The Importance of the Lead-Based Paint Renovation License

By Jeffrey S. Frasier, Chenoweth Law Group, ORA Government Affairs Committee Member

The Lead-Based Renovation (LBPR) license has been in existence since May 2010. ORA made a significant push to ensure that its members received the required training and obtained the license. Those that obtained the LBPR license and are complying with the requirements for safe renovation of target housing and child-occupied facilities are dealing with added cost and time to complete projects. This article explains why it is important to have the license and how it can be used to your advantage.

The LBPR license is required for all contractors performing work on child-occupied facilities (schools, daycare facilities, etc.), or houses built before 1978, except housing for the elderly or disabled, or housing without a bedroom. This encompasses a large segment of the remodeling work in Oregon. I have heard that as many as 90 percent of contractors performing work on buildings that are within the requirements of the LBPR license are unlicensed. Those contractors that have the license and are following the required work practice standards at a distinct advantage to unlicensed contractors from a liability, enforcement and marketing perspective.

An important reason to maintain the license is to avoid personal liability. If you do not have the LBPR license and perform work required by the license, or fail to follow prescribed work practice standards or record keeping requirements, you are a target for civil liability from a variety of sources. Employees and subcontractors can assert claims against you for lead exposure, as can home and building owners and occupants. Additionally, if paint flakes from your job spread to adjacent property, you are vulnerable to a lawsuit by occupants of a neighboring property. Liability is not limited to personal injuries. A contractor who causes a release of lead is subject to a claim for property damage and remediation costs. Lawsuits are expensive and take time away from your business. Although contractors carry insurance to protect against lawsuits and civil liability, insurance policies are filled with exclusions, so coverage is not always a certainty.

Another reason for maintaining the LBPR license is to ensure you are paid for your work. In some circumstances, a customer can assert failure to maintain a required license as a defense to a claim for payment for work performed. There may also be problems asserting a construction lien if you are not properly licensed to perform the work.

Finally, the failure to maintain the LBPR license could subject a contractor to an enforcement proceeding by the CCB, resulting in a significant fine and/or suspension of your contractor's license. I recently attended a continuing education seminar presented by the Oregon State Bar Construction Law Section, of which I am a member. The subject of the seminar was a practitioner's guide to the CCB. After the seminar I spoke to two CCB employees about the LBPR license. One was an inspector/mediator and the other worked in the licensing department. I learned that CCB is actively enforcing the LBPR license requirement. CCB has limited resources and encourages self-policing by reporting unlicensed activity. If the CCB receives a report of unlicensed activity they will do their best to get an inspector out to the site that day or the next. I also learned that if an inspector/mediator in the Dispute Resolution section sees evidence of licensing violations during an on-site meeting or mediation, the information will be forwarded to the Enforcement section of CCB for possible action.

Penalties for violating the LBPR license requirement, work practice standards, and record keeping and reporting requirements are set forth in Oregon Administrative Rule 503-446-6261 . Generally, a first offense is subject to a $1,000 fine, a second offense is subject to a $3,000 fine and a third offense is subject to a $5,000 fine plus license suspension for up to one year. If the CCB characterizes a violation as including conduct that is dishonest or fraudulent and injurious to the welfare of the public, a first offense is subject to a $1,000 fine and/or license suspension, while second and subsequent violations are subject to a $5,000 fine and/or revocation or suspension of license until the fraudulent conduct is mitigated.

Another license enforcement trap that contractors may not know about is the possibility of a license suspension for failing to pay a civil judgment (for example, a judgment for property damage due to lead contamination). Prevailing parties report judgments to the CCB so a claim can be made against the surety bond. Additionally, contractors are required to report judgments against them to the CCB (failure to do so subjects a contractor to a fine). A contractor cannot avoid the suspension by closing down the business, forming a new one, and applying for a license under the new entity. The CCB will not issue a new license if anyone affiliated with the first business is involved in the new business.

On the marketing side, it is important for contractors to educate owners of homes or buildings that fall within the requirements for lead-safe practices. Make a point to inform the customer of the need for the LBPR license to work on their property and that you are trained in lead-safe work practices. Tell them that your practices will avoid the contamination of their property and possible injury to occupants. Play up the fact that hiring an unlicensed contractor could subject them to claims by anyone working on the job, occupants of the property and neighboring properties, and could result in an expensive lead contamination remediation of their property and adjacent property. It should become obvious that any savings realized from hiring a contractor that is not licensed and not practicing lead-safe practices pales in comparison to the potential liability that could be encountered.