Owners Fret Over Cost of Lead Law

Andrew Hoffman is in a fight with insurance companies to buy a policy that includes lead paint coverage. The city’s new, tougher lead paint law has been in effect for two weeks, and the owner of the London Terrace in Chelsea will likely be forced to join other landlords in acquiring separate pollution policies, which are becoming prohibitively expensive in the shadow of the new legislation.“They are going to exclude lead paint from the insurance policy, I’m sure of it,” said Mr. Hoffman, whose insurance runs out September 1.Insurance companies have been hesitant to offer pollution coverage, which would cover lead paint, because the new law presumes all paint in pre-1960 buildings is lead-based. In prior laws, paint in pre-1960 buildings was treated as if it contained lead but only to cover all possible cases. Insurance companies say the assumption that all paint in these buildings is lead paint, has put the burden of proof on landlords. This leaves owners vulnerable to paying damages in a lawsuit, raising their risk profile for insurers.The City Council passed Local Law 1 of 2004, which went into effect August 2, over a veto by Mayor Bloomberg in February. The law, which applies to all pre-1960 apartments except owner-occupied co-ops, requires that any worker who touches more than 2 square feet in an apartment be certified in “lead safe work practices.” Those who touch more than 100 square feet must receive a 32-hour certification course in lead paint abatement. Among other things, it also requires surface edges that rub against each other, such as windows and doors, to be specially treated, forcing some owners to replace objects previously considered “lead safe.”The law’s supporters say the law does not presume a landlord’s guilt.“The law says that if you don’t know if a surface in a pre-1960 building has lead based paint, then assume it does. This is just a commonsense health policy,” a public health advocate at the New York Public Interest Research Group, Pete Sikora, said. “This is logically different from what the real estate and insurance industry is claiming, which is that if a child is poisoned by lead, there is an assumption” that it was the landlord’s fault. Mr. Sikora said this perspective “is just spin.”Rates for lead-paint insurance have gone up in recent months, and landlords are now being charged “a minimum of $10,000 with a $50,000 deductible,” said an insurance broker at York International, Barbara Strauss.“Most insurance companies are excluding lead-paint coverage from their policies, so you have to buy the coverage separately, which is very expensive,” she said.One company does offer an insurance program that includes lead-paint coverage, but it has made the policy difficult to get. Insurance wholesaler Gary Shapiro of Program Brokerage says he’s being very selective.“I’m looking to be here for the long run,” Mr. Shapiro, said. “If a company has any violations, we’ll pass on them.”“Pollution insurance has gone from about $10 per apartment per year, to almost $70,” said the president of Langsam Property Services, Mark Engel. Mr. Engel manages 8,000 low- and middle-income apartments in the Bronx, mostly in buildings built in the 1920s and 1930s, before lead paint was made illegal. His buildings have been subject to several lead-paint lawsuits.“The misconception is that the lead paint comes from the apartment,” Mr. Engel said. “It could be from the park, the school, or even a bridge. It’s proving that which is hard.”Some companies are opting out of buying lead-paint insurance rather than pay such large premiums.“Some clients are deciding to go bare, without any insurance at all, which is dangerous, but what can you do?” Ms. Strauss said.“It is just dreadful what landlords are going through,” said the director of government affairs for the Rent Stabilization Association, Frank Ricci. “My sense is, the larger landlords will use funds from one building to help another, but I don’t know how the landlord who owns one small building will be able to comply with the law.”Beyond the insurance issue, owners have hit upon another problem: finding knowledgeable workers.“It is chaotic as everyone is trying to find contractors who have the training,” said the senior vice president of the Real Estate Board of New York, Marolyn Davenport. “Word hasn’t filtered out yet to the carpenters and electricians that they need to be certified.”The bill also contains a number of liability traps, in Ms. Davenport’s view. She said one example is complicated record-keeping requirements that make it difficult to remain compliant.“You have to keep detailed records for 10 years, and you have to make them available if you sell the building or get inspected,” Ms. Davenport said. “It is really complicated, and if our members are confused, who are some of the most sophisticated in the industry, it is much worse among those owners who are less sophisticated.”To oversee the administrative aspects of remaining compliant with lead-paint laws, Mr. Engel is creating a new position to be paid $30,000 annually. He said the responsibility of maintaining compliance is such a big job that they felt the need to hire someone who would work fulltime on the issue.Ms. Davenport said this new worry is diverting attention that could be better spent.She said, “The sad part is that an enormous amount of the resources that landlords of low and middle-income housing have are being directed toward compliance instead of stopping lead-paint poisoning.”

Owners Fret Over Cost of Lead Law

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