale or Lease of ResidentialProperty

Sec.

35.80 Purpose.35.82 Scope and applicability.35.84 Effective dates.35.86 Definitions.

35.88 Disclosure requirements for sellersand lessors.35.90 Opportunity to conduct anevaluation.35.92 Certification and acknowledgmentof disclosure.35.94 Agent responsibilities.35.96 Enforcement.35.98 Impact on State and localrequirements.

Subpart H—Disclosure of Known Lead-Based Paint and/or Lead-Based PaintHazards Upon Sale or Lease of ResidentialProperty

§ 35.80 Purpose.This subpart implements the

provisions of 42 U.S.C. 4852d, whichimpose certain requirements on the saleor lease of target housing. Under thissubpart, a seller or lessor of targethousing shall disclose to the purchaseror lessee the presence of any knownlead-based paint and/or lead-basedpaint hazards; provide available recordsand reports; provide the purchaser orlessee with a lead hazard informationpamphlet; give purchasers a 10-dayopportunity to conduct a riskassessment or inspection; and attachspecific disclosure and warninglanguage to the sales or leasing contractbefore the purchaser or lessee isobligated under a contract to purchaseor lease target housing.

§ 35.82 Scope and applicability.This subpart applies to all

transactions to sell or lease targethousing, including subleases, with theexception of the following:

(a) Sales of target housing atforeclosure.

(b) Leases of target housing that havebeen found to be lead-based paint freeby an inspector certified under theFederal certification program or under afederally accredited State or tribalcertification program. Until a Federalcertification program or federallyaccredited State certification program isin place within the State, inspectorsshall be considered qualified to conductan inspection for this purpose if theyhave received certification under anyexisting State or tribal inspectorcertification program. The lessor has theoption of using the results of additionaltest(s) by a certified inspector to confirmor refute a prior finding.

(c) Short-term leases of 100 days orless, where no lease renewal orextension can occur.

(d) Renewals of existing leases intarget housing in which the lessor haspreviously disclosed all informationrequired under § 35.88 and where nonew information described in § 35.88has come into the possession of thelessor. For the purposes of this


paragraph, renewal shall include bothrenegotiation of existing lease termsand/or ratification of a new lease.

§ 35.84 Effective dates.The requirements in this subpart take

effect in the following manner:(a) For owners of more than four

residential dwellings, the requirementsshall take effect on September 6, 1996.

(b) For owners of one to fourresidential dwellings, the requirementsshall take effect on December 6, 1996.

§ 35.86 Definitions.The following definitions apply to

this subpart.The Act means the Residential Lead-

Based Paint Hazard Reduction Act of1992, 42 U.S.C. 4852d.

Agent means any party who entersinto a contract with a seller or lessor,including any party who enters into acontract with a representative of theseller or lessor, for the purpose ofselling or leasing target housing. Thisterm does not apply to purchasers orany purchaser’s representative whoreceives all compensation from thepurchaser.

Available means in the possession ofor reasonably obtainable by the seller orlessor at the time of the disclosure.

Common area means a portion of abuilding generally accessible to allresidents/users including, but notlimited to, hallways, stairways, laundryand recreational rooms, playgrounds,community centers, and boundaryfences.

Contract for the purchase and sale ofresidential real property means anycontract or agreement in which oneparty agrees to purchase an interest inreal property on which there is situatedone or more residential dwellings usedor occupied, or intended to be used oroccupied, in whole or in part, as thehome or residence of one or morepersons.

EPA means the EnvironmentalProtection Agency.

Evaluation means a risk assessmentand/or inspection.

Foreclosure means any of the variousmethods, statutory or otherwise, knownin different jurisdictions, of enforcingpayment of a debt, by the taking andselling of real property.

Housing for the elderly meansretirement communities or similar typesof housing reserved for householdscomposed of one or more persons 62years of age or more at the time of initialoccupancy.

Inspection means:(1) A surface-by-surface investigation

to determine the presence of lead-basedpaint as provided in section 302(c) of

the Lead-Based Paint Poisoning andPrevention Act [42 U.S.C. 4822], and

(2) The provision of a reportexplaining the results of theinvestigation.

Lead-based paint means paint orother surface coatings that contain leadequal to or in excess of 1.0 milligramper square centimeter or 0.5 percent byweight.

Lead-based paint free housing meanstarget housing that has been found to befree of paint or other surface coatingsthat contain lead equal to or in excessof 1.0 milligram per square centimeteror 0.5 percent by weight.

Lead-based paint hazard means anycondition that causes exposure to leadfrom lead-contaminated dust, lead-contaminated soil, or lead-contaminatedpaint that is deteriorated or present inaccessible surfaces, friction surfaces, orimpact surfaces that would result inadverse human health effects asestablished by the appropriate Federalagency.

Lessee means any entity that entersinto an agreement to lease, rent, orsublease target housing, including butnot limited to individuals, partnerships,corporations, trusts, governmentagencies, housing agencies, Indiantribes, and nonprofit organizations.

Lessor means any entity that offerstarget housing for lease, rent, orsublease, including but not limited toindividuals, partnerships, corporations,trusts, government agencies, housingagencies, Indian tribes, and nonprofitorganizations.

Owner means any entity that has legaltitle to target housing, including but notlimited to individuals, partnerships,corporations, trusts, governmentagencies, housing agencies, Indiantribes, and nonprofit organizations,except where a mortgagee holds legaltitle to property serving as collateral fora mortgage loan, in which case theowner would be the mortgagor.

Purchaser means an entity that entersinto an agreement to purchase aninterest in target housing, including butnot limited to individuals, partnerships,corporations, trusts, governmentagencies, housing agencies, Indiantribes, and nonprofit organizations.

Reduction means measures designedto reduce or eliminate human exposureto lead-based paint hazards throughmethods including interim controls andabatement.

Residential dwelling means:(1) A single-family dwelling,

including attached structures such asporches and stoops; or

(2) A single-family dwelling unit in astructure that contains more than oneseparate residential dwelling unit, and

in which each such unit is used oroccupied, or intended to be used oroccupied, in whole or in part, as theresidence of one or more persons.

Risk assessment means an on-siteinvestigation to determine and reportthe existence, nature, severity, andlocation of lead-based paint hazards inresidential dwellings, including:

(1) Information gathering regardingthe age and history of the housing andoccupancy by children under age 6;

(2) Visual inspection;(3) Limited wipe sampling or other

environmental sampling techniques;(4) Other activity as may be

appropriate; and(5) Provision of a report explaining

the results of the investigation.Seller means any entity that transfers

legal title to target housing, in whole orin part, in return for consideration,including but not limited to individuals,partnerships, corporations, trusts,government agencies, housing agencies,Indian tribes, and nonprofitorganizations. The term ‘‘seller’’ alsoincludes:

(1) An entity that transfers shares ina cooperatively owned project, in returnfor consideration; and

(2) An entity that transfers its interestin a leasehold, in jurisdictions orcircumstances where it is legallypermissible to separate the fee title fromthe title to the improvement, in returnfor consideration.

Target housing means any housingconstructed prior to 1978, excepthousing for the elderly or persons withdisabilities (unless any child who is lessthan 6 years of age resides or is expectedto reside in such housing) or any 0-bedroom dwelling.

TSCA means the Toxic SubstancesControl Act, 15 U.S.C. 2601.

0-bedroom dwelling means anyresidential dwelling in which the livingarea is not separated from the sleepingarea. The term includes efficiencies,studio apartments, dormitory housing,military barracks, and rentals ofindividual rooms in residentialdwellings.

§ 35.88 Disclosure requirements for sellersand lessors.

(a) The following activities shall becompleted before the purchaser orlessee is obligated under any contract topurchase or lease target housing that isnot otherwise an exempt transactionpursuant to § 35.82. Nothing in thissection implies a positive obligation onthe seller or lessor to conduct anyevaluation or reduction activities.

(1) The seller or lessor shall providethe purchaser or lessee with an EPA-approved lead hazard information


pamphlet. Such pamphlets include theEPA document entitled Protect YourFamily From Lead in Your Home (EPA#747-K-94-001) or an equivalentpamphlet that has been approved foruse in that State by EPA.

(2) The seller or lessor shall discloseto the purchaser or lessee the presenceof any known lead-based paint and/orlead-based paint hazards in the targethousing being sold or leased. The selleror lessor shall also disclose anyadditional information availableconcerning the known lead-based paintand/or lead-based paint hazards, such asthe basis for the determination that lead-based paint and/or lead-based painthazards exist, the location of the lead-based paint and/or lead-based painthazards, and the condition of thepainted surfaces.

(3) The seller or lessor shall discloseto each agent the presence of any knownlead-based paint and/or lead-basedpaint hazards in the target housingbeing sold or leased and the existenceof any available records or reportspertaining to lead-based paint and/orlead-based paint hazards. The seller orlessor shall also disclose any additionalinformation available concerning theknown lead-based paint and/or lead-based paint hazards, such as the basisfor the determination that lead-basedpaint and/or lead-based paint hazardsexist, the location of the lead-basedpaint and/or lead-based paint hazards,and the condition of the paintedsurfaces.

(4) The seller or lessor shall providethe purchaser or lessee with any recordsor reports available to the seller or lessorpertaining to lead-based paint and/orlead-based paint hazards in the targethousing being sold or leased. Thisrequirement includes records andreports regarding common areas. Thisrequirement also includes records andreports regarding other residentialdwellings in multifamily target housing,provided that such information is partof an evaluation or reduction of lead-based paint and/or lead-based painthazards in the target housing as a whole.

(b) If any of the disclosure activitiesidentified in paragraph (a) of thissection occurs after the purchaser orlessee has provided an offer to purchaseor lease the housing, the seller or lessorshall complete the required disclosureactivities prior to accepting thepurchaser’s or lessee’s offer and allowthe purchaser or lessee an opportunityto review the information and possiblyamend the offer.

§ 35.90 Opportunity to conduct anevaluation.

(a) Before a purchaser is obligatedunder any contract to purchase targethousing, the seller shall permit thepurchaser a 10-day period (unless theparties mutually agree, in writing, upona different period of time) to conduct arisk assessment or inspection for thepresence of lead-based paint and/orlead-based paint hazards.

(b) Notwithstanding paragraph (a) ofthis section, a purchaser may waive theopportunity to conduct the riskassessment or inspection by soindicating in writing.

§ 35.92 Certification and acknowledgmentof disclosure.

(a) Seller requirements. Each contractto sell target housing shall include anattachment containing the followingelements, in the language of the contract(e.g., English, Spanish):

(1) A Lead Warning Statementconsisting of the following language:


(2) A statement by the sellerdisclosing the presence of known lead-based paint and/or lead-based painthazards in the target housing being soldor indicating no knowledge of thepresence of lead-based paint and/orlead-based paint hazards. The sellershall also provide any additionalinformation available concerning theknown lead-based paint and/or lead-based paint hazards, such as the basisfor the determination that lead-basedpaint and/or lead-based paint hazardsexist, the location of the lead-basedpaint and/or lead-based paint hazards,and the condition of the paintedsurfaces.

(3) A list of any records or reportsavailable to the seller pertaining to lead-based paint and/or lead-based painthazards in the housing that have beenprovided to the purchaser. If no such

records or reports are available, theseller shall so indicate.

(4) A statement by the purchaseraffirming receipt of the information setout in paragraphs (a)(2) and (a)(3) of thissection and the lead hazard informationpamphlet required under section 15U.S.C. 2696.

(5) A statement by the purchaser thathe/she has either:

(i) Received the opportunity toconduct the risk assessment orinspection required by § 35.90(a); or

(ii) Waived the opportunity.(6) When any agent is involved in the

transaction to sell target housing onbehalf of the seller, a statement that:

(i) The agent has informed the sellerof the seller’s obligations under 42U.S.C. 4852d; and

(ii) The agent is aware of his/her dutyto ensure compliance with therequirements of this subpart.

(7) The signatures of the sellers,agents, and purchasers, certifying to theaccuracy of their statements, to the bestof their knowledge, along with the datesof signature.

(b) Lessor requirements. Each contractto lease target housing shall include, asan attachment or within the contract,the following elements, in the languageof the contract (e.g., English, Spanish):

(1) A Lead Warning Statement withthe following language:

Housing built before 1978 may containlead-based paint. Lead from paint, paintchips, and dust can pose health hazards ifnot managed properly. Lead exposure isespecially harmful to young children andpregnant women. Before renting pre-1978housing, lessors must disclose the presenceof lead-based paint and/or lead-based painthazards in the dwelling. Lessees must alsoreceive a federally approved pamphlet onlead poisoning prevention.

(2) A statement by the lessordisclosing the presence of known lead-based paint and/or lead-based painthazards in the target housing beingleased or indicating no knowledge of thepresence of lead-based paint and/orlead-based paint hazards. The lessorshall also disclose any additionalinformation available concerning theknown lead-based paint and/or lead-based paint hazards, such as the basisfor the determination that lead-basedpaint and/or lead-based paint hazardsexist in the housing, the location of thelead-based paint and/or lead-basedpaint hazards, and the condition of thepainted surfaces.

(3) A list of any records or reportsavailable to the lessor pertaining to lead-based paint and/or lead-based painthazards in the housing that have beenprovided to the lessee. If no suchrecords or reports are available, thelessor shall so indicate.


(4) A statement by the lessee affirmingreceipt of the information set out inparagraphs (b)(2) and (b)(3) of thissection and the lead hazard informationpamphlet required under 15 U.S.C.2696.

(5) When any agent is involved in thetransaction to lease target housing onbehalf of the lessor, a statement that:

(i) The agent has informed the lessorof the lessor’s obligations under 42U.S.C. 4852d; and


(6) The signatures of the lessors,agents, and lessees certifying to theaccuracy of their statements to the bestof their knowledge, along with the datesof signature.

(c) Retention of certification andacknowledgment information.

(1) The seller, and any agent, shallretain a copy of the completedattachment required under paragraph (a)of this section for no less than 3 yearsfrom the completion date of the sale.The lessor, and any agent, shall retaina copy of the completed attachment orlease contract containing theinformation required under paragraph(b) of this section for no less than 3years from the commencement of theleasing period.

(2) This recordkeeping requirement isnot intended to place any limitations oncivil suits under the Act, or to otherwiseaffect a lessee’s or purchaser’s rightsunder the civil penalty provisions of 42U.S.C. 4852d(b)(3).

(d) The seller, lessor, or agent shallnot be responsible for the failure of apurchaser’s or lessee’s legalrepresentative (where suchrepresentative receives all compensationfrom the purchaser or lessee) to transmitdisclosure materials to the purchaser orlessee, provided that all required partieshave completed and signed thenecessary certification andacknowledgment language requiredunder paragraphs (a) and (b) of thissection.

§ 35.94 Agent responsibilities.

(a) Each agent shall ensurecompliance with all requirements of thissubpart. To ensure compliance, theagent shall:

(1) Inform the seller or lessor of his/her obligations under §§ 35.88, 35.90,and 35.92.

(2) Ensure that the seller or lessor hasperformed all activities required under§§ 35.88, 35.90, and 35.92, or personallyensure compliance with therequirements of §§ 35.88, 35.90, and35.92.

(b) If the agent has complied withparagraph (a)(1) of this section, theagent shall not be liable for the failureto disclose to a purchaser or lessee thepresence of lead-based paint and/orlead-based paint hazards known by aseller or lessor but not disclosed to theagent.

§ 35.96 Enforcement.

(a) Any person who knowingly fails tocomply with any provision of thissubpart shall be subject to civilmonetary penalties in accordance withthe provisions of 42 U.S.C. 3545 and 24CFR part 30.

(b) The Secretary is authorized to takesuch action as may be necessary toenjoin any violation of this subpart inthe appropriate Federal district court.

(c) Any person who knowinglyviolates the provisions of this subpartshall be jointly and severally liable tothe purchaser or lessee in an amountequal to 3 times the amount of damagesincurred by such individual.

(d) In any civil action brought fordamages pursuant to 42 U.S.C.4852d(b)(3), the appropriate court mayaward court costs to the partycommencing such action, together withreasonable attorney fees and any expertwitness fees, if that party prevails.

(e) Failure or refusal to comply with§§ 35.88 (disclosure requirements forsellers and lessors), § 35.90 (opportunityto conduct an evaluation), § 35.92(certification and acknowledgment ofdisclosure), or § 35.94 (agentresponsibilities) is a violation of 42U.S.C. 4852d(b)(5) and of TSCA section409 (15 U.S.C. 2689).

(f) Violators may be subject to civiland criminal sanctions pursuant toTSCA section 16 (15 U.S.C. 2615) foreach violation. For purposes ofenforcing this subpart, the penalty foreach violation applicable under 15U.S.C. 2615 shall be not more than$10,000.

§ 35.98 Impact on State and localrequirements.

Nothing in this subpart shall relieve aseller, lessor, or agent from anyresponsibility for compliance with Stateor local laws, ordinances, codes, orregulations governing notice ordisclosure of known lead-based paintand/or lead-based paint hazards.Neither HUD nor EPA assumes anyresponsibility for ensuring compliancewith such State or local requirements.

40 CFR Chapter I

1. Part 745 is added to read as follows:

PART 745–LEAD-BASED PAINTPOISIONING PREVENTION INCERTAIN RESIDENTIAL STRUCTURES

Subparts A—E [Reserved]

Subpart F — Disclosure of Known Lead-Based Paint and/or Lead-Based PaintHazards Upon Sale or Lease of ResidentialPropertySec.

745.100 Purpose.745.101 Scope and applicability.745.102 Effective dates.745.103 Definitions.745.107 Disclosure requirements forsellers and lessors.745.110 Opportunity to conduct anevaluation.745.113 Certification andacknowledgment of disclosure.745.115 Agent responsibilities.745.118 Enforcement.745.119 Impact on State and localrequirements.

Authority: 15 U.S.C. 2615, 15 U.S.C. 2689,and 42 U.S.C. 4852d.

Subparts A—E [Reserved]

Subpart F—Disclosure of Known Lead-Based Paint and/or Lead-Based PaintHazards Upon Sale or Lease ofResidential Property

§ 745.100 Purpose.This subpart implements the

provisions of 42 U.S.C. 4852d, whichimpose certain requirements on the saleor lease of target housing. Under thissubpart, a seller or lessor of targethousing shall disclose to the purchaseror lessee the presence of any knownlead-based paint and/or lead-basedpaint hazards; provide available recordsand reports; provide the purchaser orlessee with a lead hazard informationpamphlet; give purchasers a 10-dayopportunity to conduct a riskassessment or inspection; and attachspecific disclosure and warninglanguage to the sales or leasing contractbefore the purchaser or lessee isobligated under a contract to purchaseor lease target housing.

§ 745.101 Scope and applicability.This subpart applies to all

transactions to sell or lease targethousing, including subleases, with theexception of the following:

(a) Sales of target housing atforeclosure.

(b) Leases of target housing that havebeen found to be lead-based paint freeby an inspector certified under theFederal certification program or under afederally accredited State or tribalcertification program. Until a Federalcertification program or federallyaccredited State certification program is


in place within the State, inspectorsshall be considered qualified to conductan inspection for this purpose if theyhave received certification under anyexisting State or tribal inspectorcertification program. The lessor has theoption of using the results of additionaltest(s) by a certified inspector to confirmor refute a prior finding.

(c) Short-term leases of 100 days orless, where no lease renewal orextension can occur.

(d) Renewals of existing leases intarget housing in which the lessor haspreviously disclosed all informationrequired under § 745.107 and where nonew information described in § 745.107has come into the possession of thelessor. For the purposes of thisparagraph, renewal shall include bothrenegotiation of existing lease termsand/or ratification of a new lease.

§ 745.102 Effective dates.The requirements in this subpart take

effect in the following manner:(a) For owners of more than four

residential dwellings, the requirementsshall take effect on September 6, 1996.

(b) For owners of one to fourresidential dwellings, the requirementsshall take effect on December 6, 1996.

§ 745.103 Definitions.The following definitions apply to

this subpart.The Act means the Residential Lead-

Based Paint Hazard Reduction Act of1992, 42 U.S.C. 4852d.

Agent means any party who entersinto a contract with a seller or lessor,including any party who enters into acontract with a representative of theseller or lessor, for the purpose ofselling or leasing target housing. Thisterm does not apply to purchasers orany purchaser’s representative whoreceives all compensation from thepurchaser.

Available means in the possession ofor reasonably obtainable by the seller orlessor at the time of the disclosure.

Common area means a portion of abuilding generally accessible to allresidents/users including, but notlimited to, hallways, stairways, laundryand recreational rooms, playgrounds,community centers, and boundaryfences.

Contract for the purchase and sale ofresidential real property means anycontract or agreement in which oneparty agrees to purchase an interest inreal property on which there is situatedone or more residential dwellings usedor occupied, or intended to be used oroccupied, in whole or in part, as thehome or residence of one or morepersons.

EPA means the EnvironmentalProtection Agency.

Evaluation means a risk assessmentand/or inspection.

Foreclosure means any of the variousmethods, statutory or otherwise, knownin different jurisdictions, of enforcingpayment of a debt, by the taking andselling of real property.

Housing for the elderly meansretirement communities or similar typesof housing reserved for householdscomposed of one or more persons 62years of age or more at the time of initialoccupancy.

HUD means the U.S. Department ofHousing and Urban Development.

Inspection means:(1) A surface-by-surface investigation

to determine the presence of lead-basedpaint as provided in section 302(c) ofthe Lead-Based Paint Poisoning andPrevention Act [42 U.S.C. 4822], and

(2) The provision of a reportexplaining the results of theinvestigation.

Lead-based paint means paint orother surface coatings that contain leadequal to or in excess of 1.0 milligramper square centimeter or 0.5 percent byweight.

Lead-based paint free housing meanstarget housing that has been found to befree of paint or other surface coatingsthat contain lead equal to or in excessof 1.0 milligram per square centimeteror 0.5 percent by weight.

Lead-based paint hazard means anycondition that causes exposure to leadfrom lead-contaminated dust, lead-contaminated soil, or lead-contaminatedpaint that is deteriorated or present inaccessible surfaces, friction surfaces, orimpact surfaces that would result inadverse human health effects asestablished by the appropriate Federalagency.

Lessee means any entity that entersinto an agreement to lease, rent, orsublease target housing, including butnot limited to individuals, partnerships,corporations, trusts, governmentagencies, housing agencies, Indiantribes, and nonprofit organizations.

Lessor means any entity that offerstarget housing for lease, rent, orsublease, including but not limited toindividuals, partnerships, corporations,trusts, government agencies, housingagencies, Indian tribes, and nonprofitorganizations.

Owner means any entity that has legaltitle to target housing, including but notlimited to individuals, partnerships,corporations, trusts, governmentagencies, housing agencies, Indiantribes, and nonprofit organizations,except where a mortgagee holds legaltitle to property serving as collateral for

a mortgage loan, in which case theowner would be the mortgagor.

Purchaser means an entity that entersinto an agreement to purchase aninterest in target housing, including butnot limited to individuals, partnerships,corporations, trusts, governmentagencies, housing agencies, Indiantribes, and nonprofit organizations.

Reduction means measures designedto reduce or eliminate human exposureto lead-based paint hazards throughmethods including interim controls andabatement.

Residential dwelling means:(1) A single-family dwelling,

including attached structures such asporches and stoops; or

(2) A single-family dwelling unit in astructure that contains more than oneseparate residential dwelling unit, andin which each such unit is used oroccupied, or intended to be used oroccupied, in whole or in part, as theresidence of one or more persons.

Risk assessment means an on-siteinvestigation to determine and reportthe existence, nature, severity, andlocation of lead-based paint hazards inresidential dwellings, including:

(1) Information gathering regardingthe age and history of the housing andoccupancy by children under age 6;

(2) Visual inspection;(3) Limited wipe sampling or other

environmental sampling techniques;(4) Other activity as may be

appropriate; and(5) Provision of a report explaining

the results of the investigation.Secretary means the Secretary of

Housing and Urban Development.Seller means any entity that transfers

legal title to target housing, in whole orin part, in return for consideration,including but not limited to individuals,partnerships, corporations, trusts,government agencies, housing agencies,Indian tribes, and nonprofitorganizations. The term ‘‘seller’’ alsoincludes:

(1) An entity that transfers shares ina cooperatively owned project, in returnfor consideration; and

(2) An entity that transfers its interestin a leasehold, in jurisdictions orcircumstances where it is legallypermissible to separate the fee title fromthe title to the improvement, in returnfor consideration.

Target housing means any housingconstructed prior to 1978, excepthousing for the elderly or persons withdisabilities (unless any child who is lessthan 6 years of age resides or is expectedto reside in such housing) or any 0-bedroom dwelling.

TSCA means the Toxic SubstancesControl Act, 15 U.S.C. 2601.


0-bedroom dwelling means anyresidential dwelling in which the livingarea is not separated from the sleepingarea. The term includes efficiencies,studio apartments, dormitory housing,military barracks, and rentals ofindividual rooms in residentialdwellings.

§ 745.107 Disclosure requirements forsellers and lessors.

(a) The following activities shall becompleted before the purchaser orlessee is obligated under any contract topurchase or lease target housing that isnot otherwise an exempt transactionpursuant to § 745.101. Nothing in thissection implies a positive obligation onthe seller or lessor to conduct anyevaluation or reduction activities.

(1) The seller or lessor shall providethe purchaser or lessee with an EPA-approved lead hazard informationpamphlet. Such pamphlets include theEPA document entitled Protect YourFamily From Lead in Your Home (EPA#747-K-94-001) or an equivalentpamphlet that has been approved foruse in that State by EPA.

(2) The seller or lessor shall discloseto the purchaser or lessee the presenceof any known lead-based paint and/orlead-based paint hazards in the targethousing being sold or leased. The selleror lessor shall also disclose anyadditional information availableconcerning the known lead-based paintand/or lead-based paint hazards, such asthe basis for the determination that lead-based paint and/or lead-based painthazards exist, the location of the lead-based paint and/or lead-based painthazards, and the condition of thepainted surfaces.

(3) The seller or lessor shall discloseto each agent the presence of any knownlead-based paint and/or lead-basedpaint hazards in the target housingbeing sold or leased and the existenceof any available records or reportspertaining to lead-based paint and/orlead-based paint hazards. The seller orlessor shall also disclose any additionalinformation available concerning theknown lead-based paint and/or lead-based paint hazards, such as the basisfor the determination that lead-basedpaint and/or lead-based paint hazardsexist, the location of the lead-basedpaint and/or lead-based paint hazards,and the condition of the paintedsurfaces.

(4) The seller or lessor shall providethe purchaser or lessee with any recordsor reports available to the seller or lessorpertaining to lead-based paint and/orlead-based paint hazards in the targethousing being sold or leased. Thisrequirement includes records or reports

regarding common areas. Thisrequirement also includes records orreports regarding other residentialdwellings in multifamily target housing,provided that such information is partof an evaluation or reduction of lead-based paint and/or lead-based painthazards in the target housing as a whole.

(b) If any of the disclosure activitiesidentified in paragraph (a) of thissection occurs after the purchaser orlessee has provided an offer to purchaseor lease the housing, the seller or lessorshall complete the required disclosureactivities prior to accepting thepurchaser’s or lessee’s offer and allowthe purchaser or lessee an opportunityto review the information and possiblyamend the offer.

§ 745.110 Opportunity to conduct anevaluation.

(a) Before a purchaser is obligatedunder any contract to purchase targethousing, the seller shall permit thepurchaser a 10-day period (unless theparties mutually agree, in writing, upona different period of time) to conduct arisk assessment or inspection for thepresence of lead-based paint and/orlead-based paint hazards.

(b) Not withstanding paragraph (a) ofthis section, a purchaser may waive theopportunity to conduct the riskassessment or inspection by soindicating in writing.

§ 745.113 Certification andacknowledgment of disclosure.

(a) Seller requirements. Each contractto sell target housing shall include anattachment containing the followingelements, in the language of the contract(e.g., English, Spanish):

(1) A Lead Warning Statementconsisting of the following language:


(2) A statement by the sellerdisclosing the presence of known lead-based paint and/or lead-based paint

hazards in the target housing being soldor indicating no knowledge of thepresence of lead-based paint and/orlead-based paint hazards. The sellershall also provide any additionalinformation available concerning theknown lead-based paint and/or lead-based paint hazards, such as the basisfor the determination that lead-basedpaint and/or lead-based paint hazardsexist, the location of the lead-basedpaint and/or lead-based paint hazards,and the condition of the paintedsurfaces.

(3) A list of any records or reportsavailable to the seller pertaining to lead-based paint and/or lead-based painthazards in the housing that have beenprovided to the purchaser. If no suchrecords or reports are available, theseller shall so indicate.

(4) A statement by the purchaseraffirming receipt of the information setout in paragraphs (a)(2) and (a)(3) of thissection and the lead hazard informationpamphlet required under 15 U.S.C.2696.

(5) A statement by the purchaser thathe/she has either:

(i) Received the opportunity toconduct the risk assessment orinspection required by § 745.110(a); or

(ii) Waived the opportunity.(6) When one or more agents are

involved in the transaction to sell targethousing on behalf of the seller, astatement that:

(i) The agent has informed the sellerof the seller’s obligations under 42U.S.C. 4852d; and


(7) The signatures of the sellers,agents, and purchasers certifying to theaccuracy of their statements to the bestof their knowledge, along with the datesof signature.

(b) Lessor requirements. Each contractto lease target housing shall include, asan attachment or within the contract,the following elements, in the languageof the contract (e.g., English, Spanish):

(1) A Lead Warning Statement withthe following language:

Housing built before 1978 may containlead-based paint. Lead from paint, paintchips, and dust can pose health hazards ifnot managed properly. Lead exposure isespecially harmful to young children andpregnant women. Before renting pre-1978housing, lessors must disclose the presenceof lead-based paint and/or lead-based painthazards in the dwelling. Lessees must alsoreceive a federally approved pamphlet onlead poisoning prevention.

(2) A statement by the lessordisclosing the presence of known lead-based paint and/or lead-based paint


hazards in the target housing beingleased or indicating no knowledge of thepresence of lead-based paint and/orlead-based paint hazards. The lessorshall also disclose any additionalinformation available concerning theknown lead-based paint and/or lead-based paint hazards, such as the basisfor the determination that lead-basedpaint and/or lead-based paint hazardsexist, the location of the lead-basedpaint and/or lead-based paint hazards,and the condition of the paintedsurfaces.

(3) A list of any records or reportsavailable to the lessor pertaining to lead-based paint and/or lead-based painthazards in the housing that have beenprovided to the lessee. If no suchrecords or reports are available, thelessor shall so indicate.

(4) A statement by the lessee affirmingreceipt of the information set out inparagraphs (b)(2) and (b)(3) of thissection and the lead hazard informationpamphlet required under 15 U.S.C.2696.

(5) When one or more agents areinvolved in the transaction to leasetarget housing on behalf of the lessor, astatement that:

(i) The agent has informed the lessorof the lessors obligations under 42U.S.C. 4852d; and


(6) The signatures of the lessors,agents, and lessees, certifying to theaccuracy of their statements, to the bestof their knowledge, along with the datesof signature.

(c) Retention of Certification andAcknowledgment Information.

(1) The seller, and any agent, shallretain a copy of the completedattachment required under paragraph (a)of this section for no less than 3 yearsfrom the completion date of the sale.The lessor, and any agent, shall retaina copy of the completed attachment orlease contract containing the

information required under paragraph(b) of this section for no less than 3years from the commencement of theleasing period.

(2) This recordkeeping requirement isnot intended to place any limitations oncivil suits under the Act, or to otherwiseaffect a lessee’s or purchaser’s rightsunder the civil penalty provisions of 42U.S.C. 4852d(b)(3).

(d) The seller, lessor, or agent shallnot be responsible for the failure of apurchaser’s or lessee’s legalrepresentative (where suchrepresentative receives all compensationfrom the purchaser or lessee) to transmitdisclosure materials to the purchaser orlessee, provided that all required partieshave completed and signed thenecessary certification andacknowledgment language requiredunder paragraphs (a) and (b) of thissection.

§ 745.115 Agent responsibilities.(a) Each agent shall ensure

compliance with all requirements of thissubpart. To ensure compliance, theagent shall:

(1) Inform the seller or lessor of his/her obligations under §§745.107,745.110, and 745.113.

(2) Ensure that the seller or lessor hasperformed all activities required under§§ 745.107, 745.110, and 745.113, orpersonally ensure compliance with therequirements of §§ 745.107, 745.110,and 745.113.

(b) If the agent has complied withparagraph (a)(1) of this section, theagent shall not be liable for the failureto disclose to a purchaser or lessee thepresence of lead-based paint and/orlead-based paint hazards known by aseller or lessor but not disclosed to theagent.

§ 745.118 Enforcement.

(a) Any person who knowingly fails tocomply with any provision of thissubpart shall be subject to civilmonetary penalties in accordance with

the provisions of 42 U.S.C. 3545 and 24CFR part 30.

(b) The Secretary is authorized to takesuch action as may be necessary toenjoin any violation of this subpart inthe appropriate Federal district court.

(c) Any person who knowinglyviolates the provisions of this subpartshall be jointly and severally liable tothe purchaser or lessee in an amountequal to 3 times the amount of damagesincurred by such individual.

(d) In any civil action brought fordamages pursuant to 42 U.S.C.4852d(b)(3), the appropriate court mayaward court costs to the partycommencing such action, together withreasonable attorney fees and any expertwitness fees, if that party prevails.

(e) Failure or refusal to comply with§ 745.107 (disclosure requirements forsellers and lessors), § 745.110(opportunity to conduct an evaluation),§ 745.113 (certification andacknowledgment of disclosure), or§ 745.115 (agent responsibilities) is aviolation of 42 U.S.C. 4852d(b)(5) and ofTSCA section 409 (15 U.S.C. 2689).

(f) Violators may be subject to civiland criminal sanctions pursuant toTSCA section 16 (15 U.S.C. 2615) foreach violation. For purposes ofenforcing this subpart, the penalty foreach violation applicable under 15U.S.C. 2615 shall be not more than$10,000.

§ 745.119 Impact on State and localrequirements.

Nothing in this subpart shall relieve aseller, lessor, or agent from anyresponsibility for compliance with Stateor local laws, ordinances, codes, orregulations governing notice ordisclosure of known lead-based paint orlead-based paint hazards. Neither HUDnor EPA assumes any responsibility forensuring compliance with such State orlocal requirements.[FR Doc. 96–5243 Filed 3–5–96; 8:45 am]BILLING CODE 6560–50–F

Documents

9064 Federal Register /Vol. 61, No. 45/Wednesday, … · 06.03.1996 · 9064 Federal Register/Vol. 61, No. 45/Wednesday, March 6, 1996/Rules and Regulations DEPARTMENT OF HOUSING