New statutory and regulatory changes coming into effect in California will impose new disclosure requirements on commercial landlords and property owners.
The law and regulations will apply to all sales, purchases and leases entered into on or after July 1, 2013. One disclosure pertains to whether a property has been inspected for disability access by a Certified Access Specialist (CASp) and the other one concerns historic energy usage.
Under Civil Code Section 1938, commercial property owners must include a statement in all leases indicating whether the premises have been inspected by a CASp. If the inspection has been performed, the lease must include whether the property has met all applicable accessibility standards. This requirement will apply to commercial properties of all sizes.
Regulations under Section 25402.10 of the Public Resources Code will come into effect on July 1 as well. Owners and operators of commercial properties will be required to disclose information about the property’s energy use for the previous 12 months.
They will also be required to provide information about its Energy Star Portfolio Manager ratings and its operating characteristics to a prospective buyer or in a situation where the entire building is being refinanced or leased. The owner or manager is not required to disclose this information to a prospective tenant who wishes to occupy a portion of the building only.
This requirement will be phased in for different sized buildings over time as follows:
July 1, 2013: Buildings with areas over 50,000 sq ft
January 1, 2014: Buildings with areas over 10,000 sq ft
July 1, 2014: Buildings with areas over 5,000 sq ft
The disclosure must be made no later than 24 hours prior to signing of the sale, financing or lease documents.
Owners and operators of commercial buildings should visit the Energy Star Portfolio manager website to set up an account. The site is run by the Environmental Protection Agency (EPA). The account must be set up at least 30 days before a disclosure is required. Utility companies providing services to the building will provide energy use data for the account, and the owner and operator will give permission to release it to third parties.
The language of the statute and the regulations do not specify penalties for non-compliance or legal remedies if commercial property owners or landlords fail to comply with them. A prospective buyer or tenant could rely on failure to disclose this information as reason to rescind an offer to buy or lease a property, though, and commercial property owners and landlords should comply with the new legislation and regulations.
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