CASp Disclosures in Commercial Property Leases
Historically, owners and lessors of commercial property in California have been required to comply with the American with Disabilities Act (“ADA”) in regard to providing equal access to disabled persons. However, whether or not the property was in compliance with ADA requirements was generally not disclosed by the owner/lessor in a lease agreement with a tenant, unless specifically negotiated between the parties. This is no longer the case and owners/lessors should make sure they understand and comply with the law in order to minimize potential liability.
In September 2012, the California State Legislature enacted SB 1186, which added California Civil Code section 1938 to the books. Section 1938 requires that an owner or lessor of commercial property must disclose on any lease (or lease amendment), entered into after July 1, 2013, whether or not the property has undergone inspection by a Certified Access Specialist (CASp), and, if so, whether the property has or has not meet all applicable construction-related accessibility standards. This disclosure requirement appears to apply to any commercial lease (e.g. retail, office, industrial, etc.) and to any size property.
It is important to note that Section 1938 does not require the owner/lessor to conduct a CASp inspection, only to disclose whether or not it was done. In the event it was performed, then the owner/lessor must disclose the results. If the property does not pass inspection, currently there are no penalties under Section 1938. However, an owner/lessor may experience difficulties in leasing a non-conforming property to a prospective tenant.
Practically speaking, whether or not to conduct a CASp inspection depends on balancing several factors, but mainly the cost of the inspection, the likelihood of identifying defects, the cost of remediating the defects, and who will bear the cost of bringing the property into compliance, which can be negotiated with the tenant beforehand.
In the event an owner/lessor is sued for ADA compliance issues and a CASp inspection had been previously performed, certain incentives to the owner/lessor in the litigation are provided. For example, a stay of the proceeding for 90 days, an early evaluation conference, and a potential reduction of the amount of certain statutory fines.
In regard to how the disclosure should read in the lease, Section 1938 does not provide required language. Therefore, the owner/lessor is free to craft their own provisions, which, if inspected, could read similar to: “On [date], the [Property] was inspected by a Certified Access Specialist pursuant to California Civil Code §1938, and the [Property][was/was not] determined to meet all applicable construction-related accessibility standards under California Civil Code §55.53.” In the event the property was not inspected the owner/lessor could simply insert a short sentence saying so.
For now, many questions remain regarding the scope and effect of the law, which will evolve over time as the California courts have a chance to interpret its meaning. For further questions regarding Section 1938 please do not hesitate to contact attorney Steven W. Blake.