You might think that nearly 40 years after lead-based paint was outlawed that it would no longer be an issue, but you’d be wrong.
Over the past decade I have witnessed an increased rather than decreased attention to this issue. Just read Section 10.10 of the current state-mandated Contract to Buy and Sell Real Estate (emphasis added):
“Unless exempt, if the improvements on the Property include one or more residential dwellings for which a building permit was issued prior to January 1, 1978, this Contract is void unless (1) a completed Lead-Based Paint Disclosure (Sales) form is signed by Seller, the required real estate licensees and Buyer, and (2) Seller receives the completed and fully executed form prior to the time when this Contract is signed by all parties.”
It’s not uncommon for this requirement to be fudged by the parties and their agents, but doing so can create serious problems.
In order for this rule to be followed, it is critical that the listing agent make available to prospective buyers a lead-based paint disclosure, signed by the seller, prior to them submitting their offer. This can be done by making it a “supplement” to the MLS listing. The buyer’s agent must then have their buyer sign that form — and sign it themselves — and submit it with their offer.
Notice that the deadline for all parties signing is not upon submission of the contract, but upon the contract being accepted (signed) by the seller. Therefore, the listing agent should take care to see that all parties have signed the Lead-Based Paint Disclosure before allowing the seller to go under contract with a buyer.
Not only can the violation of this rule subject the buyer, seller and both agents to a fine of $16,000, it also creates an opportunity for a seller to get out of a buyer’s contract, which is otherwise very difficult for sellers to do.
Imagine, for example, a scenario in which a seller who is already under contract to sell his home receives a much better back-up offer. If it can be shown that the current contract was fully executed before the Lead-Based Paint Disclosure was signed by both parties and their agents, it is conceivable that the listing agent could cite Sec. 10.10 of the contract and declare the contract void for that reason alone, allowing the seller to accept the better offer.
The buyer would have no recourse, because, for starters, he would be admitting that the disclosure had not been signed on time, resulting in that $16,000 fine.