New Additional Commerical Lease Disclosure Requirements Regarding Compliance with Disability Access Laws

NEW ADDITIONAL COMMERICAL LEASE DISCLOSURE REQUIREMENTS REGARDING COMPLIANCE WITH DISABILITY ACCESS LAWS

The bad news is that ADA litigation risks have increased under new laws.  The good news is that compliance is manageable and that modifying your leases can be done quickly and will reduce liability.

During 2013, California enacted legislation requiring commercial landlords to disclose to prospective tenants whether the premises had been inspected by a Certified Access Specialist (CASp) and, if an inspection was undertaken, whether the CASp concluded that the premises was in compliance with applicable construction-related accessibility standards.  Certain local jurisdictions also imposed their own requirements.  Now, California has broadened its requirements.

Under the new requirements, in addition to disclosing to prospective tenants whether the premises have been inspected by a CASp, landlords must provide copies of any report by certain deadlines, and to include certain language in the lease if the premises has not been inspected or if the premises has been inspected and is not in compliance with applicable disability access laws.  Landlords’ obligations under various scenarios are discussed below.

A. NO INSPECTION REQUIREMENT, BUT LANDLORDS OBLIGATIONS VARY DEPENDING ON WHETHER AN INSPECTION HAS OCCURRED

Commercial leases will have to a provision stating whether or not the premises have undergone inspection by a CASp.  No inspection or report is required.  However, the new legislation imposes requirements that vary depending on whether a report has been issued and, if one has been issued, whether compliance has been certified.

B. CASp CERTIFICATE OF COMPLIANCE

If the CASp certifies that the premises meets applicable standards, and no modifications or alternations impacting the premises’ compliance with construction-related accessibility standards have occurred since then, the certification and accompanying report must be provided to the tenant within seven days of the execution of the lease.

C. CASp REPORT OF NON-COMPLIANCE

If, to the landlord’s knowledge, the premises has been inspected by a CASp and no modifications or alternations impacting the premises’ compliance with construction-related accessibility standards have occurred since then, the CASp’s report must be provided to the prospective tenant.  The landlord may require, as a condition to providing the report, that the prospective tenant agreement that the report will be confidential except as used to remedy any construction-related accessibility standards violations.

The landlord will be responsible for making any repairs or modifications necessary to correct violations of construction-related accessibility standards that are noted in the report unless otherwise mutually agreed upon by the landlord and tenant.  Therefore, any shifting of responsibility to the tenant should be set forth in the lease or stand alone work letter.

If the report is not provided to the prospective tenant at least 48 hours prior to the execution of the lease, the prospective tenant may rescind the lease, based upon the information contained in the report, for 72 hours after execution of the lease.

The legislation is silent as to the tenant’s remedies if the report is not given to the tenant and the tenant learns of the report more than 72 hours after execution of the lease.  Landlords should assume that, under these circumstances, tenants would have an extended right to rescind the lease or to sue the landlord for damages.  Landlords should also assume that, if the tenant rescinds the lease, the tenant also will be able to recover damages such as the cost of unamortized tenant improvements paid for by the tenant, moving expenses, and possible rent differential.

D. IF REPORT OF NON-COMPLIANCE HAS BEEN ISSUED OR NO CASp INSPECTION HAS OCCURRED

If the CASp has reported non-compliance with construction-related accessibility standards or no inspection has occurred, the lease must recite verbatim certain language set forth in the new legislation.

IT’S NOT AS BAD AS IT SEEMS

Although meeting the new disclosure requirements might seem to be daunting, in fact compliance can be easily accomplished through a standard lease clause in a “check the box” format.  We are here to help you navigate these new requirements and the myriad of other commercial lease requirements.  Feel free to contact Jonathan Seigel of Scheer Law Group at (415) 491-8900, ext. 107 or [email protected] if you have any questions.