New Disability Access Law Aims to Curb Predatory Lawsuits

Senate Bill 1186 was signed into law in September 2012 as part of an ongoing bipartisan effort to provide California landlords, tenants and business owners with added protection against predatory lawsuits based on alleged violations of the federal Americans with Disabilities Act and other disability access laws and regulations in California. Specifically, the legislation is concerned with increasingly familiar lawsuits that attempt to extort settlement payments from small businesses and their landlords in exchange for dismissal of time-consuming and costly litigation.

Much of the new law focuses on requiring stricter procedures for plaintiff attorneys pursuing alleged violations of construction-related accessibility standards, and providing certain protections for businesses sued for alleged violations of those standards. For example, under certain circumstances, SB 1186 allows for a stay of litigation and/or a reduction of the minimum statutory damages that can be awarded. The availability of some of these protections granted under SB 1186 turns on whether the subject premises has been inspected by a Certified Access Specialist (CASp) for compliance with applicable disability access requirements. CASps are inspectors certified by the Division of the California State Architect. During an inspection, a CASp will determine whether the property complies with applicable accessibility standards and issue a written certificate based on the CASp's findings.

The stricter procedures for plaintiff attorneys and protections for businesses under SB 1186 became effective Jan. 1 of this year. However, another provision of SB 1186 has not yet taken effect, and it affects all commercial property owners in California, whether or not they are ever sued for violating any accessibility standards. Codified in California Civil Code Section 1938, the new law expressly requires that every commercial lease agreement executed on and after July 1 of this year disclose whether the leased premises has been inspected by a CASp, and if so, whether the inspected premises has or has not been determined to meet all applicable construction-related accessibility requirements. Section 12 of SB 1186 created the new disclosure requirement by adding Section 1938, which provides as follows:

"A commercial property owner or lessor shall state on every lease form or rental agreement executed on or after July 1, 2013, 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 Section 55.53." The obvious intent of the new law is disclosure. Tenants have an interest in knowing whether their leased premises have undergone inspection by a CASp, and whether the premises have been found to meet applicable accessibility requirements, since tenants, in addition to landlords, are often named as defendants in accessibility lawsuits. Accordingly, tenants will likely want to know whether their leased premises have been inspected and deemed compliant by a CASp to determine whether they may benefit from the protections granted under SB 1186.

It is important to remember that the new law does not require commercial property owners to have CASp inspections performed on their properties - it simply requires that they state in their leases executed on or after July 1 whether or not they have done so, and if so, whether the property meets the applicable accessibility standards. It is likely that some commercial property owners will elect not to perform CASp inspections, either because a particular property does not fall within the purview of the accessibility standards, the owner does not want to incur the expense of the inspection, or the owner believes the property may fail to meet the standards, and the owner does not want that fact stated in the lease.

Because it is currently unclear whether inspection reports can be kept confidential under such circumstances, some owners may fear that a failing report could be used against them in future litigation. However, a disclosure in a commercial lease that the premises have not been CASp inspected may prompt the tenant to request that the landlord undertake such inspection, or the tenant may undertake such inspection on its own (both of which are likely intended results from the legislation) in order to receive the benefits under SB 1186.

Regardless of the landlord's decision whether to have the inspection performed, every commercial landlord in California will be required to disclose that decision in all of their leases executed on or after July 1.

With the July 1, 2013, deadline in Civil Code Section 1938 rapidly approaching, owners of commercial property should consult with experienced real estate counsel to: (1) determine whether their property has been inspected by a CASp and, if so, to evaluate the findings of such inspection; (2) based on whether or not a CASp inspection has been performed, draft and incorporate appropriate provisions into their commercial leases executed on or after July 1 to comply with Civil Code Section 1938; and (3) review other relevant provisions of their commercial lease form, including compliance with law and indemnity provisions, to ensure the lease appropriately allocates accessibility related risk between landlord and tenant.