In this episode of The Same Day Podcast, host Yoni Schmidt sits down with Monica Gilroy, Managing and Founding Member at The Gilroy Firm, to discuss the shifting responsibilities around lead-based paint compliance. You’ll learn why the EPA’s rule changes caught much of the industry off guard, how minor documentation errors can lead to major fines, and what types of repairs trigger mandatory lead-based paint safe practices.
Mastering Lead-Based Paint Compliance in Property Management With Monica Gilroy
Monica Gilroy is the Managing and Founding Member at The Gilroy Firm, a national real estate litigation and property management law firm. She has over 30 years of experience in real estate litigation, title insurance defense, foreclosure, bankruptcy, and fair housing matters. Monica is a Georgia Super Lawyer, a National Title Professional, and a frequent speaker at state and national industry conferences. She has also chaired the State Bar of Georgia’s Real Property Law Section and serves on national committees for the American Land Title Association.
Here’s a glimpse of what you’ll learn:
- [02:17] Monica Gilroy explains why lead-based paint rules now target property managers hardest
- [04:58] How owners, brokers, and managers all share lead liability
- [06:53] Why certification is a must-have for property managers
- [08:26] Costly mistakes with lead-based paint disclosures and forms
- [10:59] How missing one document could cost $37,000 per day
- [14:10] Demystifying which properties and repairs trigger strict EPA rules
- [18:15] Monica’s top strategies for surviving EPA audits and fines
- [22:23] How lead-based paint compliance intertwines with fair housing laws
- [31:46] Monica shares horror stories where property management fines topped $1 million
- [39:58] What role state agencies play in enforcement, and why their penalties continue during federal slowdowns
- [49:18] When translated leases may qualify as a reasonable accommodation, and how PMs can stay protected
- [51:10] Why industry advocacy matters and what changes Monica hopes to see in lead compliance policy
In this episode…
Sometimes the biggest risks in real estate aren’t the ones you can see, but the ones hiding in old walls and window frames. Lead-based paint has quietly resurfaced as a major compliance challenge for property managers and owners, fueled by shifting regulations and increasing enforcement. With rules quickly changing, how do you protect your business and your tenants?
According to Monica Gilroy, a nationally recognized real estate attorney, the danger comes from misunderstanding how much the landscape has shifted. She explains that two long-standing protections property managers relied on were removed without much warning, leaving companies exposed in ways they’ve never been before. Suddenly, managers are required to hold certifications even when they’re not the ones doing the work, and they share full liability even if a certified contractor makes the mistake. Monica illustrates how simple oversights like missing initials or an unfamiliar brochure can balloon into tens of thousands of dollars in penalties. Her take is clear: awareness and proactive preparation aren’t optional anymore; they’re the only way to stay ahead of an aggressive enforcement environment.
Resources mentioned in this episode:
- Yonatan Schmidt on LinkedIn
- Mat Zalk on LinkedIn
- Keyrenter Property Management
- Keyrenter Property Management in Tulsa | Oklahoma City | Arkansas
- Keyrenter Property Management email address: [email protected]
- Monica Gilroy: LinkedIn | Email
- The Gilroy Firm
- “Building Long-Term Wealth Through Turnkey Real Estate Investing With Lindsay Davis” on The Same Day Podcast
- “Transforming Property Management Through Technology and Partnerships” with Ben Nemecek on The Same Day Podcast
- “From Sale to Closing: Fine-Tuning the Home-Building Process” with Noah Bleicher on The Same Day Podcast
- Environmental Protection Agency (EPA)
- Texas Commission on Environmental Quality
- National Association of Residential Property Managers (NARPM)
- Georgia Association of Realtors (GAR)
- Texas Realtors
Quotable Moments
- “Yeah, it’s just to me it’s the biggest problem currently facing our industry.”
- “We have huge exposure where we didn’t have any before, and that’s why I think it’s just a big deal.”
- “They’re huge because they’re just not there right; the PM just doesn’t have them traditionally.”
- “Children have the highest lead-based paint poisoning ever in dealing with any kind of lead-based product.”
- “We’re the buffer between actually bad owners and tenants, and we actually help tenants every day.”
Action Steps
- Conduct a full internal audit of lead-based paint documents: Reviewing leases, disclosures, and renovation records helps identify missing initials or absent brochures before they become costly violations.
- Get at least one team member certified in lead-safe practices: Certification demonstrates good faith compliance and strengthens your position if the EPA or state agencies initiate an audit.
- Require owners of pre-1978 homes to complete lead inspections: A clean lead-free certification follows the property forever, eliminating ongoing disclosure risks and reducing long-term liability.
- Work only with certified remediation and renovation vendors: Partnering with properly credentialed contractors ensures lead-safe practices are followed and minimizes shared liability for mistakes.
- Incorporate lead compliance checks into every acquisition or onboarding process: Verifying disclosures during M&A or new-client intake prevents inheriting undisclosed risks that could result in substantial fines.
Sponsor for this episode…
Keyrenter Property Management:
This episode is brought to you by Keyrenter Property Management.
Keyrenter Property Management is a full-service property management company that helps clients buy, renovate, and operate real estate assets.
The team helps clients build wealth while taking the headache out of property management.
That’s why, no matter what rental you have — single-family homes, condos, townhomes, or apartments — they can give you the management solutions you need.
To learn more about their services, go to https://keyrenterpmc.com/ or send them an email at [email protected].
Episode Transcript
Intro 00:04
Welcome to The Same Day Podcast, where we discuss driving incremental business growth and other topics related to real estate, property management and entrepreneurship. Now to the show at hand.
Yoni Schmidt 00:20
Hi there, Yoni Schmidt here hosting today’s episode of The Same Day Podcast where I connect with top business and real estate leaders. Past guests include Lindsay Davis, the CEO of Spartan Invest, Ben Nemecek of BlanketHomes.com, and Noah Bleicher of Capital Homes. Today’s episode is brought to you by Keyrenter Property Management. At Keyrenter Property Management we are a full service property management company helping our clients buy, renovate and operate real estate assets. We help our clients build wealth by removing the headache of real estate ownership.
That is why no matter what rental you have, we have the management solutions that you need. Go to keyrenterpmc.com or email us at [email protected] for more details. Today I’m excited to welcome Monica Gilroy for the second time, who is a nationally recognized real estate attorney and managing partner of The Gilroy Firm based in Atlanta. With a legal career spanning over three decades, she is a subject matter expert in property management, law, fair housing and real estate litigation.
Monica serves as general counsel for all national members and also for the Atlanta chapter, of course, and is a highly sought after speaker, educator and advisor to property managers nationwide. She is also the winner of the National Volunteer of the Year by National, which is very exciting and just happened. And her passion lies in empowering professionals to navigate complex legal issues with clarity, integrity and confidence. Monica, thank you for being here for the second time.
Monica Gilroy 01:55
Thank you. I’m so glad to be back. Thanks for that nice introduction.
Yoni Schmidt 01:59
Yeah, let’s dive right in. About today’s topic, which is lead based paint a hot topic in our industry. You know, can you briefly remind our listeners, you know, why is lead based paint compliance such a hot button issue in real estate today?
Monica Gilroy 02:17
Yeah. And you know, you’d never think like you don’t wake up as a small child being like, oh, I’m going to become a lead based paint expert for the property management world. But yeah, it’s just to me it’s the biggest problem currently facing our industry. I think it’s even bigger than fraud. I really think it’s a really big problem because we have just, you know, leaders who have made some very bad decisions without a lot of due process and information to it.
You know, we all know that paint is going to come into play with any property that is 77, 78 or beyond, right? And, you know, the big problem came just back a couple of years ago when we had a series of very specific protections that were articulated by the EPA in the federal regulations that talked about that. As property managers, we didn’t have to worry about, you know, two main issues. One, we didn’t need to have our own certification as a remediator lead based paint remediator or renovator. As long as we were using a company that was which is really what almost everybody that are my clients in the industry has told me that they’ve done.
There’s a few that, you know, did go get certified, but they’re still not really doing any of the work themselves. You know, they’re not scraping the windows and stuff like that. And then secondarily, we had this protection that said that as long as we as property managers had hired a certified lead based remediation firm to do the repair, painting or remediation. And if that firm screwed up, the only person on the hook would be that firm that did the work. So what happened a couple of years ago is both of these protections went away.
They were just removed such that one, the state of the current law is that we have to, as property managers, hold a certification, even though even though we’re not doing the work ourselves, just the organizing of it, the calling people, the paying the bills, that’s all been considered part of doing the work. And then secondarily, we’re on the hook as well. If the company who we hired, even though certified, messes up. So we have huge exposure where we didn’t have any before. And that’s why I think it’s just a big deal.
And the EPA has been extremely active in this area. I have numerous clients across the country facing EPA audits, and they’re costly. They’re expensive, they’re stressful. They go on for a long time and they’re not letting up, which is really the part that concerns me the most.
Yoni Schmidt 04:49
Yeah. And does this extend also to, you know, other Brokers and, you know, the landlords themselves, right? Or is it just, you know, property managers?
Monica Gilroy 04:58
Yes. That’s a really good point that, you know, within these EPA laws, right? There’s this body of law that talks about realtors, right. What realtors brokers have to do. And then we have subsections with property managers.
And then yes, we have owners as well. So even if we are dealing, let’s say our management style is where the owner is, the landlord, for example, and we’re just being treated as just the third party manager. The owners are subject to this as well. There’s not the kind of carve outs we see in other areas of the law. And again, it’s it’s just a money maker.
Unfortunately for the EPA, because of the type of fines that they levy, the type of, you know, sanctions that come down. And, you know, when we talk about this subject, certainly no one is saying and I’m not saying anybody is saying that lead based paint isn’t a serious chemical hazard to people, especially small children. Nobody is anti lead based paint. Good practices right. It’s just happened is under this current state of the world.
All this liability is shining down on the PM industry in particular where there wasn’t any before. And that’s without really the kind of due process we would like to see when a rule of this magnitude is changed. So but yeah, everybody’s affected. Everybody who touches this area needs to be aware. This isn’t just a PM issue, it is the Realtors have their own problems and yes, even owners do as well.
Yoni Schmidt 06:33
And so just to clarify this for, you know, people who are listening to us for the first time or someone who’s just coming into the industry, it’s someone who’s a new investor buying their first rental property. If I’m a landlord and I hire a property manager, I need to make sure that they have this certificate in place.
Monica Gilroy 06:53
I would. I mean, I think as an owner, you’re, you know, you’re looking to the property manager to ensure that they’re doing what needs to be done. And my advice to the property managers that I speak to and help is that they need to go get that certification. So yes, I think when you’re vetting a company, that is something to look for, to be sure they have their understanding of what the current regulations are now. You know, I don’t have it with me, but I mean, I actually sat through about a month ago, a class A certified getting certified class, so I haha me, Monica, a lawyer, right?
Trial lawyer. I am certified as a lead based paint remediator, which sort of goes to the kind of insanity of the whole thing is. Why would you think that I, as an attorney, would be qualified to to do all of this? But the certification takes about a day. It’s good for, I think, five years, but it needs to be.
You know, I’ve been telling my clients, you need to go. Somebody needs somebody in the company needs to go get it right. Just one person. I like to recommend sometimes that they also send maybe their maintenance person too. But to me, that would be a good marketing tool to set yourself apart from other PMS to say, look, we we understand there’s problems with lead based paint.
We know the EPA is very aggressive right now. We’re certified. I think that would be a leg up to to sell yourself.
Yoni Schmidt 08:14
Yeah. What are the most common mistakes that you’re seeing that with property managers right now and maybe owners or landlords that they’re making when it comes to, you know, lead disclosures?
Monica Gilroy 08:26
Sure. Great question. Well, you know, just as a refresher, we know that there’s two specific lead based paint disclosures we have to give. The first one is called protecting yourself from lead based paint. It’s protect your family from lead in your home.
Everyone’s real familiar with this one. This is the one that I often refer to as the onboarding document. And this is the one that most people, most state, you know, like state real estate forms. If you’re using, like, you know, the Texas Realtors forms or the Georgia Realtors forms, or if you’re using your own, most people have this all embedded right within the lease itself. And it’s a disclosure that goes through the tenants that basically is signed by both the owner, the property manager and the tenant and the owner in the the property manager are basically saying to the tenant either, yes, there’s lead based paint, and here’s some information about what we found or no, there is no lead based paint.
And no, we don’t have any documents that that that support or that that show that there are. Right. So one of the mistakes on that one that I keep seeing is people just literally forget forgetting to check the boxes. Right. Maybe the PM has signed and the tenant signed, but you’re missing an owner initial.
Each one of those missing initials has a money penalty associated with it, so sometimes it’s just somebody working too fast right there. You know, even if it’s a downloaded electronic lease. There may be missing something or the the program isn’t saying wait, you missed to fill this out. So if there’s an audit with that form, it’s going to be something as simple as just a missing missing signature or initial. And that literally translates to money.
The other one, obviously that’s the bigger source of the problem is the second brochure, which is the brochure that’s called the Renovate Right brochure. And that is the brochure that in my experience, most PMS have never seen. And the question I get all the time is, well, why have I never seen this form before? And it’s because prior to this change in the, in the policy, right, a couple of years ago, it was never our job to give it out. It wasn’t the job of the the owner or the real estate agent or the landlord or the property manager.
It was being given out by the firm that you hired. Right, because that it makes the most sense. It’s a disclosure that would be given by the people who are going to come in and do the painting or the renovation, and that’s this. The absence of this form is what’s causing the huge fines, you know, the fines that are like $37,000 a day. I mean, huge fines.
Yoni Schmidt 10:58
Wow.
Monica Gilroy 10:59
They’re huge because they’re just not there, right? The PM just doesn’t have them because traditionally they’ve never given them out. So what we find is, is just it’s not even so much a mistake in the sense that it’s not that the PM’s or anybody in the space are again being flagrant of the rules. Right. It’s not like we’re saying, oh, I don’t have to give out any disclosures to the tenant when we’re going to renovate.
It’s that it hasn’t been the job of the realtor, the PM, the owner. It just hasn’t been their job because they’re relying on mediators who give it out.
Yoni Schmidt 11:31
And so and that’s that’s the brochure. Sorry. That’s the brochure with the blue cover that it basically says protect your.
Monica Gilroy 11:40
Yeah, yeah I’ll hold it up. But it’s not that this is the podcast that it doesn’t help, but it says renovate, right? Yeah, it’s got a little kid on the front of it. And yeah, yeah. But yeah, that’s the one.
So that’s the one that people, that people in our industry in particular just are not familiar with because they’ve never had to hand it out. And that’s part of the problem.
Yoni Schmidt 11:58
Yeah. So to recap, it’s basically just initials or checking the right boxes and also providing the information that needs to be accompanied with, you know, the disclosure itself. Now you mentioned something. Does the owner of the property, when I’m signing a lease as the property manager, does the owner of the property also have to sign the lead based paint disclosure?
Monica Gilroy 12:20
They do. But what I say to most of my clients is if you if your model is that you as the PM are doing everything and speak for the owner, then you’re going to have the authority under your property management agreement to initial for the owner as well. But it’s still incumbent upon you as the PM, just to be sure. Like if you’re dealing with a 1950s house in Boston? Right.
And that’s what you’re renting. You need to know, is there any lead based paint. Right. And so because even if you are signing for the owner, you know, you need to know this because that’s the whole point of that brochure. Because the whole point of these laws is to provide the tenants with choice.
Right? It lets the tenants decide, hey, do I want to move into this 1950s, you know, Boston house or house in Saint Petersburg, Florida, with my two year old child? Right. Do I do I want to do that? You know, when we’re not sure if there’s lead based paint or not or, you know, do I want to remain in the house for renovations being done?
That’s more disturbing. More than six square feet of potential paint or wall when I have my two year old child in the house. So it’s all it’s all about providing that choice. But the property managers are still like they’re like the threshold. They’re like the gatekeepers.
And that’s why EPA comes down so hard on our industry is because they see us as the gatekeepers, right? They’re not necessarily forgiving the owners and stuff like that, but they really view us even more so than the mediators as the people in the know. And that’s that’s why it’s just been such an aggressive attack on our industry.
Yoni Schmidt 13:49
Yeah. There’s a lot of confusion around renovation, repairs and painting rules. Right. Can we unpack that a little bit? Can you help us demystify how these rules apply?
What kind of work triggers these mandatory lead safe practices, and what we, as property owners and property managers should be on the lookout for?
Monica Gilroy 14:10
Yeah, absolutely. Absolutely. So, you know, if we kind of talk about what’s not covered, right. So things that do not matter, like if something is from post or pre 78, if it’s a loft, an efficiency, a studio apartment, something with zero bedrooms. Right.
These rules don’t apply. It also doesn’t apply, of course, to short term rentals. Right. Anything that’s 100 days or less, right? It doesn’t matter even if.
Yoni Schmidt 14:33
It’s.
Monica Gilroy 14:33
A 1920s bungalow, right? But it also obviously doesn’t apply if you’ve gone and gotten your home certified as lead free by a certified lead inspector. And that is something that has become, in my opinion, a bit of a trend, which is a positive trend where PMS are insisting to their owners, look, I’m not going to even manage for you unless you go get this house tested. And if the house is clean, that paperwork just follows the property for the rest of the property’s life, which is fantastic, right? The other thing that when we think of so that’s that’s sort of what what isn’t covered from that perspective, but what is.
Yoni Schmidt 15:14
Get out of get out of jail free card.
Monica Gilroy 15:18
Yeah, it really is. And for some, some of my clients are just being like, look, if you don’t want to use me, if you don’t want to pay this money to do it, I’m going to charge you to do it. And if you don’t like that, then don’t hire me. So it’s kind of an interesting position, but what we need to remember, you’re right with the RFPs is that what’s covered under the law is any repair or maintenance activity that disturbs six square feet or more of paint or of a room inside so, you know, six square feet. I’m not a math person, but it’s been shown to me.
It’s really smaller than you would think. But if you’re disturbing more six feet, six square feet or more of paint on the inside, or if you’re disturbing 20ft² or more on the outside, right? So I get the question a lot. Well, gosh, I’ve got to repaint this 1942 home. Okay.
It’s going to you have to give the RFP disclosure because you’re obviously disturbing, you know, more more than 20ft² on the whole exterior of the house, right. The other two things about RFP that sometimes people get confused about is anything dealing with a window. So if you’re dealing with window replacement in any way, because traditionally that’s where lead based paint was used. Right. And window frames and you’re doing any kind of full or partial demolition, like if you’re knocking down a whole kitchen right in a pre 78.
Those rules RFP disclosures are always going to apply regardless of how much you’re doing. And it makes sense if you think about it. Because if I’m replacing a window, right, right. Even if it’s just a window sill, I’m paying, I’m chipping it. Paint chips are flying on the inside the outside.
And if I’m obviously doing a big demolition, same thing. The dust. There’s got to be the proper containment, the proper remediation for handling with all that. So so people just kind of need to remember that. 666 20 windows, right?
620 windows. Right. Six square feet inside. Disturbing more than that, more than 20ft² on the outside. But if you’re doing anything with windows, doesn’t matter.
Always has to be given. And if you’re doing any demolition, it has to be given. So and again and again, that’s why we get tripped up is because we were hiring the people to replace the windows who were certified, and those people were giving out the the the the notices the RFP notices. And so that’s where again, our industry is like, what are you talking about. Because nobody really nobody really knew about it.
Yoni Schmidt 17:45
Well yeah, it’s gaining traction. And you mentioned in your slides that enforcement is ramping up right now. Right. So you know who’s who’s most at risk of being audited or fined. And what can they do right now to protect themselves?
Is it to, you know, call up someone who can certify it as a no lead based paint home? So that that inspection and certificate follows it, as you mentioned, for the for the, you know, rest of eternity or what should they be doing?
Monica Gilroy 18:15
Yeah. I mean, I think that that right now you’re, you’re at risk if you, if you’re obviously if you’re managing pre 78, you’re, you’re at risk because the EPA is extremely interested in this topic right now. But we can’t also forget that in many, many states we have our their own equivalent right of a little EPA right there. It’s the, you know, whatever it might be, you know, the Texas Environmental Protection Division or whatever, right. And so sometimes people are getting hit in our industry from on the state level as well.
Now the rules are going to be the same. There’s some deviations in some states, but on the whole it’s kind of the same concepts. Yeah, I mean I think too I think the most vulnerable are just going to be those PM who have been managing the pre 78 for the last three years. That’s how far they go back and look. And you just are kind of now waking up this year in 2025 to this issue of, wait a minute, we were supposed to be doing things that we haven’t traditionally been doing before, right?
So I think you’ve got to, as a PM, go back, take a look. Self-audit. See if you know all your boxes are checked. See if you have had projects done for for RFPs that you’ve, you know, did someone at least did somebody at least give that brochure and that notice to the tenant. Right.
I do think that the idea of getting, you know, saying to your owners, I am not going to be assisting you anymore on this pre 78 unless you go get it tested is a good idea. I think the other thing that I would encourage everybody to do is go ahead. Right now, under the current state of the law, get certified, have somebody in your office that’s certified, because that goes a long way. When we’re dealing with the EPA and an audit, I can say, you know, look, they may not have known about this a year ago because it wasn’t what our industry was doing. But since then, they’ve gotten education.
They’ve they’ve gone and they’ve gotten certified. And it’s just a good way to show the EPA good faith, you know, because when you’re in the middle of these audits, there’s a whole lot of factors that are very discretionary for the EPA and for the various state agencies to to whittle down, to cut down those penalties. And one of the first things is like awareness that you’re you’re being aware, you’re not trying. You’re acting in good faith. You’re not trying to hurt people.
You’re being cooperative with the investigation. And it’s surprising how much we can shave down some of those fines just by, you know, proactive things like we self audited, we got certified. We told the owners we’re not going to help you unless you go get the certification. So it’s there’s a there’s a little bit more control than we might want to think there is because we feel so vulnerable as an industry. But that’s why, you know, talking about it like we’ve been doing so much this year, hopefully we’re reaching people to take those steps.
So if or when they knock on the door, EPA does or the state agency, you know, you’re a little you’re a little ahead of the band. You really got to be.
Yoni Schmidt 21:15
Yeah. Not knowing doesn’t, you know, I guess, help you because you’re still going to be subject to the law and.
Monica Gilroy 21:24
Right, right. And I always I mean, listen, I’ll be honest. I always make an argument, you know, to the EPA, you know, people, to their attorneys and to the investigative officers. I always kind of give the pitch like we’re talking about today. Look, this is a big change in the industry.
It wasn’t really as understood or received or publicized the way that it could have been by EPA. So I do explain that. Again, no one is being flagrant, right? No one is saying we love lead based paint. We want kids to be in danger.
That’s not it. But we did not know we were supposed to be. We were doing it one way. Rug gets pulled from underneath us. We’re supposed to be doing it another way, but we’re not being told that the rug.
We weren’t being educated, that the rug was being pulled out underneath us in the fashion that one would expect. So that’s that’s where I listen to.
Yoni Schmidt 22:13
Let’s talk a little bit about how lead based paint compliance ties into fair housing concerns for potential claims of discrimination.
Monica Gilroy 22:23
Yeah. Wow. That’s a good one. That would be your double whammy, right? I mean, I think you have to be very conscientious of the fact that, again, the point of these laws is to protect us, in particular, the most vulnerable people like children, right?
Children have the highest lead based paint poisoning always have had in dealing with any kind of lead based product. And so I think yeah, I think you obviously want to be careful you’re not managing pre 78 houses and saying something like oh well there’s no children allowed because obviously those laws are going to bump heads together. You know if familial status is a protected class you can’t simply say, oh well this is a pre 78 house. I can’t have any children because there’s a higher risk. That would be a per se violation of fair housing.
Right? You’re not allowing a child to live in a house. Obviously fair housing. You know, you have to also think about with lead based paint, if you’ve dealt with, if you’ve got anybody that has any sort of disability, right, if you have more vulnerable tenant, you want to be extra Sure. If there’s if they’re medically fragile or something like that, that, you know, if they’re complaining about something or that that they’re saying what they think there’s a problem, just be sure you’re treating it just like you would with anyone, anyone else.
And again, you can’t tell someone who has a disability. You know, look, I can’t rent to you because this house is, is got lead based paint or is p78, you know, had had lead paint, lead based paint at one point. I mean, it’s a fine line, right? But, you know, when we talk about fair housing, we’ve also talked a lot this year about reasonable accommodations. Right.
And especially in the realm of, of disability, you know, is it is it unreasonable for a tenant who’s medically fragile to say, look, I need you to do testing to see if this house has lead based paint. I don’t know that that is very unreasonable. Right. You know, what is the cost of that versus, you know, if you say no. So, yeah, I mean, they don’t they don’t completely intersect, but you could see Where you could have some trouble with some fair housing.
If you’re if you’re not thinking more globally with lead based paint. Right. You can’t deny a family with small children a pre 78 home because there might be lead based paint. You know, you’ve got to kind of always be thinking about both of them from that perspective you know.
Yoni Schmidt 24:42
But that’s a that’s an interesting rabbit hole that I kind of want to go down a little bit. You mentioned, you know, I’m, I’m a let’s say I’m a tenant. I come to you, you’re an owner, I want to rent your house. It’s built in 1960. There could be lead based paint.
I come to you, I say I, you know, I have a family and small kids. I’d like to rent this house, but I also would like for you to test it for lead based paint, because I, you know, of whatever disability or something like that. You say, you know, you could go either way. You could say yes or no. If you’re saying no, then you’re not essentially reasonably accommodating me as the tenant.
Is that true or not true? Maybe it could be argued either way.
Monica Gilroy 25:24
Yeah, I think it would go either way. Right? I mean, I think the thing that would get you into the most trouble would be, again, familial status, right? Where if you said this is a 1960s house, I can’t have children because there could be lead based paint that’s just flat out a violation of familial status, right? I think if someone came though, as a tenant and said, look, we’d really like to rent this house, but we need you to do something ahead of time.
I think that’s really up to you, right? I don’t know that it would be. I think I could argue it either way, but I think I could argue it more successfully that, look, we don’t have to have our houses tested for anything, right? To accommodate someone potentially with a disability. Right.
If they’re coming to us and it’s their choice on whether or not they’re going to rent this house or not, they really can’t necessarily demand that we test for mold or other allergens or things like that now. I think it depends. Those are such. They’re each situation will be a little different. But I think, you know, when you think about what is a reasonable accommodation, Reasonable is the key word, right?
How much money is this going to take? How much time is this going to take? Is it going to alter the way that the property is actually used? Right. That’s what we have to think about.
What’s reasonable, what’s not. I could certainly advise either way. You know, this family wants to rent the house, but they have a child that’s got a medical problem. They’re asking for you to go get it tested. The test is going to cost $1,200, you know, but yet I could defend that, too.
And I could say, well, you know that we don’t do that. That’s not something we do. We can disclose our job under lead based paint laws is to disclose that there could be the presence of lead based paint. We don’t know of any. It’s then the the client’s or the tenant’s choice.
Right. Because that’s the whole kicker of these lead based paint laws is the tenant needs to choose whether they want to move forward or not. So it’s a good question though. I mean, I think it’s one that makes you think, because you could I think you could argue it either way. You really could.
Yoni Schmidt 27:19
Yeah. And that’s something that I guess, you know, could get some people in some hot water. Some owners may assume that using a third party contractor, you know, shields them from the liability. And you alluded to this earlier and you talked about this a little earlier. Two questions.
Is that true? And or does the legal responsibility still fall on the property owner or manager?
Monica Gilroy 27:44
Yeah. Yeah. The no, it’s not because of the way that they, they were they were a series of frequently asked questions, FAQs. And there were two that were removed in starting in. They were effective as of March of 22.
So it’s been a little over three years now. But those the removal of those FAQs have placed equal liability onto PMS and owners, right? For work that is not done in compliance right. With the RFP. You haven’t given the proper notice or you’ve not done the work correctly or you haven’t notified correctly again, the RFPs used to say that so long as owner PM had hired.
You know, Steve, the certified remediator, right? Steve was responsible if he if he messed up the law. Now says if Steve messes up, you PM slash owner are equally responsible right along with Steve. And the problem with that is we all can know is that maybe Steve, although a really good guy. Right?
Maybe he’s just a little, you know, Remediator maybe he’s only a little LLC, just a few people. And so if you get stuck with some big fine, you’re not going to be able to go back against this guy Steve the Remediator, because he may not have anything. Right. You’re the big landowner with a piece of property, right? Or you’re the PM with a with a presence where you you manage these things.
So, you know, that’s the problem. Is that the liability we were shielded from liability. We didn’t have to be certified. Number one is so long as we use certified company. And number two we were not independently liable.
Only the Remediator was it the Remediator didn’t do something correctly. So those two protections were very bright line very clear. Right. And they’ve been taken away. And that’s the problem is that we have so much confusion in my opinion, around around what does this really mean?
You know who should be doing what. What happens and what it’s led to again, are just all of these audits that have just, you know, imposed hundreds of thousands of dollars of fines collectively across the industry. And it’s, you know, people get very scared when they get those audit notices. They immediately go to, I’m going to be bankrupt. They don’t know because they see these numbers that are astronomical and they don’t they don’t know, you know, it’s really scary.
Yoni Schmidt 29:57
That’s why they should be calling you right away when they get this notice that they’re being audited.
Monica Gilroy 30:02
I’ve had. Great. Let me tell you something. I’ve learned a lot over the last year and a half, a lot, a lot about dealing with the different EPAs or state departments. I’ve learned a lot about negotiating these things down.
I’ve been very fortunate to be in some conversations with the EPA itself. I’ve learned a lot, so I’m always happy to share what I’ve learned. And, you know, and on the whole, you know, we negotiate these things down to some levels that are just. I had one the other day that came in at over $200,000 of fine. We negotiated to $1,500.
Right.
Yoni Schmidt 30:38
Wow.
Monica Gilroy 30:38
But but still, there’s you got to pay for a lawyer or have some, you know, have some help potentially. You have to, you know, spend time, spend stress. And so that’s why again, like preventatively, if we’re self-auditing, if we’re getting our our certifications, if we’re being sure we’re using only certified companies, which many people tell me are very hard to to find. And my advice for that is then go, you pay to send your favorite, you know, guy remediation guy, send them to the remediation class. Right.
It’s worth it to have the people you’re working with from a third party perspective, you know, doing what needs, you know, doing what’s right. So.
Yoni Schmidt 31:18
Yeah. Well, my next question was going to be if you could share a horror story. Right. Of an event or, or I guess like a audit that, you know, came out unfavorable and you mentioned, you know, negotiating down $200,000 to 1500, which, yeah, $200,000 is what could make or break a property management company or, you know, a landlord. And it could leave some some companies bankrupt and some people bankrupt.
Monica Gilroy 31:46
Okay. Yeah. I mean I have seen I’ve seen them all over the gap. Right. I had one the really big one that I talked about publicly a few years ago was a very large company where there were multiple states.
And when it came in, you know, it was it was well over a million. It was almost $2.1 million. And wow, that. Yeah. And that that was really bad because we had no answers for why are there.
Because they and that and that one. Right. In that context, we had a list of probably 15 properties where there was absolutely no brochure given at all for renovation repairs. I mean zero. So every time that’s absent, right, it’s that 30 something thousand dollars.
The reason why we always, when we teach on this and speak on this every day, the amount of the fines ticks. And that’s another little thing we didn’t know about until we got really deep dove into this a little bit. But the fines every day are always changing and increasing because it’s all based on like almost like a interest schedule, right? But anyway, in that one. Right.
And the one, the really big one, you know, multiple properties repairs being done. Zero brochure. So that’s a per day per day fine of when you’re supposed to have given it to the time of the repairs of, you know, $37,000. So I mean, it’s it’s terrifying that one was negotiated down to 18 for. Right.
Which although 18,000 is a lot of money, it’s not when you compare it to the to that I had another one just just probably about maybe I would say that was a few months ago where that person on the West Coast was dealing with the state, one of the state agencies, and that state agency was really focused on those onboarding ones where they were saying, I can’t, you know, these aren’t checked off. The tenant has an initial well, come to find out, the way they had been scanned, they had bought these doors, right. They it was an acquisition the way that the paperwork had been scanned in. It didn’t show that it had actually been checked off. So if they had just gone to the actual paperwork, they would have seen, right, that oh my goodness, look, there is the initial.
It just was sort of faint because of the way the this was before they were using electronic, you know, leasing to lease forms. So that one was terrifying because they were facing, again, hundreds of thousands of dollars, because when they bought those doors, when they bought those accounts, this wasn’t in their mind. They weren’t thinking, oh, I should do a quick little spot audit to be sure that all those lead based paint forms are filled out. And that led then to a big discussion, really almost a fight with who they had purchased from like, wait a minute, you sold me a bill of goods, you know, where’s where’s the where? Why weren’t these signed off?
And the response back to my client was, well, how come you didn’t do any due diligence? How come you didn’t investigate this when you were purchasing both equally good arguments, leading to this kind of collective sigh of relief when we actually got our hands on the originals, they were actually there. But I mean, it was it’s stuff that would it makes my owners lose sleep there. So my PM owner is so tense. It’s very scary.
There’s, you know, and again, there’s sometimes it’s just the finger pointing. You have to be prepared for these audits just like you do. If you’re having a real estate commission audit, like if you’re having an audit on your books or something. And it’s just it’s very it’s just very foreign territory. And it and to me, it’s just it can turn on a dime.
You know, with that there we were thinking, we are so dead. Because here’s a handful of these, you know, these leases that we bought that seemingly had nothing, which by law are going to be, you know, right there $400,000 and, you know, only to only to have gone back later and found that, no, we had it. So that’s why, you know, when people are listening to this or when they hear me talk about this and I say, just please look at your files, you you could have a lease right now that just is missing one initial with the tenant still in there, give it to the tenant to sign. You’ve just fixed it, right? You’ve just made a huge you’ve made a huge problem.
Go away. You know. Right. If we can. But we have to be very diligent in this in this area while we continue as an industry to try to fix this.
Right. We’re trying to fix it very, very, very diligently through grassroots grassroots efforts, through advocacy is extremely at the forefront of this, as are other organizations, but not to be the most. So you know, it’s it’s it is really scary. And I think when we might talk to our legislators. Right.
If we have that chance to explain how scary this could be to our industry because, yeah, like think of our average, our average PM company, they’re not going to have the ability to write checks of that size, you know, just oh here, here’s a I mean they’re going to have to do something and then that creates more problems. So it’s you know. Yeah.
Yoni Schmidt 36:32
Because shutting your doors is just a bigger problem. If you go bankrupt then all these jobs are lost and you know, you’re. Yeah. So one one important point that I, you know, kind of heard from all of this is other property management companies who are doing mergers and acquisitions should really dig in and do due diligence and, and handle it in a very thorough way to understand, okay, here are your property management agreements. The lead based paint is part of this property management agreement.
It’s checked off by the owner. You know, the disclosures and the initials are, you know, all there in place. And then, of course, the tenants also have to sign that. And then the second thing that I was going to ask was, you know, from all of this, why now? Why is this all happening right now?
I don’t know that you can answer. I mean, is the EPA being defunded? Were they anticipating being being defunded or losing some funding? And so now they’re looking for ways to, you know, I guess, like, you know, fatten the revenue or or is that even am I completely off track?
Monica Gilroy 37:40
No. I mean, I’ll answer that one first and then we’ll talk about the mergers and acquisitions. I mean, I’ve been doing this for 33 years, right? And I have every year of my practice. Right.
The EPA has always been lurking in the background. Right. I spent a long time representing huge real estate companies here in Georgia and in the southeast, where, you know, we’re talking the the, you know, the 90s, the early 2000, right? At least every six months, I’d get a panicked call from the broker saying, the EPA is at the door and they want to see our sales contracts. Right.
And back then, you know, the fines were like 12,000 and missing, you know, disclosure on this on the sales contract, right, or whatever it was. But, I mean, they’ve always been there and they’ve always been they’ve always been, you know, ever present in any industry that they’re meant to interface with. There’s been something, though, about the property management industry, in my opinion, since the Great Recession, since oh eight, seven, you know, getting past that, right. Because that’s really when, in my opinion, the advent of the more sophisticated property management company came into place. Right.
Yeah, we still have even out there with everyone, you know, sweetly calls the mom and pops. But let’s face it, the mom and pops have been selling out for the last few years to bigger, more sophisticated groups. It’s people who made a lot of money in tech and then have always been investors, and now they’re a property management company. Right. Or it’s larger companies or it’s people who have really embraced all the technology.
And and so the industry is much more sophisticated. And I think because the industry is more sophisticated, that equates to wait, I think they have more money. And so I think the EPA has just like, let’s be honest and let’s be fair, just like HUD turned its eye with fair housing over to our property management friends. Right. We were not really under the under the microscope until really the Great Recession after the Great Recession.
I think it’s that we’re now viewed as an industry with money that we have. We have means we have ways to pay these fines. And because we have touted ourselves as professionals, which we are, they’re we’re sort of setting ourselves up both ways to say, yeah, we’re really good at what we do. Meaning EPA is going to say, well, then you should know. You should know.
Yoni Schmidt 39:57
That.
Monica Gilroy 39:58
You know, right now, EPA, I mean, we’re talking today is November 3rd. I’m not sure when this will air, but I mean, we’re still part of a government shutdown. I think it’s 30 day mark. You know, right now what type of enforcement is happening at the federal level? Maybe not a lot, but guess who’s still chugging along.
All those states. Right. And for the state it is a it is revenue. And for the EPA of course finds a revenue. I mean, that’s that’s what they do.
They obviously have their their goals wrapped around that. This is for protection. And again, nobody whenever I speak on this it is not let’s go crazy and get people sick with lead based paint. But it’s it’s I think the motivation is we’re an industry that because we have more of a spotlight on us as professionals than it is, suddenly we’ve come under the eye much more of EPA, state EPA’s. And even though this isn’t a fair housing conversation, but, you know, fair housing as well, I think that’s definitely part of it.
Now, you know, there is an administration aspect, without question, to both fair housing and lead based paint, depending on the party in the White House. You definitely have, you know, a different views. We’ve seen that with our current administration getting rid of disparate impact as it relates to, which is a huge thing. Huge. Now, don’t get too excited though, because a change of administration, that thing could come right back, right?
Yoni Schmidt 41:22
Right.
Monica Gilroy 41:23
This. Right. Right now we have hopefully an administration that is actually going to see that property managers are not the bad guys. We’re the buffer between actually bad owners and tenants. We actually help tenants.
So the hope is, is that the fervor right to try to collect money dies down a little bit. Again, state level, it’s still going to be going on because that doesn’t get affected by, you know, the politics as much in terms of mergers, mergers and acquisitions and any kind of buying. Yes, I have actually have recent been helping a few people buy some. I do that too. I help people buy and sell real property management companies.
And I’ve actually changed it to a new bullet item on the due diligence checklist. Right. Review for lead based paint compliance. So it’s not just do I have the tenant signature and do we have their security deposit on on on file. Right.
You got to look at that because I think it’s, it’s you are inheriting, which is what a lot of my clients did in these recent audits. You’re inheriting so much liability if you’re not looking at something really closely. And again, nobody’s trying to do anything sneaky or on purpose. It’s just, you know, what is it look like? Because.
Yoni Schmidt 42:35
Do you. Yeah.
Monica Gilroy 42:36
Those doors where they’ve done all this repair work in the last year and not given out the RFPs?
Yoni Schmidt 42:42
Yeah. What should a property manager do then? I guess, like when, when they, you know, go through due diligence and they don’t have those.
Monica Gilroy 42:50
I think you have to see I think you have to see what can be corrected before the purchase. So if they’re able, for example, to get missing initials as as it relates to the onboarding one, they should you should ask your selling company to do that in terms of RFPs, when you know that there’s been repairs without the benefit of that brochure being given, you know, make the company you’re buying from, either go to the person who did the work and say, hey, did you give it? At least they gave it. That helps. Or really seriously consider either carving out that property, those doors that don’t have compliance, or asking for price reductions.
Right? Because there is a risk to you going forward if you’re audited and you’ve, you know, knowingly brought on a property that you know, is not been compliant with, you know, with the disclosure. So it’s it’s got to become, I think, a little bit more of a bargaining tool when we’re doing an M&A, we’ve got to think about it a little more deeply than we probably did before, just because of what’s currently going on.
Yoni Schmidt 43:49
Yeah. Let’s talk about, you know, training. How should real estate teams, you know, whether it’s a brokerage, a property management company, train their staff or their agents, you know, on this issue. And is annual training enough?
Monica Gilroy 44:04
Great question. Yes, I think annual training is enough because I think that if we are just once a year, kind of like fair housing training, if we’re hitting it really big and deep and we’re, you know, we’re bringing in somebody that can talk about it or we’re having conversations with we have state regulators getting them to come in. There are, you know, there are webinars or our classes. The the other thing I would suggest is, is that, you know, there’s there’s some amazing lead based paint certifiers out there. Lead classes is my friend Steve, Steve Hof, who we we taught together just last week or a couple of weeks ago in, in Orlando.
But there’s you know to Google lead based certification classes look for Steve’s name. It’s really those are really good ways to train people and get them certified at the same time. Again, those classes are about a day long. And he unfortunately he can’t do them by zoom. He has to do them in person.
But he has educators located across almost the whole 50 states that can accommodate you in many ways. He’s got a bunch of.
Yoni Schmidt 45:10
Yeah, looking at his website.
Monica Gilroy 45:11
In Texas. Yeah, he’s and he’s like, he’s a real good example of if you went and got that training from him. Right. And something happened, then at least you can say to the EPA or to the state agency, hey, look, we went to somebody who’s really highly regarded or, you know, somebody brings in me and they’re like, well, she knows what she’s talking about, right? Or here’s a webinar where somebody did it.
You know, anything showing that you’ve been proactive makes a huge difference. I think once a year is fine, you know. But but one thing I would say is as you onboard new people just be sure they understand it. Just like fair housing. Right.
Like it’s so important when you onboard. And I’ll say this too, if you’re using virtual team members, ask the companies that you’re hiring from. Do they have any training? Do they train at least with a modicum of information on lead based paint? Because you know what?
If you get a question and they’re not sure, you know, and they’re the first line taking the phone calls or something like that or answering an email. So, yeah, I mean, to me, you can never train enough. I again, I love to teach and educate. That’s how I give back. I love it.
So to me you can never learn enough. But in these areas where we’re where it’s literally like it equals liability. You know, lead based paint equals liability. It just does. Beep beep.
Flashing lights. We have to take those steps to educate, you know, once a year I think it’s fine. But it has to be part of your curriculum part of what you’re doing I really do.
Yoni Schmidt 46:35
Yeah. Let’s talk a little bit about investors or brokers that are working with Spanish speaking or immigrant tenants, because there’s a nuance here. Are there any additional communication or translation requirements that you know they should be aware of, and what does that look like?
Monica Gilroy 46:52
Great question. The brochures that we’re talking about, the renovate right and the protecting your your home from lead based paint are all they have Spanish versions as well. And it’s my understanding that you can go to the EPA for guidance if you needed other languages as well. So obviously if you’re dealing with Spanish speakers, be sure you’re using the Spanish forms of these brochures. They’re they’re exactly the same.
They’re just translated into Spanish. So I don’t think you need anything extra, so long as you’re using those versions of those forms in their language. And if you have a different language being spoken, again, I’m pretty confident. If you look at the EPA website, they have some directions as to other languages that they can help provide the the brochures in. You know, I would also encourage, if you haven’t looked at the EPA website under Property Managers for a while, there is a lot of great information.
There’s actually training information there to, you know, they’re you know, although although I’m not real pleased with the decisions that were made at a very high level in terms of how our industry was basically notified of the effect of of what these removals of these FAQs did. The the EPA itself, you know, when you deal with the boots on the ground, I’ve always dealt with the most, you know, the investigators, the lawyers, the internals, they’re incredibly professional. They they’re very appreciative of the efforts that are made to train and teach and educate. They are they are very they very much appreciate that we understand their goals as PMS and as owners and that, you know, we’re trying to go right with them. So it’s the EPA website is a really good source of information if you’re not sure.
Like this different.
Yoni Schmidt 48:31
Yeah.
Monica Gilroy 48:32
It’s a really, really good point. But I don’t think there’s any heightened responsibility. Just obviously anytime you have someone who isn’t English is not the first language. You know, just be sure we’re trying to provide as much as we can in there in the language that they use. But with Spanish, EPA has helped us.
They already have those.
Yoni Schmidt 48:47
We’ll put that link below is that I guess consider a reasonable accommodation to provide documents and forms and translated language. Yeah.
Monica Gilroy 48:57
Oh yeah. Oh 100%, 100%.
Yoni Schmidt 48:59
Even if it’s the whole lease I know, I know, we’re talking about doing another episode about fair housing, which we can dive into reasonable accommodations a little bit more. But even if it’s the whole lease and someone says, you know, I’d like you to reasonably accommodate me, and I’m a native Hebrew speaker, so please provide me with this lease in Hebrew.
Monica Gilroy 49:18
I think it depends. Right? I mean, how easy is that? Can you run your lease through, you know, something that translates it, perhaps? I mean, I think I think it I think it certainly could be.
I think again, I could argue it either way. Right. If I’m, you know, in a place where I’m not, you know, if I’m in an area of the country where maybe I’m not dealing with people who are not having English as their first language, you know, what would that mean? Would I have the capabilities to do that versus, you know, maybe in the middle of New York City and it’s different where we’re surrounded by, you know, hundreds of hundreds of languages. I mean, I certainly don’t think it’s unreasonable, given the the amount of Spanish speakers to anticipate that, especially if you’re in an area of the country managing where you have a Spanish speaking population.
I mean, that only to me would only make sense because you want to be sure everyone is on the same page and being compliant. So I don’t know that it’s that much of a task, right, to have to do it, but I don’t know at the same time if it would necessarily be a colorable, you know, discrimination claim for like country of origin or something like that. I mean, you know, it’s a fine line. It’s a fine line. Again, that’s the problem with some of these fair housing ones, you know, to me, like if someone called and said, should I do that?
I would say, well, what would it entail? And if they said, I just have to run it through some system, I’d say run it through some system, but attach behind it the English version as well, right? So run it through in the translated form, but go behind it with the actual English speaking lease. So if there was ever a debate, right, you’re in front of a judge who most likely isn’t speaking the other language, right? They at least can see.
Look, the intent was to try to take this English document and translate it into this other language. That would be probably my my advice on that.
Yoni Schmidt 50:58
Nice. Okay. That’s a nice CYA. And just a little bit of a tangent. I guess looking forward, what changes do you see coming down the pipeline in lead compliance, enforcement and legislation?
Monica Gilroy 51:10
Well, I mean, the big goal right now is what can we do as an industry. Again, like I said, Northam is taking the lead with this. Has, you know, retained a lobbyist to deal with this issue? A professional lobbyist to deal with this issue. Meetings will be had with the EPA themselves.
Meetings have been had. They’re going higher, deeper. I actually have a call this week or next week. I think it’s one of one of these weeks with some legislators in D.C. to talk about things that can be done. So I think this will still if if we are not able to get the movement.
We want to try to see these FAQs brought back, which I think is all that we need. I’ve been asked a lot, Monica, what are we asking for? What is the impact on the Hill? And I think you know that in the white House, the Capitol, I think it is just as simple as put those FAQs back. Right.
Because those FAQs said, no, you don’t have to be certified as long as you use a certified person and you’re not liable as long as you’ve used a certified person. Our liability that I’m seeing are coming from those two areas, right? So I think we’re going to see this being a hot button issue for property managers. I’ve spoken I’ve spoken to realtors this year who may not have a full PM practice. They need to all be aware of it.
It’s just it’s just it’s just caught a lot of action, right? It’s just there’s something about this has just it’s caught a lot of trying to think of a better word than action. But it’s just it’s become a big issue. And it’s not just because I think because of how we’re talking about it as an industry. I think that there just has been a push within, you know, EPA to really spotlight our industry.
And again, I’ve seen this traditionally. I’ve seen this over the years where we were spotlighted with fair housing, you know, where the where the eyes were turned there. So it’s just something about our industry where, you know, I think this is going to remain, at least in my opinion, the biggest issue we have, both on the state level and federal level, but especially on our federal level, to see what we can get done. I really and I and again, I to me, it is just such a risk for those in this industry because probably everybody that will listen to this has got at least one pre 78 house in their inventory, you know, and some people they’re listening from you know like my friends in Saint Petersburg, my friend and friends in Boston, my friends in Philly. I mean these are probably all pre 78.
So you know it’s it’s you sort of have to just realize it’s ever present. And so being sure we understand it is the best we can do. And advocating for us as an industry that look, we’re trying to do right, but we need some help with putting the playing field back to the way that it was.
Yoni Schmidt 53:49
Makes sense. Monica, you are always a wealth of knowledge, and I cannot think of anyone better to be leading the charge. You know, protecting our industry, educating us, educating, you know, agents and owners, property managers, owners, owners of property management companies. Because without this education we’d be lost I think. So thank you so much.
Monica Gilroy 54:16
My pleasure. I love coming and talking with you, and I will come anytime and talk about anything.
Yoni Schmidt 54:22
I love that. Thank you so much, Monica.
Monica Gilroy 54:24
You’re welcome. Have a wonderful day. Thank you.
Yoni Schmidt 54:27
You too.
Outro 54:31
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