California has seen many lawsuits brought under the Americans with Disabilities Act (ADA) and Unruh Civil Rights Act. Sadly, many commercial leases in California are drafted, considered, and signed without ever addressing the vital issue of how the parties involved will stay in compliance with the ADA and/or who will absorb any costs associated with an ADA lawsuit should it become necessary.
When dealing with this type of situation, southern California landlords and tenants are each responsible for obtaining their own competent southern California real estate lawyers for assistance. Attempts have been made to reduce ADA lawsuits (i.e. SB-1186), but most feel that small businesses need more relief.
The ADA applies to anyone who owns, leases, or operates a place of public accommodation. Any such place must be in compliance with ADA guidelines. So far, the issue is straightforward and easily understandable, but the next question is a little bit difficult. Who holds the financial burden of compliance? Who handles the costs of being compliant with ADA?
This financial burden must be specified in the lease agreement. With a “gross” lease, the property landlord will most often hold the responsibility for the structure/building, but issues that are within the tenant’s direct (and sole) control like furniture placement on the property/within the building usually leaves the tenant responsible. Regardless, if there is not a clear allocation of the financial burden in the lease, disputes can occur. Commercial leases in California should include information that addresses these issues, but at the very least it should state whether or not the property is ADA compliant, who is responsible for any required retrofitting in connection with ADA regulations, and how the costs would be distributed in such an event. In instances where the lease calls for tenant improvements with an included Work Letter, these issues should be addressed in the same document.
The importance of these issues becomes clear when you consider the worst-case scenario. In instances where someone is filing suit, under the ADA both the landlord and the tenant can be liable to the third party. Court’s have ruled on this type of case in the past stating that while the parties may have a lease agreement designating one or the other as liable for ADA compliance, this is a private matter between them, but that in regards to third parties either can be held liable. These arguments make it vital that every commercial lease agreement include indemnification provisions for the allocation of liability between the parties involved.
If you have additional questions about ADA compliance or what to include in your southern California commercial lease agreement, please get in touch with one of the business lawyers at The Law Office of Retz & Aldover LLP today.