Over the past 6 months the Environmental Protection Agency (EPA) has once again targeted the elimination of lead based paint in homes for sale. Based on their stats 1 million children are affected by lead poisoning.

When you sell or rent a house built before 1978 you need to disclose any knowledge of lead based paint. Most private sellers don’t have any knowledge nor records of lead based paint, because they never tested their house. They can simply initial the two boxes on the form that indicate that they don’t know of lead based paint and are done.

If you buy a property from an institutional seller, such as HUD, Fannie Mae and Freddie Mac, you have to watch out and read their disclosures. Their homes for sale may have been tested for lead paint.

A couple of years ago HUD had all their listings tested for lead based paint. When new asset managers took over in 2009, they discontinued this practice.

Most HUD homes for sale in Columbus have not been tested for lead based paint.

You are certainly free to have your new home purchase tested before you close. It costs approximately $400.

If you finance your purchase with an FHA loan, FHA will conduct a lead based paint test.

That’s the good news.

The bad new is that, if they find lead based paint on the property, it has to be remedied, before they agree to underwrite your loan.

This is exactly what happened at one of my HUD home listings. My buyer was approved for FHA financing. After they won the bid, FHA discovered a tiny bit of lead based paint on parts of the soffit of the detached garage.

Sounds trivial?

Not so, says FHA. They refused to finance the deal until the lead paint issue was remedied. And that can delay the closing by weeks.

What should you do, if you find lead paint on the property?

You need to ask for remediation!

Here’s the good news. If you buy a HUD home with FHA financing, HUD will actually pay for the lead remediation up to $4,000. The work and a re-testing has to be done before the closing.

On the home I mentioned above the remediation cost was only $600 and the re-testing another $400. However, it took more than a month to get it done. Closing was delayed by more than 4 weeks.

Keep in mind that this only works with FHA loans on HUD properties. If you get a conventional loan or pay cash, HUD will not pay for lead remediation.

Definitely go with FHA loans on HUD homes. And work with a real estate agent and a loan officer who understand this process well.

Investors have additional obligations when it comes to lead based paint. If a property was inspected and lead paint was discovered, you first have to remedy the lead issue.  You also must disclose it to future tenants before they sign their lease agreement.

Also, keep in mind that contractors working on your home (not just the lead paint remediation), need to get a lead-safe certification.

You can find more about the danger of lead based paint and the necessary disclosures at EPA’s website.