Action Required! New Commercial Lease Disclosure Concerning Disability Access Legal Requirements (California Civil Code Section 1938)

by Manatt, Phelps & Phillips, LLP
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This year, July 1 marks more than just the halfway point of the year. Effective July 1, commercial and nonresidential property owners in California have additional disclosure requirements to contend with courtesy of California Civil Code Section 1938.

Specifically, California Civil Code Section 1938 requires that all commercial leases (regardless of the size of the premises) executed on or after July 1, 2013 state whether the property being leased or rented has undergone inspection by a Certified Access Specialist (CASp), and, if so, whether the property has or has not been determined to meet all applicable construction-related accessibility standards pursuant to California Civil Code Section 55.53.

Section 1938 does not specify any penalties or consequences if a commercial lease does not contain the required statement, but landlords should anticipate that tenants might use the lack of a Section 1938 statement in a lease to argue that the landlord is solely responsible for any disability access violations on the property and must indemnify the tenant in any litigation regarding those violations. It is also possible that a tenant could seek to rescind or terminate the lease if it did not contain the required statement.

As noted in Section 1938, California Civil Code Section 55.53 sets forth pertinent details concerning the scope and content of the inspection by the CASp (who must be certified by the California Division of the State Architect). This statute also addresses the role of the CASp in determining whether the assessed premises meet all applicable construction-related accessibility standards. For a list of CASps, click here.

To address and comply with Section 1938, a commercial landlord contemplating a post-July 1, 2013 lease must determine whether to (1) have a CASp inspect the premises and disclose the results of that inspection in the lease, or (2) forego the CASp inspection and disclose in the lease that no inspection has been performed. Landlords who elect to have the inspection performed should do so promptly to allow ample time to decide whether a remedy of any violations identified in the inspection would be required under the ADA’s “readily achievable” standard (meaning “easily accomplishable and able to be carried out without much difficulty or expense”). Landlords who either elect not to have the inspection performed or to have it performed but not remedy any issues identified in the inspection should be prepared to discuss and explain their decision to potential tenants.

Clearly landlords have a lot to consider when deciding how to comply with Section 1938. In making that decision, two key aspects of California Civil Code Section 55.54 should be considered as well. Pursuant to California Civil Code Section 55.54, (1) a landlord of premises that have been inspected by a CASp can request a 90-day stay of any accessibility lawsuit related to those premises, and (2) any business that has received a CASp inspection will have 60 days to fix an ADA violation and its statutory damages for that violation may be reduced from $4,000 to $1,000.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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