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By Clay B. Powell, Director
Rental Property Owners Association
of Kent County

The deadline for being in compliance with the new EPA Renovation, Repair, and Painting (RRP) rule has now passed.

On April 22, 2010, all contractors and landlords working on housing built prior to 1978 had to be in compliance. The purpose of the rule is to reduce children’s exposure to dust containing lead paint created during the course of these activities.

The rule requires all contractors, subcontractors, landlords and their employees to be certified as “renovators” and use “lead safe work practices.” To become a certified renovator, the aforementioned entities must attend an 8-hour course approved and certified by the EPA. Some contractors and landlords may be eligible to take the shorter 4-hour course if they have previously completed an 8-hour lead safe work practices course approved by the EPA.

There are few training companies offering RRP certification in Michigan. The Rental Property Owners Association (www.rpoaonline.org) in Grand Rapids is one of the few.

Real estate lawyers are claiming that the stakes are extremely high for renovators, remodelers and landlords. Anyone not in compliance faces heavy fines upwards of $37,500 per violation. These amounts do not take in consideration other penalties that may apply if the owner fails to comply with additional mandates under Michigan law, including PA 434 where an owner and manager are subject to 93 days in jail and/or $10,000 fine for allowing a known lead hazard to persist 90 days in a housing unit with a resident child with an elevated blood lead level.

The risk extends to real estate investors and property owners as well.

Owners of large multi-unit residential rental properties built prior to 1978 must use contractors and onsite property maintenance staff trained and certified in compliance with the new RRP rule. Even part-time mom and pop landlords must follow the rule if they are going to do their own renovation and maintenance.

Buyers and sellers of pre-1978 residential real estate must also be on their toes to ensure that all contractors they use are certified. Sellers often make quick fixes and upgrades to properties before selling. Buyers often plan to renovate a property after purchase. As previously mentioned, the cost for being out of compliance is steep for contractors and landlords, but the additional cost the rule adds to each job is also substantial in terms of time and materials. These new costs must be figured into any planned investment.

The cost of insurance is also likely to climb. The new rule opens up a whole new area of litigation. Contractors, as well as owners, may now be held accountable for lead-based paint poisoning. Owners not using a certified renovator could be exposing themselves to huge liabilities — all of which are yet unknown.

Buyers and sellers will also need to become familiar with the terminology used in the industry of lead-based paint remediation and abatement. For example, a visual clearance test performed by a renovator is completely different from a risk assessment performed by a certified risk assessor. Not knowing the difference and ordering one as opposed to the other could expose an investment to even greater liability and/or additional costs. Also, owners receiving rental payments under the Section 8 Voucher program are held to a higher standard of testing.

Under Michigan law, some test and lead remediation and abatement work must be reported to the Michigan Department of Community Health. The associated property is then to be posted on the Michigan Lead-Safe Housing Registry.

As always, investors should perform due diligence before making an investment. Investors are encouraged to research the history of all renovations, remodeling and repairs made at a subject property after April 22, 2010 to ensure that the work was done in compliance with the RRP rule. Examples of the types of documents that might be asked for include:

• Written evidence that all documentation required by the EPA was completed, including final clearance test results.
• A list of contractors and subcontractors used for the work with documentation showing that these contractors were on the list of certified renovators at the time the work was completed.
• Copies of construction contracts.

Though the impact of the new law is minimal on real estate salespersons and brokers, they are strongly advised to recommend only trained and certified contractors to their clients. Those salespersons and brokers also acting as property managers and maintenance workers should become RRP compliant.

For more information on the RRP rule go to www.epa.gov/lead/pubs/renovation.htm. For more information on the Rental Property Owners Association of Kent County go to: www.rpoaonline.org.

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