November 1, 2016

Commercial Leases: New California Law Increases Disability Disclosure Requirements

Related Attorney(s): Steven P. Heller

Related Practice(s): Real Estate

Commercial landlords need to update their lease forms to comply with a new disability disclosure law.

Many commercial landlords are familiar with the 2013 law requiring commercial leases to state whether or not a Certified Access Specialist (CASp) has inspected the premises.  New amendments to that law expand the disclosure and related requirements. Governor Brown signed AB 2093, amending existing California Civil Code 1938, on September 16, 2016.

Leases signed on or after January 1, 2017 must satisfy the new disclosure requirements (although the law, without explanation, also says it has "immediate effect", so caution dictates implementing these lease changes right away).  This law affects commercial leases (not residential) and is generally understood to apply to lease amendments as well as new leases.

If a CASp has inspected the premises, then the landlord must give the tenant a copy of the CASp report at least 48 hours before lease execution - a landlord's failure to do so will trigger tenant lease cancellation rights.

Most of our property owner clients have not had CASp inspections to date. If a CASp has not inspected the premises, the landlord must state the following exact language, verbatim, in the lease:

"A Certified Access Specialist (CASp) can inspect the subject premises and determine whether the subject premises comply with all of the applicable construction-related accessibility standards under state law. Although state law does not require a CASp inspection of the subject premises, the commercial property owner or lessor may not prohibit the lessee or tenant from obtaining a CASp inspection of the subject premises for the occupancy or potential occupancy of the lessee or tenant, if requested by the lessee or tenant. The parties shall mutually agree on the arrangements for the time and manner of the CASp inspection, the payment of the fee for the CASp inspection, and the cost of making any repairs necessary to correct violations of construction-related accessibility standards within the premises."

These new requirements may encourage tenants to seek CASp inspections. And, importantly, the law makes the landlord responsible for required repairs or modifications, unless the parties agree otherwise.

We recommend that commercial landlords add accompanying provisions into their lease forms to preemptively address any CASp inspections, required CASp compliance work, and unrelated compliance work triggered by the CASp work. These additional provisions should cover concepts like scheduling, performance of work, cost of work, indemnity and confidentiality.

This alert is only a brief outline of the new law; please contact our attorneys directly to discuss the legislation and how to immediately implement its requirements and strategically address its implications.

For more information, please contact the author of this alert, Steven P. Heller, Of Counsel, at 310.556.7884 or sheller@glaserweil.com, or any Glaser Weil real estate attorney.

This article is intended for informational purposes only and is not intended as a substitute for legal counsel.  It does not establish, and receipt of it does not constitute, an attorney-client relationship.