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New ADA, energy laws come to the fore

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New California laws pertaining to real estate, taking effect this year focus on the Americans with Disabilities Act renters and energy efficiency.

They and are expected to have significant impacts in the ways building owners conduct their business.

State legislation enacted on Jan. 1, or taking effect in 2014, was the topic of a Certified Commercial Investment Member luncheon Wednesday at the Barney & Barney Conference Center.

Jeff Stoke -- a partner with Procopio, Cory, Hargreaves & Savitch LLP -- said a total of 900 new pieces of legislation were introduced in Sacramento last year.

While these include more disclosure regulations, the news isn’t all bad from a landlord’s perspective.

Under the old California ADA law, there was a minimum fine of $4,000 per violation.

Compounding this was that the violation could be assessed for each time a disabled person visited the property and if multiple disabled persons visited, that would compound the expense. Attorneys’ fees would go on top of that.

“This was a recipe for abuse,” Stoke said.

Under the new law (SB 1186), a written advisory with the initial complaint about the alleged violation spells out who, what, where and when the incident took place.

Secondly, and perhaps most important, the new law -- which grandfathers in buildings constructed prior to 2008 -- gives an owner 60 days to correct any violations, and damages are capped at $1,000 each.

The revised law also said small business owners, defined as having 25 or fewer employees and or less $3.5 million in gross revenues over the past three years, will have the opportunity to correct the problem within 30 days at a cost of $2,000 per violation.

When there is an aggregation of claims, the building owner will again be given the opportunity to evaluate corrective action, rather than being hit with multiple $4,000 fines at the outset.

As of July 1, 2013, all commercial property leases will be required to include whether a certified access specialist has inspected the property.

That specialist will determine if the building complies with the California ADA -- which is more stringent than the federal ADA statute.

“This is definitely not a case of one size fits all,” Stoke said.

Stoke said it is best to be an open book, whether it refers to what is required to be revealed about the property's accessibility, or about new regulations governing energy use.

“Disclosure, disclosure, disclosure is the name of the game,” Stoke said.

Stoke also discussed multifamily properties.

Renters have sometimes been left out in the cold after a landlord's foreclosure.

To correct that, new legislation (AB 2610) enacted this year states that a fixed-term tenant must be allowed to remain until the lease expires.

In addition, a month-to-month tenant must receive a 90 day notice before being forced out.

Laws governing commercial property leases in California won’t be the only ones taking effect on July 1: on that date, all building owners with properties of 50,000 square feet or larger will be required to disclose any energy data/ratings from the prior 12 months.

This requirement -- which utilizes the Energy Star rating system as a benchmark -- will be triggered when a building is sold, is leased by a single entity in its entirety or is refinanced.

By January 2014, the energy requirement will be expanded to include all commercial buildings of 10,000 square feet or larger.

Finally, on July 1, 2014, all commercial buildings that are larger than 5,000 square feet will be subject to the same reporting requirements.

Randy Walsh, San Diego Energy Desk chief optimizer, elaborated on the energy issue.

Walsh said buildings account for 48 percent of the U.S. energy consumption annually, and that energy expenses represent about 30 percent of the operating costs of a building.

“Energy is the single largest expense for office buildings,” Walsh said. “I think brokers are going to drive the market on this.”

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