Here's something that may be of interest to those working on rehabs (and who
might be landlords as well). From DIRT -- the Real Estate Lawyers Listserv.
Mary
_________Fwded message _________
Subj: DD 1/24 Important Lead Paint Ruling Imposes Retroactive Duties
Date: 1/24/00 1:21:42 PM Eastern Standard Time
From: [log in to unmask] (Pat Randolph)
Sender: [log in to unmask] (DIRT - Real Estate Lawyers Listserv)
Daily Development for Monday, January 24, 2000
by: Patrick A. Randolph, Jr.
Professor of Law
UMKC School of Law
Of Counsel: Blackwell Sanders Peper Martin
Kansas City, Missouri
[log in to unmask]
LANDLORD/TENANT; LANDLORD'S RESPONSIBILITY FOR
CONDITION OF PREMISES; FEDERAL LEAD PAINT LAW:
New York federal court rules that LeadBased Paint Act imposed
disclosure requirements even prior to effective date of HUD regulations.
Sweet v. Sheahan, 1999 WL 1011921 (N.D.N.Y. 11/5/99)
In the Federal LeadBased Paint Act, Congress directed HUD to develop
regulations providing for disclosure of the enivornmental risk of leadbased
paint to certain tenants and purchasers of "target housing." The
Act required that the regulations become effective no later than October
28, 1995, and, purusant to that directive, HUD promulgated proposed
Regulations on November 2, 1994, with the statement that the
"disclosure requirements set forth in the regulations "shall apply to any
transaction to sell or lease target housing on or after October 28, 1995."
As is the nature of federal regulatory processes, however, HUD did not
publish final regulations in this area until March 6, 1996, and the
disclosure requirements set forth in these regulations did not become
effective, according to the terms of the regulations, until December 6,
1996 (September 6, 1996 for single family homes).
Plaintiff in the instant case alleged damages for violations of the statutory
disclosure requirements in a lease entered into prior to the effective date
of the HUD regulations, but three days after October 28, 1995 date
thatCongress originally specified as thedate HUD was supposed to issue
them.
Here, the court denied a summary judgment motion for defendant, stating
that HUD had no power to make law inconsistent with Congressional
action, and that the Lead Paint Act "expressly and unambiguously stated
that the disclosure regulations shall take effect' on October 28, 1995."
The court stated that "the effective date set forth in the [HUD]
regulations, which contravenes the cleawr will of Congress, cannot be
enforced." Consequently, the landlord's failure to provide notice of lead
paint dangers to this tenant directly violated the LeadBased Paint Act
and was actionable under the Act.
The court stressed that HUD's function with regard to these rules was
merely "interpretive," and not "legislative." HUD's duty was only to
"report and explain whant Congress has done." The court also alluded to
the statutory statements of purpose to stress that Congress saw an
emergency situation and the timing of the HUD response was critical.
Defendants argued that it was inappropriate to apply the regulations
retroactively. But the court responded that it was not applying the
regulations at all, but rather the "rights and obligations" of the parties
that arose under the Lead Paint Act itself. The court was willing to grant
that Congress did not intend that its statutory policies about lead paint
become law instantly upon the effective date of the Act, but concluded
nevertheless that the Congressional intent was that these policies would
become effective as of the date it instructed HUD to promulgate final
regulations.
The court states, without citing any language in the Act, that the Lead
Based Paint Act "specifically set forth the specific conduct required of
sellers and lessors, and stated that such conduct would be required on
and after October 28, 1995."
Comment 1: In the words of a broker who sent this case to the editor:
"EEEEK!!" The case would substantially expand the range of liability
for violations of the act to a period when many, if not all, institutions
doing business covered by the proposed regulations assumed that the
were not covered. If they had geared up to comply with supposed
requirements under the Act, and HUD later developed new and different
requirement standards, at worst there would have been signficant
economic waste and massive confusion in the compliance efforts.
Comment 2: But what happens now? Don't we have the same situation?
If courts following this opinion impose compliance responsibilities upon
landowners and land sellers, will they adopt "federal law" standards
based upon the Act alone? If so, will these standards be different than
those eventually enacted by HUD? Will they, in the alternative, simply
retroactively impose the HUD regulations? Will they impose the
proposed regulations? What does all this mean for parties subject to
future regulatory requirements?
The editor says all this without himself studying the language of the
statute. If it in fact is exactly consistent with what HUD ultimately
required, then some of the concerns will go away.
Comment 3: The bottom line, however, is that Congress did *not* say
that certain disclosures were required as of 1995. Rather, Congress said
that HUD would develop regulations by that date. To push the
consequences of HUD's failure to comply onto the regulated parties
seems both unjust and inconsistent with Congressional intent. If
Congress indeed perceived an emergency here requiring immediate
disclosure rules, it knew how to say that. Apparently it didn't. All we
can hope for is that the Second Circuit will realize the error of the trial
court here.
Readers are urged to respond, comment, and argue with the daily
development or the editor's comments about it.
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