Shift ADA Responsibility, Cost to Tenants

Violating the Americans with Disabilities Act (ADA) can be costly for commercial real estate owners. It’s a complicated law with nuances that create pitfalls for owners. While the ADA is detailed in terms of spelling out under what circumstances a building’s or a tenant’s space must be altered to make it accessible to people with disabilities, it doesn’t say who is responsible for making and paying for these alterations. That is, are owners or tenants on the hook for ensuring that accommodations are made and any violations that stem from them?

If you think that you’ve protected yourself by adding a clause to your lease that makes the tenant responsible for ADA compliance in its space, that’s not enough. You may need to change other lease clauses, too; if you don’t you could end up paying a fine for an ADA violation the tenant caused. Or you could be forced to pay for expensive ADA alterations outside the tenant’s space that are required because of something the tenant did.

One of many key clauses to focus on is the compliance with laws portion of the lease. Most leases require the tenant to comply with all laws, codes, and other governmental requirements in connection with the tenant’s use and improvement of its space. But go one step further: Specifically include “without limitation” the ADA as a law with which the tenant must comply.

The extra step is necessary because in your “compliance with laws” clause, you may specifically mention other laws by name, for example, environmental laws; if you don’t mention the ADA, a tenant could argue that you meant to omit it from the tenant’s compliance responsibilities. This has become common practice in commercial leases, so you shouldn’t experience much if any pushback from tenants.

The tenant’s alterations provision is also a crucial place to address the ADA. That’s because, once the tenant starts altering its space, multiple ADA compliance responsibilities are triggered. So make sure the tenant’s alterations clause says that all of the tenant’s alterations must be made “in compliance with all laws, including, without limitation, the Americans with Disabilities Act of 1990 and all regulations issued hereunder.”

For 10 more key clauses to focus on while you’re working with your attorney to review your leases with an eye on ADA compliance and shifting cost and responsibility for that to tenants, plus model lease language to adapt, see “Meticulously Draft ADA Requirements Throughout Lease,” available to subscribers here.