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+-----------------------------+----------------------------------------+
| **Special Attention of:**   | **Notice H 01-01 (HUD)**               |
|                             |                                        |
| **All Homeownership Center  | **Issued: 01/02/2001**                 |
| Directors**                 |                                        |
|                             | **Expires: 01/31/2002**                |
| **All REO Directors**       |                                        |
|                             | **Cross References: Housing Notice     |
| **All Real Estate Owned     | 00-20**                                |
| Branch Chiefs**             |                                        |
|                             |                                        |
| **All Management and        |                                        |
| Marketing Contractors**     |                                        |
+-----------------------------+----------------------------------------+

**Subject: Modifications of Terminology and Procedures for**

> **Elimination of Lead-Based Paint Hazards in**
>
> **HUD-Owned FHA-Insured Single Family Properties**
>
> **Built Before 1978.**

This Notice implements the requirements and terminology established by
the Residential Lead-Based Paint Hazard Reduction Act of 1992 (Title X
of the Housing and Community Development Act of 1992) and new lead-based
paint regulations (the Lead Safe Housing Rule) at 24 CFR Part 35,
Subpart F. The regulations establish procedures to eliminate as far as
practicable lead-based paint hazards on single family properties built
prior to 1978 and sold with FHA-insured mortgages (including 203(b) and
203(k) loans), effective September 15, 2000.

**A. Applicability**

The new regulation applies to HUD-owned single family properties that
have been built before 1978 and are sold with

FHA-insured mortgages. Properties sold without FHA mortgage insurance
are no longer subject to these requirements, but such properties **are
still subject to the lead-based paint disclosure requirements of 24 CFR
Part 35, Subpart A and Housing Notice 96-78**.

**B. Definitions**

The following definitions are used throughout this Notice. They are
provided to avoid confusion where definitions are new or have changed as
a result of the new regulation.

**HSIP Distribution:** W‑3‑1, W‑2(OGC)(H)(Z), W‑3(A)(H)(ZAOO), W‑4(H),
R‑1, R‑2, R‑3, R‑3‑1(H)(RC), R‑3‑2, R‑3‑3, R‑6, R‑6‑1, R‑6‑2, R‑7,
R‑7‑1, R‑7‑2, R‑8, R‑8‑1

**[Certified]{.underline}:** Licensed or certified to perform such
activities as risk assessment, lead-based paint inspection, or abatement
supervision, either by a State or Indian tribe with a lead-based paint
certification program authorized by the Environmental Protection
Agency(EPA), or by the EPA, in accordance with 40 CFR Part 745, subparts
L or Q.

**[Clearance]{.underline}:** An examination conducted following
lead-based paint hazard reduction activities to determine that the
hazard reduction activities are complete and that no settled dust-lead
hazards exist in the dwelling unit or worksite. The clearance
examination process includes a visual assessment, dust sampling,
submission of samples for analysis for lead, interpretation of sampling
results, and preparation of a report. Clearance examinations must be
performed in accordance with 24 CFR 35.1340, which states that clearance
must be performed following interim controls, paint stabilization,
standard treatments, ongoing lead-based paint maintenance or
rehabilitation, unless the work performed is below the de minimis levels
specified at 24 CFR 35.1350(d).

Persons conducting clearance examinations must meet the qualifications
set forth in 24 CFR 35.1340(b)(1). The following personnel are qualified
to conduct clearance examinations:

1.  A certified risk assessor.

2.  A certified lead-based paint inspector.

3.  A technician licensed or certified by EPA or a State or Indian tribe
    to perform clearance examinations.

4.  An uncertified person who has successfully completed a training
    course for clearance technicians that is developed or accepted by
    the Environmental Protection Agency (EPA) or a State or Indian Tribe
    and that is given by a training provider accredited by EPA or a
    State or Indian tribe, [provided]{.underline} a certified risk
    assessor or a certified lead-based paint inspector approves the work
    of the clearance technician and signs the report of the clearance
    examination.

5.  Clearance examinations shall be performed by persons or entities
    independent of those performing hazard reduction or maintenance
    activities, unless the designated party uses qualified in-house
    employees to conduct clearance. An in-house employee shall not
    conduct both a hazard reduction or maintenance activity and its
    clearance examination.

**[Deteriorated Paint]{.underline}:** Replaces the term "Defective
Paint". Any interior or exterior paint or other coating that is peeling,
chipping, flaking or cracking, or any paint or coating located on an
interior or exterior surface or fixture that is otherwise damaged or
separated from the substrate.

**[Lead-Based Paint]{.underline}:** Paint or other surface coatings that
contain lead equal to or exceeding 1.0 milligram per square centimeter
or 0.5 percent by weight or 5,000 parts per million (ppm) by weight.

**[Paint Stabilization]{.underline}:** Repairing any physical defect in
the substrate of a painted surface that is causing paint deterioration,
removing loose paint and other material from the surface to be treated,
and applying a new protective coating or paint.

Persons performing paint stabilization must be trained or supervised in
accordance with the requirements at 24 CFR 35.1330(a)(4), which states
that a person performing interim controls must be trained in accordance
with 29 CFR 1926.59, which is a training requirement of the Occupational
Safety and Health Administration, and such persons must either be
supervised by an individual certified as a lead-based paint abatement
supervisor, or have successfully completed one of the following courses:

1.  A lead-based paint abatement supervisor course accredited in
    accordance with 40 CFR 745.225

2.  A lead-based paint abatement worker course accredited in accordance
    with 40 CFR 745.225

3.  The lead-based paint abatement Maintenance Training Program, "Work
    Smart, Work Wet, and Work Clean to Work Lead-Safe," prepared by the
    National Environmental Training Association for EPA and HUD.

4.  "The Remodeler's and Renovator's lead-based training program,"
    prepared by HUD, based on a course developed by the National
    Association of the Remodeling Industry.

5.  Any other course approved by HUD for this purpose. A list of
    approved courses can be downloaded from **http://www.hud.gov/lea**.

**[Paint Testing]{.underline}:** The process of determining, by a
certified lead-based paint inspector or risk assessor, the presence or
the absence of lead-based paint on deteriorated paint surfaces or
painted surfaces to be disturbed or replaced.

**[Prohibited Methods of Paint Removal:]{.underline}** Prohibited
methods of paint removal include the following:

1.  Open flame burning or torching.

2.  Machine sanding or grinding without a high-efficiency particulate
    air (HEPA) local exhaust control.

3.  Abrasive blasting or sandblasting without HEPA local exhaust
    control.

4.  Heat guns operating above 1100 degrees Fahrenheit or heat guns or
    other means which char the paint.

5.  Dry sanding or dry scraping, except dry scraping in conjunction with
    heat guns or within 1 foot (0.3 meter)of electrical outlets, or when
    treating defective paint spots totaling no more than 2 square feet
    (0.2 square meter) in any one interior room or space, or totaling no
    more than 20 square feet (2 square meters) on exterior surfaces.

6.  Paint stripping in a poorly ventilated space using a volatile
    stripper that is a hazardous substance under the regulations of the
    Consumer Product Safety Commission.

**[Residential Property]{.underline}**: A dwelling unit, including
common areas, building exterior surfaces, and any surrounding land,
including outbuildings, fences and play equipment affixed to the land,
belonging to an owner and available for use by residents, but not
including land used for agricultural, commercial, industrial or other
non-residential purposes, and not including paint on the pavement of
parking lots, garages, or roadways.

**[Safe Work Practices:]{.underline}** Safe work practices require that:

1.  Prohibited methods of paint removal shall not be used.

2.  Occupants and their belongings shall be protected.

3.  After hazard reduction activities have been completed, the worksite
    shall be cleaned using cleaning methods, products, and devices that
    are successful in cleaning up dust-lead hazards, such as a HEPA
    vacuum or other method of equivalent efficacy, and lead-specific
    detergents or equivalent.

4.  Safe work practices are not required, and clearance examinations and
    clearance reports are not required when maintenance or hazard
    reduction activities do not disturb painted surfaces that total more
    than:

    a.  20 square feet (2 square meters) on exterior surfaces;

    b.  2 square feet (0.2 square meters) in any one interior room or
        space; or

    c.  10 percent of the total surface area on an interior or exterior
        type of component with a small surface area. Examples include
        window sills, baseboards, and trim.

**[Substrate]{.underline}:** The material directly beneath the painted
surface out of which the components are constructed, including wood,
drywall, plaster, concrete, brick or metal.

**C. Required Lead-Based Paint Procedures for HUD Real Estate Owned
Single Family Properties.**

**1. Identification of Properties Subject To Lead-Based Paint
Procedures**

Within 15 days of acquisition of a new HUD property,

the management and marketing (M&M) contractor will identify properties
constructed prior to 1978 and make a determination regarding potential
insurability of those properties.

**2.** **Properties Built Prior to 1978 and Sold Without FHA- Insured
Mortgages**

Properties constructed prior to 1978 that will be sold without
FHA-insured mortgages will not be subject to the new criteria cited in
24 CFR Part 35 Subpart F, which establishes procedures to eliminate as
far as practicable lead-based paint hazards in HUD-Owned single family
properties that have been built prior to 1978 and are sold with
mortgages insured under a program administered by HUD.

Properties that will be sold without FHA-insured mortgages include
properties offered only to non-profit organizations, government housing
agencies, and other Community Advancement Program participants to
include Asset Control Areas (ACAs). It further includes properties that
the Department intends to demolish, or that are in such deteriorated
condition that they are offered for cash only with no provision for use
of 203(k) Rehabilitation financing. Officer Next Door/Teacher Next Door
properties are subject to 24 CFR Part 35 Subpart F, unless those
properties, based on their physical condition, are not eligible for FHA
insurance.

Properties sold without FHA-insured mortgages are still subject to the
lead-based paint disclosure requirements at 24 CFR 35, Subpart A, and
Notice 96-78, renewed as Notice 00-20, which states that the Seller
shall disclose to the purchaser or lessee the presence of any known
lead-based paint and/or lead-based paint hazards; provide available
records and reports; provide the purchaser or lessee with a lead hazard
information pamphlet; give

purchasers a 10-day opportunity to conduct a risk assessment or
inspection; and attach specific disclosure and warning language

to the sales or leasing contract before the purchaser or lessee

is obligated under a contract to purchase or lease target housing.

> **3. Required Lead-Based Paint Procedures for HUD Real Estate Owned
> Single Family Properties Built Prior to 1978 and Sold with FHA-Insured
> Mortgages.**

The following lead-based paint procedures will apply to all properties
that are offered for sale as insurable(IN), insurable with
conditions(IC), or insurable with escrow(IE):

> a\. Prior to listing of the property for sale, the management and
> marketing contractor will conduct a visual assessment of all painted
> surfaces of the residential property to determine and identify areas
> of deteriorated paint as defined in the management and marketing
> contract in Exhibit 15, paragraph 15-3 and the certification of
> inspection for deteriorated paint surfaces. Deterioration limited to
> hairline cracks, small nicks, scratches or nail holes is not
> considered deteriorated paint. Special training or certification is
> not required under 24 CFR 35 Subpart F to perform visual inspections,
> however, at a minimum, inspectors should complete a visual assessment
> web-based tutorial at **http://www.hud.gov/lea**.

b\. Conduct paint testing by a certified lead-based paint inspector or
risk assessor of those areas that have been identified as deteriorated
paint. If the management and marketing contractor determines that it is
more cost effective to presume the presence of lead-based paint rather
than conducting a paint test, the contractor may forego paint testing.

c.  Paint stabilization and clearance will not be required for those
    surfaces that are found by the paint testing not to be lead-based
    paint.

d\. Prior to listing the property for sale, paint stabilization will be
performed by the management and marketing contractor on the deteriorated
paint surfaces found by the paint testing to be lead-based paint or
presumed to be lead-based paint. Safe work practices apply.

e\. If paint stabilization is conducted, the management and marketing
contractor will conduct a clearance examination prior to closing of
escrow on properties that are sold with FHA-insured 203(b) mortgages.
Clearance examinations shall include a visual assessment, dust sampling,
submission of samples for analysis for lead, interpretation of sampling
results, and preparation of a report. A copy of the clearance report
will be provided to the purchaser at close of escrow. If a property
fails a clearance examination, the property shall be recleaned and a new
clearance examination conducted at the expense of the management and
marketing contractor( or its construction subcontractor). The cost of
the clearance examination, not to exceed \$150 per property, shall be
treated as a pass-through expense. Safe work practices apply.

f.  Properties originally listed as insurable(IN), insurable with
    conditions(IC), or insurable with escrow(IE), and subsequently sold
    through the 203(k) loan program will not be required to provide a
    clearance report, or a clearance examination prior to close of
    escrow. The purchase contract shall contain a provision requiring
    the clearance exam and certification to be included in the work
    write-up and conducted prior to release of the final construction
    disbursement. The cost of the clearance exam, not to exceed \$150
    per property shall appear as a credit on the HUD-1 closing statement
    and shall be deposited in the 203(k) repair escrow account. If a
    property fails a clearance examination, the property shall be
    recleaned and a new clearance examination conducted at the expense
    of the purchaser.

g\. Properties originally listed as uninsurable and subsequently sold
through the 203(k) loan program are subject to the provisions of CFR
Part 35, Subpart F. The purchase contract shall contain a provision
requiring the actions described in 15-3, 15-4, 15-5 and 15-6 herein be
included in the 203(k) work write-up and completed prior to occupancy
and prior to release of the final construction disbursement. The cost of
meeting the requirements of CFR Part 35, Subpart F shall be the
responsibility of the purchaser.

A list of sampling technicians qualified under the new lead-based paint
regulations to perform clearance examinations, and of lead-based paint
inspectors and risk assessors certified by EPA or a State or Indian
tribe, who can perform clearance examinations, can be found at:
**http://www.leadlisting.org.** This voluntary Lead Listing can also be
accessed from **http://www.hud.gov/lea.** Please direct any questions to
the Office of Single Family Asset Management at (202) 708-1672.

\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

William C. Apgar

Assistant Secretary for Housing-

Federal Housing Commissioner