The Environmental Protection Agency (EPA) has signaled one of the largest potential expansions of the Lead Renovation, Repair & Painting rules by effectively classifying Property Management Companies (PMC) as contractors.
Effective March 21, 2022 the EPA has withdrawn two frequently asked questions from their website offering guidance on the obligations of Property Management Companies when renovating, repairing or maintaining pre-1978 residential rental properties potentially making them responsible for ensuring lead-safe work practices are used…even when using vendors to do the work.
Background
Effective April 22, 2010 any firm that “performs, offers or claims to perform renovations” in pre-1978 residential housing and child occupied facilities was required to be Certified. The process for certification required:
- A responsible individual, either an owner or employee, be individually certified as a Lead Certified Renovator by attending a one-day class on lead-safe work practices and
- Registering the firm, company or organization as a Lead Certified Firm with either the EPA or state.
If the Property Management Company uses their own employees to perform any maintenance or renovation work, they needed to have taken the steps above and documented that all of the EPA rules for Lead-Safe Renovation, Repair and Painting were followed.
However, via the clarifying Frequently Asked Questions (FAQs), the EPA has taken the position for over a decade that as long as the Property Management Company:
- Does not do the maintenance work in-house using their own employees and
- Hires Lead Certified Firms as vendors who use Lead Certified Renovators to perform the work
the PMC does not need to be a Lead Certified Firm and the vendors would be responsible for compliance.
So What Has Changed
All this changes with the removal of these FAQ and the EPA explained their logic in the published Federal Register remarks proposing these changes (https://www.federalregister.gov/documents/2021/11/04/2021-24010/withdrawal-of-two-answers-to-frequent-questions-about-property-management-companies-and-the-toxic)
The EPA’s Notice takes the new position that the following activities “may establish that a PMC is performing a renovation for compensation and must comply with the RRP rule, even if the PMC uses an independent contractor or vendor instead of its own employees to do the specific activities that disturb paint surfaces.” These activities would include but are not limited to:
- Soliciting and evaluating vendor bids;
- Granting vendors access to the property;
- Overseeing vendor work on the property;
- Informing tenants of renovation activity;
- Verifying completion of renovation activity; or
- Remitting payment to the vendors.
What Does This Mean to Property Management Companies?
By withdrawing these FAQs and explaining the types of actions that “may trigger compliance obligations” for PMCs the EPA has made clear that they are intending to apply the Lead RRP Rules much more broadly against PMCs then ever before.
Simply choosing a vendor, giving them access to the property and paying the vendor will require the PMC to:
- Have a Lead Certified Renovator on staff and
- Be registered as a Lead Certified Firm with either the EPA or the state.
The PMC may also be held responsible for the overall compliance of the project even though they are not doing the actual work themselves. This approach mirrors the EPA’s enforcement approach towards General Contractors (GC) and their Sub-Contractors (Subs). All GCs are required to be Certified to perform or even bid on work in pre-1978 buildings even if they do not do the actual work themselves and strictly use Subs to do the work.
The potential fines for failure to comply can be in excess of $40,000 per day and companies like Lowes, Home Depot and Sears Home Improvements have received fines ranging from $400,000 to $20,750,000 for repeated violations.
These rules have also targeted individuals flipping homes because they often renovate prior to selling. Whether this work is done by the individual flipping, their own in-house employees or vendors/sub-contractors all parties have been required to be Certified.
What is unclear is how this will affect realtors coordinating renovations on behalf of sellers.
How can Property Management Companies Protect Themselves?
This may require a significant shift in in thinking on the part of Property Management Companies.
Nothing has changed If the PMC does maintenance or renovation work in-house. Since 2010:
- Any employees or staff performing the work in pre-1978 properties are required to be Certified Renovator or trained by a Certified Renovator who is either an owner or an employee of the firm and cannot be a vendor or sub-contractor.
- To become a Certified Renovator the individual must take an in-person, eight (8) hour class. You can find your closest class here www.LeadClasses.com.
- The Property Management Company, firm or organization must be registered as a Lead Certified Firm by either the EPA or authorized state. This is done by paying a fee and submitting the proper application. The application will be provided in the Certified Renovator class.
If the PMC hires vendors or contractors to do maintenance and renovation work, likely some changes in procedures will be required. Just as a PMC currently vets vendors and verifies licenses, insurance, workers compensation coverage, etc. they will now need to verify the vendor is a Lead Certified Firm with Certified Renovator(s) on staff. Best practices would suggest obtaining copies of both the Firm Certificate and all Individual Certificates for the individuals working on the property.
The PMC should obtain copies of all documentation as required by the EPA Lead-Safe Renovation, Repair and Painting Rules and must keep them for three years after the completion of the project.
The PMC will also need to become Lead Certified. There are two steps:
- Either the owner or responsible employee of the PMC will need to take the Lead Certified Renovator Class. Find the closest class at www.LeadClasses.com
- Register the PMC as a Lead Certified Firm. Applications and links will be provided in the class. IMPORTANT: Do not try and register the PMC as a Lead Certified Firm until there has been an individual who has successfully completed the class above.
If you have any questions, please feel free to reach out us at info@LeadClasses.com or 1-888-840-8388.