Attach 3 Elimination of Lead Based Paint.pdf

Attachment 3

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 2003-30.

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 that 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 S4,000. HUD will evaluate on case by case basis all stabilization costs that exceed $4,000 to determine practicability of elimination.

B. Definitions

The definitions in the Lead Safe Housing Rule in 24 CFR 35.110 applies 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 Contractor shall verify the age of the property and ensure the correct age is reflected in P260.

2. Properties constructed before 1978 — Inspection

(a) Within 1 day of an executed Sales Contract with FHA insured financing for properties built prior to

1978, the AM Contractor shall initiate a work order or email notification in P260 for a LBP inspection. The AM Contractor shall initiate the work order for LBP inspections within one (1) business day of contract acceptance by HUD.

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

1. The FSM Contractor 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.

a. Upon receipt of the work order, the FSM Contractor shall order from an inspector or risk assessor (described in 2(a) above), a lead-based paint inspection and visual assessment to identify deteriorated lead-based paint. If deteriorated paint is found, the

FSM Contractor 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 Contractor shall post the stabilization plan and cost estimate in P260 within one (1) day of receipt.

b. Upon receipt of the stabilization plan and cost estimate, the AM Contractor shall comply with the requirements of their specific Contract and lead-based paint disclosure requirements. If the cost estimate exceeds $4000.00, the AM Contractor shall: (1) with COR approval attempt to amend the contract financing to 203(k) or conventional financing or (2) cancel the contract in accordance with the LBP

Stabilization Addendum. The AM Contractor shall deliver to the selling broker by overnight delivery a copy of the stabilization plan, cost estimate and cancellation notice if applicable. If the AM Contractor cancels the contract, the property shall be re-listed as Uninsured.

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

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

d. For all properties, the AM Contractor shall post a property-specific Lead-Based Paint

Disclosure Addendum completed by the AM Contractor on the bid site with the listing. Properties 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

Contractor shall comply with lead-based paint disclosure requirements.

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 AM Contractor's

Performance Work Statement.

b. In cases where, the FSM Contractor has performed a lead-based paint inspection and visual assessment to identify deteriorated lead-based paint, and deteriorated lead-based paint is found 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 Contractor may consider and approve reasonable written requests for extensions of time for review of lead inspection or visual assessment results.

Cancellation/Return of Earnest Money Deposit:

a. In cases where 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 the Purchaser is dissatisfied with the condition of the property and notifies the Contractor 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. 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 Contractor with a copy of the inspection report. The period for the Purchaser to request the refund of earnest money shal l be as described in

3(a), above.

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

1. 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 Contractor shall issue a work order via P260. The FSM Contractor shall forward these documents and property keys to a trained (and certified where required by the State or local jurisdiction) lead remediation Contractor retained by the Contractor for paint stabilization using lead safe work practices'.

2. Within one (1) business day of the completion of paint stabilization, the FM Contractor shall schedule clearance testing. Clearance should be performed as soon as possible following the completion of lead hazard control work. The FM Contractor shall post copies of the clearance examination report in P260 within one day of receipt. Within one (1) business day of receipt, the

AM Contractor 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).

3. 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.

4. The AM & FSM Contractors shall perform the actions described in 2(a) through 4(b) in a time frame that will not delay the scheduled closing. Any delays in closing attributed either Contractor's untimely performance of the actions described in 2(a) through 4(b) may result in a daily holding cost penalty to the Contractor.

5. In those instances where the Purchaser exercises the option to withdraw his/her offer and stabilization work has not begun, the AM Contractor shall notify the FSM Contractor 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 Contractor shall issue a work order via P260 for the FSM Contractor to perform a visual assessment to determine if

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 be found at: www.leadlisting.org. This voluntary Lead Listing can also be accessed from www.hud.gov/offices/lead/index.cfm.

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

additional deterioration of more than de minimise amounts has occurred and if so, further inspection and possible paint stabilization followed by a clearance test is required.

6. 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 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

Contractor shall issue a work order via P260 for the FSM Contractor 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 Contractor 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 Government Technical Representative (COR). Pass through reimbursement will not be made if the Contractor, its employees, SubContractors or their agents were responsible for the delay.

7. 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 Contractor shall promptly inform the AM Contractor and the COR of the failure of a clearance test and require the Contractor 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.

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

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 Contractor 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.

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.

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.

2. 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.

3. 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 STATMENT 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.

F. 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 Contractor shall coordinate its work with such persons and firms in place of providing its own services for such activities as described in this Attachment.

G. Costs

The COR will establish and provide to the FSM Contractor 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.