Mandatory Disclosures Concerning Accessibility Compliance and Energy Consumption in California Commercial Properties

This article discusses two new disclosures that must be included in certain real estate contracts and leases. The disclosures pertain to Accessibility Compliance and Energy Consumption, and affect the required contents of most non-residential leases of improved real property in California as well as loan application and purchase agreements affecting such non-residential properties.

1. ENERGY CONSUMPTION DISCLOSURE -

REQUIRED ENERGY STAR disclosure to reduce greenhouse gas emissions. California law requires that electric and gas utilities, on and after January 1, 2009, maintain records of the energy consumption data of all nonresidential buildings, and upon authorization of the building owner or operator, upload all the data to the EPA’s ENERGY STAR Portfolio Manager. This program is in furtherance of federal and state policies to reduce greenhouse gas emissions. As thoroughly explained by the federal government’s website, ENERGY STAR is a voluntary labeling program, established by the federal Environmental Protection Agency in 1992, designed to identify and promote energy-efficient products to reduce greenhouse gas emissions. In the context of commercial buildings, the uploading of the energy data to the ENERGY STAR Portfolio Manager is intended to enable building owners to rate energy performance on a scale of 1-100 relative to similar buildings nationwide. Buildings rating 75 or greater may qualify for the ENERGY STAR. As evidenced by the EPA’s recent list of top cities that have the most ENERGY STAR certified buildings, California has embraced the program, with six cities listed among the Top 25.

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