EPA Changes to Real Estate Agent's Lead-Based Paint Obligations are Focused on Making a Political Point Not Protecting People
Cheryl Conner King
Closing Attorney | Partner, Thomas & Brown | Podcaster | REALTOR? | Owner, Fidus Title & Escrow | LSU ??
The Change
In the past the Seller's Agent was required to inform their client about the requirements of Lead-Based Paint regulations. The 2024 addition to the Environmental Protection Agency (EPA) disclosure form is that the Buyer's Agent has to inform the Seller of their obligations as well.
A footnote explains that this is only applicable if the Buyer's Agent "receives compensation" from the Seller.
The disclosure does not explain whether this is direct compensation or also includes cooperative indirect compensation. The answer to that questions is found in the Code definition section.
Based upon the definition, this would include cooperative compensation to the Buyer's Agent from the Seller's Agent because the cooperative payment involves a contract between the Buyer's Agent and a representative of the Seller (the Seller's Agent) for such compensation to be paid. This could have been explained on the actual form or with more clarity to provide clear guidance the Agents. The EPA elected to put the requirements and explanation in 3 different locations on 2 different documents.
What is the Purpose of the Change?
If the point was to make sure Buyers are informed about the very real hazards of Lead-Based Paint, the Buyer's Agent should be required to inform their own client about the issue and ways to identify and mitigate the risks. If the point is to make sure all Sellers disclose to all Buyers, all Buyer's Agents would be required to inform all Sellers. Why does "who pays who" affect the need to protect the Buyers from Lead-Based Paint? It does not. The EPA has adopted the DOJ's antagonistic view of cooperative commission and are using a health and safety regulation to add burdens only to those Buyer's Agents who are compensated by the Seller side of the transaction.
How Does a Buyer's Agent Comply?
Great question considering they may have never met the Seller and probably do not have any contact information for the Seller. Also consider that there are legal and ethical restrictions that prevent a Buyer's Agent from communicating directly with a represented Seller. Buyer's Agents can only communicate with the Seller's representative under Article 16 of the REALTOR? Code of Ethics but I do not expect that the federal agency has read or cares about the ethical standard that REALTORS? commit themselves to for the protection of clients, customers and the public. What about state laws that contain similar restrictions? For example, GA. Code § 43-40-25 makes it an illegal unfair trade practice for any real estate agent to:
The only way for a real estate agent to fulfill the federal requirements and abide by law and ethics would be to inform the Seller by giving notice to the Seller's Agent if the agents are in a state where notice to the agent is notice to the client. In Georgia, this is the case under the standard GAR? Purchase and Sale Agreement and is referenced in the GAR? brokerage agreements.
Will this satisfy the EPA or are real estate agents expected to defy their ethical requirements and state laws? Often, federal agencies practice regulation by enforcement. This means the agency would clarify or establish regulatory requirements through enforcement actions rather than through clear, prior guidance or rule-making. Someone will be the test case and everyone is just hoping it is not them.
The Penalty for Errors or Omissions
The penalty per error is $21,699 as of February, 2024. It may also involve a company-wide review of all of the brokerages files for any period within the past 3 years.
How the EPA Told Agents About the Change
They did not. I believe the EPA should know how to contact the state real estate commissions. If they do not, the National Association of REALTORS? has a list of the state real estate commissions. They could have contacted the National Association of REALTORS? directly since the majority of real estate agents are members. They loaded the revised form on their website and went on with their day.
What Every Agent Should Do
I have never said more times than I have said this year - Agents need to rely upon their brokerages for confirmation of appropriate policies and practices. It should be the local real estate leadership and compliance support that guides agents, not what they see in national real estate social media groups or in YouTube videos.
领英推荐
Want to Hear a Closing Attorney and REALTOR? discuss the issues and ideas for compliance? Check out the REALsmart Podcast:
Georgia Stips:
Notice: Use the GAR Form as follows:
Want to go under contract but Seller has not provided the disclosure?
Seller acknowledges that under federal law (42 U.S. Code § 4852d), the Buyer cannot become obligated to purchase the Property until Buyer has received the Lead Based Paint Disclosure from Seller. Seller and Buyer therefore agree that the Due Diligence Period and all other contingencies in this Agreement shall commence on the day the Seller provides the Lead Based Paint Disclosure which the Buyer will sign and return to Seller within one Day.
[Use only with Due Diligence contracts.]
Associate Broker, LTD Real Estate, LLC.
4 个月Thank you for sharing!
Vice President; Managing Broker Southeastern Residential
4 个月You are the best! Fantastic information for us to share with our agents.
Associate Broker / Realtor?
4 个月Thank you for sharing this! Unbelievable.
Associate Broker at Keller Williams Atlanta Partners
4 个月Once again you have gone above and beyond on this particular change. We are experiencing so much change and will survive but its not business as usual. You are the only atty of the 3 others I've listened to that has brought this to our collective attention. Great info. Thank you!!!