Welcome to Part 2 of my conversation with James A. Kozachek, a construction law and litigation partner/owner at Bisgaier Hoff, LLC, about what buyers (and sellers) should know when it comes to lead paint in homes. If you missed our first part, click here to get up to speed: How Lead Paint Impacts Buyers, Sellers, and Homeowners, Part 1 of 3
In case you did miss our last blog, I am questioning James from the perspective of a concerned, expectant first-time mother who, with her husband, is contemplating purchasing a 1972 home that may contain lead paint – a high probability for any home built prior to 1978.
Trish: What else is the seller legally bound to disclose to me about lead in the home before I purchase it? Do I have the right to see any test results?
James: Sellers’ lead paint disclosure obligations vary from state to state, but generally the Seller has an obligation to disclose anything that could negatively impact the Buyer’s use and enjoyment of the home. The Buyer certainly has the right to request copies of any test results. If the Seller fails to provide the results then that would generally be more than adequate grounds to terminate the agreement of sale. If the Seller suggests that there are no such test results, when there really were, then that would likely result in a fraud claim against the Seller which could result in a claim for damages and rescission of the agreement of sale.
Trish: What if I want to the owner to test the home before I bid, but he or she refuses?
James: This would generally be part of a negotiation. If the Buyer wants the Seller to bear the cost of such testing as a condition precedent to entering into an agreement of sale, then they can certainly make such a demand. I doubt any Seller would be willing to do that, though. Generally the due diligence obligation is placed on the Buyer and the cost of investigating the home can often be reduced by requiring the Seller to provide any and all documentation and disclosures about the house prior to the Buyer’s inspections. Standard residential real estate agreements contain due diligence or inspection clauses that require the Seller to make the home available for the Buyer to inspect. It is the Buyer’s choice whether or not to take advantage of those opportunities. An inspection can be facilitated when and if the Seller provides the Buyer with copies of all relevant documents regarding the house including, without limitation, surveys, permit approvals for renovations, past testing and inspection reports, no further action and clearance letters for any environmental remediation (including for mold, asbestos, lead, chemical or petroleum product spills).
Trish: What if the homeowner is cheap and just wants to get out of the house with as little expense as possible. How do I know the job was done correctly – or if it was even done at all?
James: A Buyer cannot be certain that the information provided by the Seller is complete. This is why the Buyer must do her own due diligence. The Buyer is, however, generally entitled to rely upon representations made by the Seller and the Realtor. If they turn out to be false, then those false representations are generally actionable.
Trish: Does any of this vary by state?
James: Yes. For example, each state has its own disclosure obligations with respect to the condition of a home. Moreover, each state has different obligations with respect to the documentation that confirms that an environmental condition at a home has been satisfactorily resolved.
Trish: What if the owner does nothing, we buy the house and have it tested and find out it has high levels of lead. Do we have any recourse with the owner? What are our options then?
James: It depends. One important concern is the identity of the Seller. The Seller could be someone who lived in the house for decades and can be expected to know all its secrets or it can be someone or some business that never occupied the house. A bank-owned property, for instance, is in a very different situation than an owner or someone who is selling a house as an agent of an owner (especially if the owner is now an estate and the decedent is no longer available to provide information). The bank can often raise an innocent purchaser defense to a claim from a Buyer about the condition of the home. Moreover, houses can be sold “as is” which is generally an enforceable contract clause designed to shift almost all the burden to the Buyer to investigate the home. If a Buyer finds a condition in the home that is a problem, they can try and seek relief from those involved in the transaction (e.g. the Seller, the realtor(s) and inspectors hired to inspect the home). The Buyers’ rights are based on the applicable laws (statutory and common-law) and the terms and conditions of their contract and related documents that memorialize the deal between the Buyer and the Seller. A Buyer should never underestimate the importance of the agreements they enter into with respect to a home purchase (e.g. agreement of Sale with the Seller, agreements with home inspectors, agreements with contractors and consultants). It will often shape the Buyer’s rights to seek relief if a problem is discovered at the home. It is generally far cheaper to have an attorney work with you to ensure you’ve good contracts than it is to hire an attorney to represent you in a lawsuit against a Seller, inspector, contractor or consultant.
Trish: My husband said if the owner refuses to do anything we could test the house and then he and a buddy of his could just do the remediation work themselves, after we buy but before we move in. Is that legal? Is it prudent?
James: An owner has a fair amount of discretion to handle issues in their own home. While a homeowner can certainly perform repairs and renovations in their own home, they would have to be extremely careful if there is a risk of lead contamination. A lot of information on lead can be found on a web site maintained by the Environmental Protection Agency (“EPA”): See http://www.epa.gov/lead/ Is it prudent? I would again have to say that it depends on the circumstances, the extent of the potential lead issue and the skill of the homeowner. As a general matter, it would always be best to retain the services of a certified and fully insured contractor.
James A. Kozachek, Esq.’s comments here are made for informational and educational purposes only and do not constitute legal advice. These comments are not intended to provide any form of legal advice or to form the basis of an attorney-client relationship. Statements made herein are solely those of the author and do not reflect the views of Bisgaier Hoff, LLC. Nothing herein should be used as a substitute for competent legal advice from a licensed professional attorney in your state or jurisdiction. This information is not published for advertising or solicitation purposes, but only to heighten awareness of certain issues that can arise in connection with improvements to real property.