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When looking to negotiate a commercial lease you are going to run into an Americans with Disabilities Act (ADA) compliance clause – something you may have never heard of before. This clause will prove to be quite valuable for both the tenant and the landlord, and if followed correctly, will prevent a lawsuit in which you can both be held liable. This is especially important due to the fact that commercial real estate lawsuits in regards to the ADA have been increasing.
The ADA, otherwise known as the Americans with Disability Act, is a federal law enacted with a purpose to protect the rights of any individual with disabilities. It is broken down into 5 separate sections, which are as follows:
Title I: Employment
Title II: Public Entities
Title III: Places of Public Accommodations
Title IV: Telecommunications
Title V: Miscellaneous Provisions
In the case of real estate, we need to delve into Title III – the protection of individuals with disabilities against discrimination in places of public accommodations.
In order to understand how this affects real estate, we need to first break down what can be considered a public accommodation.
The ADA lists 12 categories in which business can fall under including hotels, bars/restaurants, stores, office buildings, entertainment centers, movie theaters, museums, galleries, retail stores, and more – all of which fit perfectly into the category of commercial real estate. The facility must also include operations that affect commerce (travel, trade, traffic, transportation, communication) in order to be considered a public accommodation.
As per usual there are some exceptions. For example, if a restaurant has an employee-only bathroom, that bathroom is not considered a public accommodation, while the rest of the restaurant is. Offices that are inside of private residences (a home office) are also not covered under the ADA.
Now to the main question – what is considered ADA compliant?
The requirements of the ADA state that individuals with disabilities must have equal access to any goods, services, or facilities of a place of public accommodation – these goods and services must not be different or separate from those of an individual without a disability.
In order for this to be true, a facility, or in this case the building, must have the necessary elements or make the necessary changes
It is important to remember that it is required to make changes to buildings that were constructed prior to 1990, when the ADA was first enacted.
In generally, if it is an accommodation such as providing parking spots that are close to the unit or allowing service pets then the landlord is required to pay for this. If it is a modification (a structural change) that the tenant is requesting, then the tenant is required to pay. This is especially true if the changes are expensive and the landlord does not want to provide them.
Keep in mind though – the landlord may ask the tenant to return the space back to its original state at the end of the lease. If the tenant is going forward with the modifications themselves, they must also ensure that the landlord accepts the contractors that are chosen by the tenant.
Landlord, at Landlord’s expense, shall be responsible for causing the Common Areas of the Building to comply with the Americans with Disabilities Act as of the Rent Commencement Date, as may be amended from time to time, and the regulations promulgated pursuant to such Act (“ADA”). Tenant shall be responsible for causing the Demised Premises to comply with ADA. If, because of any installations made by Tenant in the Demised Premises, it becomes necessary for Landlord to modify any portions of the Common Areas of the Building to comply with the ADA, then such cost shall be borne by Tenant. If, because of any subsequent changes or amendments to the statute, rules or regulations of the ADA after the Rent Commencement Date, Landlord is obligated to alter the Common Areas, Landlord may seek reimbursement of the costs and expenses of such alterations by including such costs and expenses in the Operating Expenses and by amortizing the costs of such alterations as capital improvements pursuant to Paragraph 3 of this Lease.
In this case, the tenant is responsible for ensuring that the property is ADA compliant as well as any payments associated with changes that need to be made.
Landlords, tenants, and property managers can all be held liable in the case of the building not being ADA compliant. It is important as a tenant to ensure that it clearly states in your lease who is in charge of payment and the general responsibility of confirming that the space follows are necessary ADA requests.
However, even if the lease states that the tenant is responsible for making any changes to the space, the landlord can still be held liable for noncompliance at the end of the day.