Legislative Alert – New Requirement for Commercial Leases

Last year, the California legislature enacted a new law (Civil Code Section 1938 if you are keeping score at home) requiring ALL commercial leases of commercial property signed after January 1, 2013 to disclose whether the leased premises have ever been inspected by a Certified Access Specialist and if so what the results of the inspection revealed.  A “Certified Access Specialist” is a professional licensed by the State of California for the specific purpose of inspecting buildings to determine whether the building meets ADA standards.  This profession was created as part of the legislature’s attempt to rein in small business shakedowns brought by professional ADA lawsuit plaintiffs alleging technical ADA violations like misplaced paper towel or toilet tissue dispensers.  The Legislature did not say what would happen if the lease did not contain this newly required provision.  However, if a lease does not contain the required language and a claim arises, the effect of not having that language may include shifting all of the liability to the landlord regardless of other lease language, such as that contained in the AIR forms that try to put that liability on the tenant.  Thus, it would be better to be safe than sorry and include this as an addendum in any AIR form leases.

Background – How does the ADA affect commercial landlords and tenants?

The ADA does not apply to every conceivable commercial establishment, but it does apply to privately owned retail establishments, professional offices, or recreational facilities, and any property that includes one or more of those should be in compliance with current ADA standards, regardless of when the facility was constructed.  Contrary to popular belief, there is no “grandfather clause” for properties constructed before 1990, though such older facilities need not comply if they have not been since renovated if the changes are not “readily achievable.”  A Justice Department Pamphlet summarizing the current requirements can be found here:

http://www.ada.gov/smbusgd.pdf

The complete current design standards are summarized in the 279 page book which can be found here:  http://www.ada.gov/regs2010/2010ADAStandards/2010ADAStandards_prt.pdf .

Why should you care?

In California, public agencies do little to enforce ADA requirements.  Enforcement is generally limited to building inspections and plan checks when someone has pulled a building permit.  The inspectors and plan checkers may or may not have fully mastered this material.  California’s Unruh Civil Rights Act contains financial incentives for private enforcement by a cottage industry of disabled people and law firms that focus on this area.  These teams of people fan out into the community, look for violations, and then sue.  Typically, the cases can be settled for a few thousand dollars, but there is no requirement of advance notice and an opportunity to correct before the lawsuit is filed, and any violation of the standards, no matter how slight, can make the tenant, landlord or sometimes both if the violations are in the common area and the leased premises liable for a minimum of $4,000 plus the plaintiff’s legal fees.  Having pulled a permit and passed an inspection may not necessarily be a defense, though if that permit was pulled after January 1, 2008, and all of the deficiencies are corrected within 60 days of service of the lawsuit, the civil penalty is reduced to $1000.

Other ways for commercial landlords and tenants to protect themselves

In response to the abusive vigilante nature of some of these California invented a new regulated profession, a Certified Access Specialist (“CASp”) , who passes a test on his or her knowledge of these standards and can, for a fee to either certify premises as being in compliance with the standards or identify specific deficiencies that need to be corrected and issue a certificate that the premises will comply once those deficiencies are corrected.  That certification can also reduce the exposure to $1000.  That certificate will deter the most egregious of the shakedown lawsuits because it not only reduces the financial penalties for violation but the existence of the certificate creates procedural challenges to a lawsuit once it is filed.  As a practical matter, the CASp’s are hard to find and expensive, and many business owners and landlords decide to take their chances and deal with the claims as and when they arise.

In that case, one should recognize that the self appointed enforcers are looking to maximize the ratio between the revenue extracted and the time invested by the plaintiff and his or her lawyers.  Thus, the professional plaintiffs, or their location scouts typically drive into parking lots and look for non-compliant signage and striping in the parking lot before entering any of the business premises.  If that signage and striping is obviously compliant, then they may simply move on to the next property down the street.  Most established paving contractors have made a point, out of self protection if nothing else, to learn and master the rules concerning striping and signage and will make sure that these are correct for a modest upcharge in connection with routine parking lot maintenance.

PAUL CLIFF | PARTNER

Lobb & Cliff, LLP

www.lobbcliff.com

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The new California law requires the installation of a carbon monoxide (CO) alarm (or a CO alarm combined with a smoke detector) that emits an alarm and has been tested and certified in accordance with standards developed by the American National Standards Institute (ANSI) and Underwriters Laboratories Inc. (UL).

Detectors must be installed in all dwelling units that contain a fossil fuel burning heater, appliance, or fireplace; or that have an attached garage. (A fossil fuel is coal, kerosene, oil, wood, fuel gases, and other petroleum or hydrocarbon products that emit carbon monoxide as a byproduct of combustion). Heres the installation schedule:

• July 1, 2011: all single-family homes
• January 1, 2013: all other dwelling units (such as multi-family residences)

Landlords’ and Tenants’ Responsibilities

Landlords are charged with installing and maintaining the detectors, and may enter the rental for the purposes of installing, repairing, and testing. Tenants are responsible for notifying the landlord if the device becomes inoperable.

Sellers’ Responsibilities

Currently, the law requires sellers of residential real estate containing one to four living units to complete disclosure forms as part of the sales process. Sellers of single-family homes must give buyers written notice of compliance with laws concerning smoke detectors. Sellers of any real property containing a water heater must certify to any buyer that the heater complies with safety requirements.

The new law amends these duties, by changing the disclosure forms so that the seller will certify that the property complies with the requirements for smoke detectors and water heaters. The new seller disclosure forms also now include a section for carbon monoxide devices, and say that installation is not a precondition, or requirement, for sale or transfer. However, sellers should not be surprised if buyers insist that such detectors be installed as a condition of closing.

If you’re a home buyer, your inspector should tell you whether the house does, in fact, contain adequate CO detectors. If not, you can either ask for them as part of your negotiations, or simply plan to buy them yourself. The cost is usually between $20 and $90 per detector. The Consumer Product Safety Commission recommends installing a CO alarm in the hallway near every separate sleeping area of the home.

Source: http://www.nolo.com/legal-update/california-requires-carbon-monoxide-detectors-65308.html

Jay Olshonsky previously served as executive vice president and chief operating officer of NAI Global New York City. He brings 25 years experience and industry knowledge to the firm.

Before joining NAI Global, Olshonsky served as managing director for CBRE for 15 years, running the Washington D.C. office.

“I am very pleased to have the opportunity to take the baton from Jeff and continue to develop and implement the next phase of NAI Global’s growth strategy,” said Olshonsky. “Our employees and network members are NAI Global’s most precious assets and they have been the cornerstone of our company’s long-term success. I am confident that together we will continue to enhance and expand NAI Global’s platform and extend our leadership position in the industry.”

NAI Capital has negotiated a special rate for brokers to subscribe to an online program to help you do prospecting more efficiently and effectively.

“I have had a subscription to ProspectNow for sometime now and it actually works pretty well in our market.  All of our competitors have been using this, so I encourage everyone to take a look.,” says Damon Wyler South Bay office