3.9 Section J Attachment A6 Amend 0015.pdf

Attachment A6: Elimination of Lead-Based Paint Hazards in HUD-Owned, FHA-Insured Single Family Properties Built Before 1978

On December 23, 2003, HUD published Housing Notice 2003-30, Elimination of Lead-Based Paint Hazards in HUD Owned Single Family Properties, that canceled Notice 01-01 and implemented the requirements and terminology established by the Residential Lead-Based Paint Hazard Reduction Act of 1992 (Title X of the Housing and Community Development Act of 1992) and the lead-based paint regulations (the Lead Safe Housing Rule) at 24 CFR Part 35, Subpart F. The regulations establish procedures to eliminate as far as practicable lead-based paint hazards in single-family properties built before 1978 and sold with FHA-insured mortgages (including 203(b) and 203(k) loans). The procedures below describe actions required to implement HN.

A. Applicability

The regulations at Subpart F apply to HUD-owned Single Family properties that have been built before 1978 and are sold with FHA-insured 203(b) and (k) mortgages. The Office of Single Family Housing’s implementation of the Department’s lead safe housing program will include the provision of full lead-based paint inspections (rather than only paint testing) of all HUD-owned properties constructed before 1978 and are sold with FHA insured financing. If the inspection identifies the presence of deteriorated lead-based paint, properties sold with FHA insurance will be subject to lead-based paint stabilization of such paint and clearance testing when the cost of the stabilization does not exceed $4,000. HUD will evaluate on case by case basis all stabilization costs that exceed $4,000 to determine practicability of elimination.

. Definitions

The definitions in the Lead Safe Housing Rule in 24 CFR 35.110 apply to this program.

The Rule is available for downloading at www.hud.gov/offices/lead. The following additional definitions also apply:

Certified lead-based paint inspector - has the same meaning as "certified inspector" in the Environmental Protection Agency (EPA) lead training and certification rule, at 40 CFR 745.223.

Certified risk assessor - has the same meaning as that term in the EPA lead training and certification rule, at 40 CFR 745.223.

Certified firm - has the same meaning as that term in the EPA lead training and certification rule, at 40 CFR 745.223.

Sampling technician - has the same meaning as that term or "clearance technician" in the HUD Lead Safe Housing Rule, at 24 CFR 35.1340(b)(1)(iii)- (iv).

http://www.hud.gov/offices/lead

C. Required Lead-Based Paint Procedures for HUD-Owned Single Family Properties.

1. Property Age Verification:

During the initial inspection or as soon as possible following acquisition of a new HUD property, the FSM Vendor shall verify the age of the property and ensure the correct age is reflected in P260.

2. Properties constructed before 1978 – Inspection and Listing:

a. Before listing any property constructed before 1978, the AM Vendor shall obtain an appraisal report for the subject property performed by a FHA Roster Appraiser. The appraisal report shall indicate whether the property can be sold with FHA insured financing, other than 203(k), or whether the property will be sold Uninsured. If a fully executed sales contract indicates the property is being sold with FHA insured financing, the AM Vendor shall initiate a work order in P260 for a LBP inspection. The AM Vendor shall initiate the work order for LBP inspections within one

(1) business day of contract acceptance by HUD.

b. FHA Insured properties: For properties being sold with FHA-insured financing, HUD will have a lead-based paint inspection and visual assessment performed as -follows:

c. The FSM Vendor shall ensure that either (1) a certified lead-based paint inspector who has successfully completed the web-based HUD visual assessment course (available at www.hud.gov/offices/lead), or (2) a certified risk assessor, conducts a lead-based paint inspection and a visual assessment for deteriorated paint.

d. Upon receipt of the work order, the FSM Vendor shall order from an inspector or risk assessor (described in 2.c.), a lead-based paint inspection and visual assessment to identify deteriorated lead-based paint. If deteriorated paint is found, the FSM Vendor shall obtain from the inspector or risk assessor a lead-based paint stabilization plan that identifies the locations of deteriorated lead-based paint and a cost estimate for implementing the plan. The FSM Vendor shall post the stabilization plan and cost estimate in P260 within one (1) day of receipt.

e. Upon receipt of the stabilization plan and cost estimate, the AM Vendor shall comply with the requirements of the PWS http://www.hud.gov/offices/lead), regarding lead-based paint disclosure. If the cost estimate exceeds $4000.00, the AM Vendor shall: either 1) convert the sale to 203(k) financing and fund the escrow with $4,000 from seller proceeds, 2) on a 203 (b) transaction only, approval may be given to exceed the $4,000 costs, 3) allow the purchaser to change contract to conventional financing or cash with no credit, or 4) the contract will be cancelled and earnest money refunded.

f. No FHA Insured Financing (Uninsured properties). The FSM Vendor shall not perform lead based paint inspections and/or risk assessments for properties sold without FHA-insured financing.

g. For all properties, the AM Vendor shall post a property-specific Lead-Based Paint Disclosure Addendum (Addendum) completed by the AM Vendor on the bid site with the listing. A property constructed before 1978 cannot be listed for sale without all available reports and/or records pertaining to lead-based paint and lead-based paint hazards being made available for downloading from the property bid site. The AM Vendor shall comply with lead-based paint disclosure as noted in its contract including Attachment 8.

3. Contingency period:

a. In all cases, the Purchaser shall have a lead contingency period of fifteen (15) calendar days to review all documentation related to lead-based paint and to obtain, at the Purchaser’s option and expense, the Purchaser's own lead-based paint inspection, visual assessment for deteriorated paint, or risk assessment. The Selling Broker, following offer acceptance and prior to submitting the executed sales contract to HUD will provide the required disclosure and obtain the Purchaser’s signature on the Disclosure Addendum. The lead contingency period shall commence on the date the contract is accepted by HUD and shall run contemporaneously with the general property condition inspection contingency described in the Performance Work Statement.

b. In cases where, the FSM Vendor has performed a lead-based paint inspection and visual assessment to identify deteriorated lead-based paint requiring the disclosure of additional lead documents, the Purchaser shall have until the later of the lead contingency period in 3(a), above, or two (2) business days after receipt of the Supplemental Addendum to exercise the right to withdraw from the contract.

c. The AM Vendor may consider and approve reasonable written requests for extensions of time for review of lead inspection or visual assessment results.

4. Cancellation/Return of Earnest Money Deposit:

a. In cases were HUD cancels the contract due to the presence of deteriorated LBP paint and the cost estimate for implementing the stabilization plan exceeds $4000.00, the buyer shall be entitled to a 100% refund of the earnest money deposit.

b. If following notification and disclosure in 3(b) above, the Purchaser is dissatisfied with the condition of the property and notifies the Vendor in writing by the close of the contingency period (as determined by the date the notification of withdrawal is postmarked), the Purchaser may withdraw from the contract and be entitled to a 100% refund of the earnest money deposit.

c. The withdrawing Purchaser shall be entitled to a 100% refund of earnest money if the Purchaser obtained an independent lead-based paint inspection performed by a Certified Lead-Based Paint Inspector or Certified Risk Assessor, and the Purchaser provides the Vendor with a copy of the inspection report. The period for the Purchaser to request the refund of earnest money shall be as described in 3(a), above.

5. Stabilization of properties sold with FHA insured financing other than a 203(k) rehabilitation mortgage which are determined to have deteriorated lead-based paint:

a. In cases where the cost of stabilization is $4000.00 or less and the purchaser elects to enter into or continue with the contract, following disclosure and receipt of the paint stabilization plan and cost estimate, the AM Vendor shall issue a work order via P260.

The FSM Vendor shall forward these documents and property keys to a trained (and certified where required by the State or local jurisdiction) lead remediation Vendor retained by the Vendor for paint stabilization using lead safe work practices1.

1 All persons performing interim controls, including paint stabilization, must be trained. Several training options exist in the Lead Safe Housing Rule (24 CFR 35.1330(a)(4)). One option is for these persons to take one of the HUD-approved courses in Lead Safe Work Practices, listed at the HUD lead web site, at www.hud.gov/offices/lead/lbptraining/cfm. If supervised on the job by a certified abatement supervisor, they must complete training in compliance with the OSHA hazard communication standard. A third option for these persons is to take either a lead-based paint abatement worker or supervisor course. Persons performing abatement require abatement training and certification. A list of trained lead evaluation and lead hazard control service providers qualified under the Lead Safe Housing Rule can http://www.hud.gov/offices/lead/lbptraining/cfm

b. Within one (1) business day of the completion of paint stabilization, the FM Vendor shall schedule clearance testing.

Clearance should be performed as soon as possible following the completion of lead hazard control work. The FM Vendor shall post copies of the clearance examination report in P260 within one day of receipt. Within one (1) business day of receipt, the AM Vendor shall provide a copy of the clearance examination report to the Purchaser in accordance with the HUD/EPA Lead Disclosure Rule (24 CFR 35 subpart A).

c. The clearance examination shall be performed by personnel qualified in accordance with 24 CFR 35.1340(b) (1), that is, by a certified lead-based paint inspector, certified risk assessor, or sampling technician. In accordance with 24 CFR 35.1340(f), the clearance examination shall be performed by a person or entity independent of those performing hazard reduction or maintenance activities, unless the FSM Vendor uses qualified in-house employees to conduct clearance; an in-house employee shall not conduct both a hazard reduction or maintenance activity and its clearance examination.

d. The AM & FSM Vendor’s shall perform the actions described in 5(a) through 5(g) in a time frame that will not delay the scheduled closing.

e. In those instances where the Purchaser exercises the option to withdraw his/her offer and stabilization work has not begun, the AM Vendor shall notify the FSM Vendor via P260 to postpone stabilization and clearance testing until such time as a sales contract for a subject property sold with FHA-insured financing is accepted.

Following acceptance, the AM Vendor shall issue a work order via P260 for the FSM Vendor to perform a visual assessment to determine if additional deterioration of more than de minimis2 amounts has occurred and if so, further inspection and possible paint stabilization followed by a clearance test is required.

f. In those instances where contingency extensions have been granted and stabilization work has begun and the Purchaser exercises the option to withdraw his/her offer, remediation and clearance should be found at: www.leadlisting.org. This voluntary Lead Listing can also be accessed from www.hud.gov/offices/lead/index.cfm.

2 de minimis is 20 square feet (2 square meters) on exterior surfaces; 2 square feet (0.2 square meters) in any one room or space; or 10 percent of the total surface area on an interior or exterior type of component with a small surface area such as windowsills, baseboards, and trim.

http://www.leadlisting.org/ http://www.hud.gov/offices/lead/index.cfm.

proceed to completion. If the property is subsequently sold with FHA insurance and/or the closing will take place more than ninety

(90) days from the date of the clearance certificate, the AM Vendor shall issue a work order via P260 for the FSM Vendor to perform a visual assessment for deteriorated paint to determine if additional deterioration of more than de minimis amounts has occurred and, if so, based upon the previous lead-based paint inspection, obtain an updated stabilization plan and perform paint stabilization of deteriorated lead-based paint, followed by another clearance examination. If more than de minimis amounts of deterioration have occurred, the FSM Vendor shall obtain a new clearance examination and certificate the cost of which shall be reimbursed by HUD as a pass-through expense, not to exceed the maximum costs for the contract area approved by the Contracting Officer Representative (COR). Pass through reimbursement will not be made if the Vendor, its employees, SubVendors or their agents were responsible for the delay.

g. A property constructed before 1978 and sold with any FHA-insured mortgage except a 203(k) rehabilitation mortgage, in which deteriorated lead-based paint has been identified, cannot close without a clearance certificate. The FSM Vendor shall promptly inform the AM Vendor and the COR of the failure of a clearance test and require the Vendor performing the paint stabilization to continue with remediation until clearance is achieved.3 There will be no charge to the Purchaser for closing extensions resulting from delays in completing paint stabilization and clearance.

6. Stabilization of properties sold with FHA 203(k) insured rehabilitation financing mortgage which are determined to have deteriorated lead-based paint:

a. In cases where the Purchaser elects to enter into or continue with the contract, if a property has deteriorated lead-based paint and has been sold with 203(k) rehabilitation financing, it is subject to the provisions of 24 CFR Part 35, Subpart F. The AM Vendor shall ensure that the Purchaser signs a 203(k) Rehabilitation Financing Lead Agreement requiring that a clearance examination and report be included in the work write-up and conducted before release of the final construction disbursement and before occupancy.

3 If significant adverse weather conditions exist (e.g., winter cold weather prevents proper paint application), occupancy following acceptable interior clearance testing results will be allowed without completion of exterior clearance, but exterior work must be completed and visually cleared as soon as possible.

b. The clearance examination shall be performed by personnel qualified in accordance with 24 CFR 35.1340(b) (1), that is, by a certified lead-based paint inspector, certified risk assessor, or sampling technician.

c. At closing the Purchaser shall receive a credit in an amount not to exceed $4000.00, representing the Seller’s contribution toward the cost of stabilization and clearance testing. The Credit shall appear on the FORM HUD-1 SETTLEMENT STATEMENT and shall be deposited in the 203(k) repair escrow account. If the actual cost of stabilization exceeds the credit provided or if the property fails a clearance examination, the Purchaser will be responsible for any additional costs.

7. Use of separately contracted certified lead firms

HUD, at its discretion, may contract for the services of certified lead-based paint inspectors, certified risk assessors, or sampling technicians, by one or more national, regional or other contracts. If HUD uses the services of such persons and firms for activities (such as lead-based paint inspection, visual assessment for deteriorated paint, risk assessment and/or clearance) covered under this contract, the FSM Vendor shall coordinate its work with such persons and firms in place of providing its own services for such activities as described in this Attachment.

8. Costs

The COR will establish and provide to the FSM Vendor maximum allowable costs for obtaining lead paint inspections, visual assessments, stabilization plans and cost estimates. Without prior approval of the COR, HUD will reimburse as a pass-through expense actual costs for these services not to exceed the COR-specified maximums. HUD will reimburse as a pass-through expense the actual cost of stabilization and clearance certification when approved in advance by the COR.