Commercial Landlords in San Francisco Beware

Chapter 38 of the San Francisco Administrative Code imposes new requirements on commercial leasing activities (both new leases and amendments of existing leases) in San Francisco where the leased premises contain 7,500 square feet or less of space to be used as a "Public Accommodation" (defined broadly by the Americans with Disabilities Act (ADA) to include some general office uses).

If the ordinance applies, then the landlord must satisfy certain obligations before signing a lease (or amendment) and the landlord must include certain provisions in the lease (or amendment). Note that the law was effective January 1, 2013, with respect to leases (and amendments) of 5,001-7,500 square feet of space. The law will be effective June 1, 2013, with respect to leases (and amendments) of 5,000 square feet or less of space. The ordinance purports to apply to all lease amendments meeting the above description (which would include minor lease amendments containing clarifications or corrections, not just lease amendments that extend the lease term or modify the leased premises).

PRE-LEASE REQUIREMENTS

Before entering into a new lease (or amendment) meeting the above description, the landlord must either (i) ensure that existing public restrooms, ground floor entrances, and ground floor exits are accessible by removing all architectural barriers to disability access (as required by, and to the extent "readily achievable" as defined by, the ADA); or (ii) notify the tenant in writing that the property may not currently meet all applicable construction-related accessibility standards, including standards for public restrooms and ground floor entrances and exits.

In addition, before executing the lease (or amendment), the landlord must ensure that BOTH of the following tasks are accomplished:

1. The landlord and the tenant must sign a "Disability Access Obligations Notice" in the form required by the ordinance; and
2. The landlord must provide the tenant with a copy of the "Access Information Notice" (a pamphlet prepared by the S.F. Small Business Commission) in the tenant's requested language.

LEASE REQUIREMENTS

In addition, such lease (or amendment) must include the following two provisions:

1. a provision setting forth in express terms the obligations of the landlord and the tenant for making required disability access improvements to the property and for paying for those improvements; and
2. a provision in which the landlord and the tenant agree to use reasonable efforts to notify each other if either makes alterations to the leased property that might impact accessibility under Federal and State disability access laws.

TRAPS FOR THE UNWARY

• Although the ordinance refers to "Small Business Tenants," the ordinance applies to any lease (or amendment) of 7,500 square feet or less. Therefore, large, national or multi-national commercial tenants (such as banks and restaurant chains) qualify as "Small Business Tenants" under the ordinance.
• Although the ordinance applies to premises to be used as a "Public Accommodation," that term is defined broadly by the ADA. Basically, a "Public Accommodation" is a commercial facility that provides goods or services directly to the public. All retail spaces and most other ground floor spaces will be used as Public Accommodations (such as retail stores, banks, restaurants, bars, service establishments and the like). Warning: some office spaces are also considered to be Public Accommodations (in particular, offices of lawyers and accountants, insurance offices, travel service offices, recruiting offices and virtual office and conference rooms).

The ordinance does not include any provision regarding any penalty or other consequence for non-compliance. The City expects the ordinance to be enforced privately (i.e., through lawsuits).

PRACTICE TIP: As with most new legislation, the language of the ordinance contains some inconsistencies and ambiguities that have yet to be interpreted. Commercial landlords should consider complying with the requirements of the ordinance in connection with any lease (or amendment) involving 7,500 square feet or less in a building (rather than relying upon potential arguments as to why compliance is not necessary under the particular circumstances).