2013 Update on Accessibility and Energy Disclosure Laws

November 2013

Last year, we told you about two new laws in California that impose requirements on property owners.The first is a new statute enacted to try to limit the amount of accessibility claims, and the second deals with new disclosure requirements regarding a building’s energy usage. Below is an update on these new laws.

CASp Inspections

Part of the new accessibility law (codified in California Civil Code Section 1938) requires any commercial lease executed on or after July 1, 2013, to state whether or not the premises under that lease has been inspected by a Certified Access Specialist, or CASp. If a CASp inspection has been done, then the lease must also state whether the property was deemed to meet federal and state accessibility requirements. This disclosure must be made in all leases, regardless of the size of the premises, the length of the term, or the age of the property, and while the language of the statute refers only to leases, it would be good practice to also make the disclosure in any amendments, extensions, or assignments of existing leases. It is also important to note that while the statute requires the disclosure to be made, it does not require a landlord to actually obtain the inspection. Finally, while the statute only requires that the disclosure be made with respect to the specific premises, if a CASp inspection has been done in the common areas but not the specific premises, landlords could include a statement that an inspection has been done at the property or in the common areas in general, but not of the specific premises.

Getting a CASp inspection provides landlords with some advantages in the event of a lawsuit, as we previously discussed in our November 2012 Dirt Report, but several courts have already ruled that these advantages are not applicable in federal ADA cases (seee.g.Lamark v. Laiwalla, 2013 WL 3872926; Moreno v. Town & Country Liquors, 2012 WL 2960049; and O’Campo v. Chico Mall, LP, 758 F. Supp. 2d 976, 2010).

Energy Disclosures

Property owners of commercial buildings will soon be required to disclose their building’s energy usage before they sell the building, get a loan on the building, or before they lease the entire building. These disclosures must occur 24 hours prior to the execution of a purchase agreement or lease and prior to the submission of a loan application, and, as we previously noted, are done through Energy Star’s Portfolio Manager. The disclosures will be phased in depending on the size of the building. There were several delays this year, but initial compliance is now set to kick in on January 1, 2014, when all owners of non-residential buildings over 10,000 square feet will be required to comply with the disclosure requirement. Owners of buildings between 5,000 and 10,000 square feet will be required to begin complying on July 1, 2014. The disclosure requirements are not applicable to buildings that are less than 5,000 square feet.

Landlords should remember that these disclosures are only required when the landlord is leasing the entire building; landlords do not need to make the disclosures to individual tenants in a multi-tenant building. However, keep in mind that the disclosure would still need to be made to a purchaser or lender. In any case, property owners should prepare to comply with these disclosures well in advance, as an account with Portfolio Manager must be opened 30 days before the disclosure needs to be made. Our September 2012 Dirt Report discussed the process of setting up these disclosures.