November 2016

How Updates to California’s CASp Disclosure Requirement for Commercial Landlords May Affect Your Clients

By Jenifer Swanson

Swanson Law Offices, P.C.

One of the more complicated areas of law for attorneys and clients alike to keep up with is laws concerning disability access. Whether you may represent a landlord or a potential tenant, it is vital to keep up with the latest disclosure requirements and property requirements not only to ensure compliance, but to avoid the unintentional shift of responsibility for such compliance.

In the latest of a string of legislative changes to try to curb serial construction-related accessibility litigation, while still encouraging property owners to make their property accessible, the legislature amended the disclosure requirements regarding accessibility inspections in commercial leases. Keeping up with these changes will allow you to more efficiently represent your clients, and may keep you a step ahead of negotiating commercial leases with other attorneys.

Disclosure Requirements in Lease Documents

AB 2093, signed into law September 16, 2016, amends California Civil Code Section 1938 by creating additional landlord obligations effective January 1, 2017. Section 1938 previously required any lease for commercial property to contain a statement as to whether or not the subject property had undergone an inspection by a Certified Asset Specialist (“CASp”) and the results of any such inspection. The revised Section 1938 goes a step further, requiring specific statutory language regarding CASp inspections be included in certain leases. The revision also creates a presumption that the landlord is responsible for any modifications required to remedy construction-related accessibility violations, obligates landlords to provide new tenants with a copy of any CASp inspection, and even provides tenants with a 72-hour rescission right in certain cases. Which obligations are imposed depends on whether a disability access inspection certificate is issued for the premises.

No Disability Access Inspection Certificate Issued

If the premises was not issued a disability access inspection certificate, either because it has not undergone a CASp inspection, or because it has undergone a CASp inspection but did not meet applicable standards, then:

1. Certain prescribed statutory language must be included in the lease;

2. If there has been a CASp inspection, but the repairs have not been completed, the landlord must provide a copy of any CASp report to a prospective tenant prior to lease execution. If the report is not provided to a prospective tenant at least 48 hours prior to lease execution, the tenant has the right to rescind the lease, based upon the information contained in the report, for 72 hours after lease execution; and

3. Any repairs or modifications necessary to correct violations of construction-related accessibility standards noted in the CASp report are presumed to be the landlord’s responsibility. This presumption can be overcome, but only if the landlord and tenant mutually agree to do so. 

Premises Issued a Disability Access Inspection Certificate

If the premises was issued a disability access inspection certificate (as a result of an inspection report by a CASp indicating that the premises meets applicable standards) then the landlord must provide a copy of the inspection certificate and any inspection report to the tenant within 7 days of lease execution.

Considerations When Representing the Landlord

1. Responsibility for necessary repairs

The statute creates a presumption that any repairs or modifications necessary to remedy construction-related accessibility violations are the landlord’s responsibility. Therefore, it is imperative that the lease clearly addresses the responsibility of any necessary modifications; otherwise the landlord will end up responsible for such modifications by default.

2. The requirement of providing the CASp report to tenant

Any CASp report must be provided to tenants. While the statute requires that the tenant agree to keep the information in the report confidential, except as necessary for tenant to complete any required repairs it agrees to make, the landlord is still required to release the report if the property is not compliant. Some landlords may be uncomfortable with this.    

3. Administrative concerns and Tenant's right of rescission.

Landlords must be sure to timely deliver documents to the tenants as required to ensure compliance with the statute:

a. If a CASp report is completed for a property and the property is not compliant, the landlord must be sure to deliver the report to any prospective tenant no later than 48 hours prior to lease execution. Landlord’s failure to do so gives the tenant the right to rescind the lease agreement within 72 hours of lease execution. 

b. If a CASp report is completed and the property is compliant and issued disability access inspection certificate, the landlord must provide the tenant with a copy of such inspection certificate within seven days of lease execution to ensure compliance with the statutory requirements.

4. Current lease provisions

Landlords must confirm that their lease forms are current and include the statutorily prescribed language in cases where a CASp inspection certificate has not been issued.  Additionally, as mentioned above, landlords should be sure that their leases properly allocate responsibility for any necessary construction-related accessibility repairs.

Landlord Action Items

1.  Review property records to confirm which properties do and do not have current CASp inspections and whether or not they have an inspection certificate.

2.  Review lease procedures to be sure that any existing CASp inspections and/or inspection certificates are being provided to tenant in a timely manner as required under Section 1938.

3. Review lease forms for all properties to ensure they are statutorily compliant and that they include necessary language as well as address the parties’ responsibilities as they relate to any potential construction-related accessibility repairs and modifications.

4. Discuss the advantages and disadvantages of obtaining a CASp report with an attorney or other professional. 

Concerns When Representing Tenants

Tenants should verify with the landlord whether or not a CASp report and/or inspection certificate exists. If there is a CASp report, but no inspection report, the tenant has the right to see the report. The tenant should timely review any CASp report regarding any non-compliance issues and be sure they are comfortable with the condition of the property.  Concurrently, the tenant should review the lease to confirm the required language is in place and also to review the allocation of the cost of any necessary repairs. Likewise, if there is no CASp report, tenants should consider having the premises inspected and negotiate the costs and logistics with the landlord.

Leases are not always simple contracts and much of landlord tenant law is governed by the terms of the contract. Thus, it is important for all lawyers, but especially new lawyers dealing with sometimes very complex commercial leases, to ensure that their clients are up to date on the latest requirements of the Civil Code. Otherwise, your clients may face unexpected liability for compliance. 

This article is intended for informational purposes only and does not constitute legal advice. The information herein should not be relied upon in regard to any particular facts or circumstances without first consulting with a lawyer.