Owner-occupied condo and co-op apartments are excluded from the city's controversial new lead paint law, set to take effect on August 2, but boards should still be concerned about potential risks in common areas and sublets. That's the word from attorneys and managers, most of whom are still awaiting further instructions from the Department of Housing Preservation and Development (HPD) and the Department of Health and Mental Hygiene about how to implement the law.
The new city law, passed on February 1, is called the New York City Childhood Lead Poisoning Prevention Act of 2003, but it hasn't been a smooth ride. Mayor Michael Bloomberg vetoed the law in December, but the City Council overrode the veto and passed the law. In April, two separate groups sued to try and stop it from taking effect.
The new legislation, known as Local Law No. 1 of 2004, repeals all previous lead paint laws. It mandates that landlords of buildings built before 1960 must determine whether children under age seven live in multiple-dwelling units they own and inspect them for lead at least once a year. The process is similar to window guard notifications. If any lead hazards are found, the landlord is responsible for cleaning the unit. Owner-occupied co-op and condo apartments are exempt from the law, but sublets, rental units, and sponsor-owned apartments in these buildings are covered.
Aside from apartments, common areas in buildings built before 1960, or built between 1960 and 1978 where there is a known presence of lead-based paint, with children under seven living in the properties, must be inspected yearly for lead paint hazards. The new law also expands considerably the definition of "lead-based paint hazard." Now, contaminated dust, peeling paint, paint on "chewable surfaces" (i.e., window sills and other edges accessible to children), "friction surfaces"(i.e., window frames and painted surfaces that scrape other surfaces when in motion), and "impact surfaces" (i.e., painted surfaces that show evidence of marked chipping) must all be considered potential sources of lead paint poisoning.
Where do co-op and condo boards get involved? Although owner-occupied units are not covered, shareholders who sublet their apartments and condo owners who rent their units take on the responsibility for inspections under the lead paint law. It is their responsibility to determine whether any children under seven are living in the apartments. If so, they must have the unit inspected for lead paint hazards and appropriately cleared out, following the provisions of the law.
For boards, says Stuart Saft, a partner with Wolf Haldenstein Adler Freeman & Herz, "the concern is limited to two areas: lead paint in an apartment that the co-op may own as a landlord, and lead paint that may exist in the common hallways." But regardless of the law, Saft recommends that any potential lead hazard be dealt with. "Regardless of the lead paint law, there could still be liability if a child ingests lead paint in an apartment. The lead paint law sets a standard for New York, but the courts are not limited to that if a lawsuit ensues."
The new law also validates agreements between boards and unit-owners that transfer responsibility for compliance to the owner in the case of a sublet. Geoffrey Mazel, a partner with Hankin, Handwerker & Mazel, says this will allow boards to include a hold harmless agreement as part of the sublet package for shareholders. "You want the shareholder to indemnify you and hold harmless in the event of any lead paint lawsuits," Mazel says. "The managing agent is going to want the same."
Because the law is so new, there are still practical questions regarding implementation, says attorney Eva Talel, a partner with Stroock & Stroock & Lavan. She points to the common areas of co-op and condo buildings and turnover procedures for apartments "Nothing is crystal clear because we're dealing with a brand new statute," she says. "The problem for the board, [is that] if there's a sublet in the building, they have to address the common areas. Theoretically, if you had a 100-percent owner-occupied co-op, then your common areas would be exempt. But again, we don't know."
Property managers and board attorneys are in a holding pattern, waiting for the city to issue more precise guidelines for how to actually implement and administer the law's requirements. "Until we know what the implementation regulations are going to be, it's hard to say what that impact will be," says John Sicree, senior vice president with Brown, Harris, Stevens. Bloomberg set aside $100 million in his budget to pay for compliance with the new law.
Two groups, one representing landlords, the other affordable housing advocates, filed separate lawsuits in April seeking to block implementation. The landlords claim the new law opens them up to more potential liability and will make it difficult to get insurance coverage, while the housing advocates argue that the specter of liability will imperil efforts to rehabilitate buildings and bring new capital into older areas of the city. Bloomberg argues that the law's tough provisions will have unintended consequences, including discouraging landlords from renting to families with young children and exposing conscientious landlords to significant tort liability.
Observes Talel: "The statute leaves a lot of gray areas where there remains a lot of potential exposure and responsibility by co-op boards and managing agents who are on the front lines of having to deal with these issues."