South Carolina Lawyer
SC Lawyer, May 2006, #3.
Hazardous House: Obligations and Remedies After Discovering Lead-Based Paint
South Carolina LawyerMay 2006Hazardous House: Obligations and Remedies After Discovering Lead-Based PaintBy Virginia McGee Richards and Ben A. Hagood Jr.When "lead-based paint" is mentioned in the company of South Carolina attorneys, many of us dismiss the subject with a mention of "EPA disclosure forms." There are, however, two reasons for attorneys to know more about laws regulating lead-based paint: lead poisoning of clients' children through ignorance or inadvertence and legal liability for clients.
Lead is recognized as the single most significant environmental health threat to American children by the Center for Disease Control (CDC). The S.C. Department of Health and Environmental Control (DHEC) estimates that more than 80 percent of housing in Charleston contains lead-based paint and that Charleston County has the highest blood levels of lead in children in the state. Lead-based paint poisoning occurs very rapidly. In just a three-month period, a child who is exposed to lead paint hazards can become poisoned at a level requiring medical treatment. The child's residence, if it is the source of the contamination, then becomes subject to regulatory and statutory requirements mandating clean up even if the child's parents are owners of the property.
Legal liability for lead-based paint falls upon real estate agents, contractors performing refurbishment, sellers, landlords, tenants and buyers of residential real estate. Two federal laws govern the sale and clean up of residences with lead-based paint, the Residential Lead-Based Paint Hazard Reduction Act of 1992 (the Act) and the Resource Conservation and Recovery Act (RCRA).
In 2005, South Carolina passed a revision to an existing law, the Childhood Lead Poisoning and Prevention Control Act at S.C. Code Ann. Section 44-53-1310 et seq. (Law. Co-op 1976) ("S.C. Lead Poisoning Prevention Act"). This revised South Carolina law governs the diagnosis, reporting and investigation of children suffering from lead poisoning. In contrast to the federal legislation, however, the S.C. Lead Poisoning Prevention Act does not give tenants or purchasers of property contaminated with lead-based paint or hazards a private cause of action: "[a] violation of this article does not give rise to a private cause of action." S.C. Code Ann. Section 44-53-1490. Accordingly, this article does not delve into the specifics of South Carolina's law.
To date, there have been no reported cases in South Carolina under the Act, RCRA or the S.C. Lead Poisoning Prevention Act. Other jurisdictions, however, have decided cases involving lead-based paint hazards and poisoning under both federal laws and common law tort theories. To help attorneys untangle the federal laws and existing case law in a manner useful to real estate practitioners, this article will describe (i) the mandate to disclose lead paint conditions and hazards upon sale or lease of a residence, (ii) strategies for protecting innocent buyers and tenants and (iii) buyers' options if lead paint hazards are discovered after purchase.
Disclosure under the Residential Lead-Based Paint Hazard Reduction Act
More than a decade has passed since Congress passed the Residential Lead-Based Paint Hazard Reduction Act, 42, U.S.C. Section 4852d, (the Act). Its supporters heralded it as "significantly expanding Federal efforts to prevent childhood lead poisoning - the No. 1 environmental health problem facing American children today." 138 CONG. REC. S17,904 (daily ed. Oct. 8, 1992). In 1992, the year of enactment, more than three million children suffered permanent neurological damage as a result of lead-based paint exposure, and half of the nation's housing stock contained lead-based paint. Id. Although Congress's intent was quite broad, the Act's actual provisions are very narrowly crafted.
Section 1018 of the Act contains disclosure requirements for lead-based paint and lead-based paint hazards. The teeth of the Act are in these disclosure requirements. The Act mandates sellers, lessors and their agents to reveal all information in their possession regarding lead-based paint and lead-based paint hazards to a prospective purchaser before a contract for purchase or lease is signed. 42 U.S.C. Section 4852d(a)(1). Disclosures must be made for any housing including apartments, co-ops, condominiums and residences for which a construction permit was obtained or construction started before January 1, 1978. 40 C.F.R. Section 745.107(a)(2). These disclosure duties, which are outlined in detail in EPA and HUD regulations and guidance documents, are discussed below.
Information that must be given to purchasers
Many professionals serving sellers follow a "don't ask, don't tell" approach to lead-paint disclosure, reasoning that the less said about lead, the better. However, where the seller has knowledge of lead-paint, there are special statutory requirements that must be met. Owners and lessors who know of lead-based defects in a residence must give prospective buyers and tenants all of the following information before a contract is signed. Any information regarding the presence of any known lead-based paint and/or lead-based paint hazards (lead hazards) as well as the basis for the determination that lead-based paint and/or lead-based paint hazards exist, the location of the lead-based paint and/or lead-based paint hazards and the condition of the painted surfaces. 40 C.F.R. Section 35.88(a)(2). The Act defines a "lead-based paint hazard" as "any condition that...