New Commercial Lease Requirement for Disability Access Inspection DisclosureJune 28, 2013 – Article
Commercial lease agreements executed on or after July 1, 2013 must include a provision disclosing whether the premises has been inspected by a Certified Access Specialist and, if so, whether the property has been determined to meet all applicable federal and state construction-related disability accessibility standards.
The requirement, codified in Civil Code Section 1938, does not mandate the performance of an accessibility compliance inspection. Rather, the legislation is a means of assuring that tenants are informed as to whether one has taken place and, if so, the results. Not surprisingly, the disclosure could induce a tenant to request the performance of an inspection or to obtain one independently. An obvious legislative objective is to increase the focus on accessibility and to incentivize compliance.
The disclosure requirement is one piece of a larger legislative initiative under SB 1186, enacted on an urgency basis by nearly unanimous vote and signed into law in September 2012. SB 1186 targeted the proliferation of predatory lawsuits claiming violations of disabled access standards to extort settlement payments from commercial building owners and occupants. (It has been reported that 40 percent of such cases nationally were filed in California due, in part, to the high statutory damages.) The provisions that went into effect earlier this year are designed to curb abusive practices by imposing tightened procedures and reducing minimum liability amounts for violations under certain circumstances. In particular, the performance of an inspection by a Certified Access Specialist prior to a claimed denial of access can provide eligibility for a stay of litigation and reduced minimum liability amounts.
In view of the lease disclosure requirements, property owners may want to evaluate whether an accessibility inspection is beneficial under their particular circumstances. Factors to consider include:
- The age of the building (those constructed after January 2008 likely comply due to building code requirements)
- Vulnerability to litigation claims (public accommodations such as retail, restaurant and service businesses are more commonly targeted)
- Eligibility for the preferential litigation procedures with an inspection
- The means to identify the extent of accessibility deficiencies and the costs of corrective work and the opportunity to budget for and perform corrective work over time based on inspection results
- Disclosure obligations and the discoverability of adverse information revealed by an inspection
- The identity of the party responsible for disabled access compliance under the lease
- The likelihood that prospective tenants may insist upon being provided with accessibility compliance information in evaluating a lease opportunity
In addition to adding a lease provision meeting the requirements of Civil Code Section 1938, it would be advisable to review related lease provisions, including compliance with law, indemnity and others allocating responsibility for meeting accessibility standards.