Buying property to use as a rental is a great way to diversify one’s portfolio. When done wisely, it can not only help shelter your finances from market volatility, but also lead to significant returns. But how do potential buyers make sure they are making wise investments when it comes to this type of real estate? Aside from finding the right property in the right location, one of the most important steps is to make sure you have a basic understanding of the applicable rules and regulations. These rules are evolving, and a recent example is New York’s push to combat lead poisoning.
Why is New York pushing to combat lead poisoning?
Lead poisoning is a big problem in New York. Lead is a harmful metal that, if ingested, can cause serious learning and behavioral problems — particularly in children. Recent estimates find hundreds of children suffer from the negative effects of lead poisoning in New York every year.
Why should real estate investors care about this issue?
Aside from potential personal reasons and a desire to keep the community safe, investors should note that the state has implemented a new law to address this issue. The law requires property owners of buildings that were built before 1960 to get the painted surfaces tested for lead by August 9, 2025. The property owner must use an Environmental Protection Agency (EPA) certified Lead paint Inspector/Risk assessor to test all units. If the test comes back positive and there is a child under the age of six within the apartment 10 hours or more a week, the law then requires the property owner to hire an EPA certified contractor to address the hazard.
Failure to comply with these requirements may result in a Class “C” immediately hazardous violation. This violation can lead to civil penalties of up to $1500.
How can prospective buyers mitigate the risk of a violation?
Investors who are interested in moving forward with a transaction are wise to either confirm that the seller has completed the required lead inspection and request documentation from the EPA certified inspector or account for this added expense during negotiations. If issues arise regarding compliance, seek assistance from a law firm experienced in real estate and environmental regulations.
Understanding these points can help buyers avoid potential legal and financial pitfalls. Compliance with the new law not only ensures safety but also protects buyers from unforeseen liabilities.
