Lead Based Paint That Is Peeling

[Stephanie Welch]

I did a search for this and couldn't find it. I am just wondering how everyone else handles this issue. I was taught by my mentor that if a home has peeling paint, that the old paint must be scraped off, the paint chips must be removed, and the home or building must be repainted with 2 coats of non lead-based paint. I was taught that on a purchase transaction, the report must be made subject too. If it is for a refinance, than it is just suggested that the paint chips be removed. So, what do you do when you have a home or outbuilding that has badly peeling paint?

Thanks in advance for your replies. Also, is there anything in writing that requires this "repair" when it is a real estate transaction?

 

[Barbara Decker-Spence]

Are you talking about FHA? The process for handling paint sounds like FHA - but you don't need to specify the details; just goes on the VC sheet. To the best of my knowledge, no difference if sale or refi, although there is some provision with a refi that is just recasting an existing loan that the UNDERWRITER may waive some repair requirements - you still report what you see.

Never heard of this regarding conventional loans, and have no knowledge with regard to FHA

 

[Jungle Boy]

If I'm appraising a 1950s house in a 1950s neighborhood, that has some peeling paint, and I know that the comparables have peeling paint, .....

 

[G-man]

Yes, for FHA just state that there is peeling paint, and if home is built after 1978. You, as an FHA appraiser do not need to specify the remedy, just what you observed. Now, for a conventional loan, either sale or refi, you can, if the peeling paint is very bad and would effect the value and/or the soundness of the structure, point out what you observed and comment on it and its effect on value. I don't believe you have to make it "subject to repair". That would be for an underwriter to decide. As appraisers, we, I believe, observe the property. I don't think peeling paint is really that serious of an issue at to make an appraisal "subject to" repair. Especially if it is just cosmetic. My $0.02 anyway.

 

[George W Dodd]

Stephanie,

A repair like this would only be required on an FHA assignment prior to 11/01/05. But with the new forms this deficiency should be noted and you must make a determination as to whether the lack of repair affects the integrity of the dwelling and/or if it is a lead paint health hazard and must be inspected by a qualified licensed contractor to determine if it needs to be mitigated, and then subject your report, if needed, in the appropriate manner.

The fact that this type of item is typical for the market is irrelevant as far as noting the deficiency in the report. As far as its effect on marketability and impact on value, these factors can only be addressed using matched paired analysis and/or other reliable data extracted from the market. However, if it is a health and safety issue and/or a problem that effects the structural integrity of the dwelling, then the report would have to be done subject to inspections and repairs.

Don’t you just love the new forms… The inspections needs to be done top to bottom and inside and out. Take lots of pictures and disclose everything. If you simply think that a deficiency is typical for the age/type of property and don’t disclose the item you have opened yourself to a world of liability and the potential for the purchaser’s attorney to clean your savings account out.

 

[Elliott]

Steph,
Take one of the chips and taste it...if its sweet, its
probably lead....that's why those little tikes like it.
Most likely, its water based. I don't think your doin
an FHA. Paint peels, that's what it does. Just put in
your report that some paint is peeling and your butt'll
be covered.

elliott

 

[Chris Colston]

How do you KNOW the paint is lead based? Did you have it tested?

As noted from others, FHA requires a notification if the paint is peeling and the house was built prior to 1978.

For conventional lending, peeling paint may be a matter of deferred maintenance and a CONDITION concern. If the house was built prior to 1978 you might want to recommend having the peeling paint tested before it gets covered by new paint or wall paper. Otherwise just report what you see.

 

[Chris Harrison]

Stephanie,

If the home was built prior to 1978 it is best to make the appraisal "subject to." FNMA will not accept loans on homes with chipping and pealing paint that were built prior to '78. No underwriter with any experience will accept a loan on a building with the possibility of lead base paint. Although you do not have to identify that it is lead base, you need to report the facts.

FYI:

http://www.epa.gov/opptintr/lead/titleten.html

Refi or purchase could end up at Fannie or Freddie and they are included in the '92 EPA law. I would rather be safe than sorry.

Chris
Behind the Zion Curtain

 

[G-man]

What??? You mean to tell me that Fannie Mae won't accept a loan on my house cause it was built before 1978? It may have lead based paint in it? 75% of the housing stock in Toledo is built before 1978. Fannie Mae won't lend on these? Just cause they have peeling paint. Come on dog, that ain't so. Every banker, realtor and home owner would be burning appraisers at the stake if we made every report "subject to" lead based paint abaitment just because some paint is peeling on the interior or exterior of a house. If peeling paint materially affects the value of a property, its a condition adjustment and requires mentioning in the report. If it is FHA, it requires to be mentioned and the U/W determines what needs to be done. Anything else, we become home inspectors.

 

[Don Clark]

B) Title 10, USC is a law passed in 1996 that makes all real estate professionals responsible for disclosure of the possibility of lead based paint in homes built prior to 1978. There is a very precise manner in which chipping, peeling lead based paint should be corrected. However, I am not an expert in lead based paint and could not say if it is lead based paint without the benefit of scientific analysis. What I typically state is " The possibility of lead based paint and other contaminants cannot be ruled out based on the age of the subject property". If the paint is chipping and peeling I reccomend correction by a company with expertise in treating surfaces that possibly contain lead based paint.