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NEW ACCESSIBILITY DISCLOSURE REQUIREMENTS FOR SAN FRANCISCO SMALL BUSINESS LEASES

Starting on January 1, 2013 a new set of rules will take effect that impact commercial landlords and small business tenants in San Francisco. Under disability access law, both landlords and tenants of public accommodations have the legal obligation to assure compliance. Although this has been the law for more than twenty years, many commercial landlords and tenants of small businesses have been unaware of the applicable requirements, which has led to confusion, conflict and litigation. With the goal to heighten awareness and to assist the parties of commercial leases to sort out disability access issues between themselves, the Board of Supervisors enacted Chapter 38 of the San Francisco Administrative Code, entitled "Commercial landlords; access improvement obligations and notice to small business tenants regarding disability access" (hereinafter "Chapter 38"). Chapter 38 imposes obligations on both landlords and tenants regarding ground floor disability access and disability access to public restroom facilities. This article focuses on how the new rules impact landlords when making or amending leases of commercial real property comprised of 7,500 square feet or less for use as a public accommodation.

Starting January 1, 2013, any new commercial lease or any amendment to an existing commercial lease for a space of 7,500 square feet or less that is used as a public accommodation will trigger a duty to comply with Chapter 38 (For spaces of 5,000 square feet or less the effective date is June 1, 2013). Under federal law, a "public accommodation" is, essentially, any business open to the public, including retail, health care, professional office, lodging, entertainment venues, social service agencies, schools, gymnasiums, museums and recreation facilities. Thus, commercial uses not open to the general public, such as call centers, are exempt from Chapter 38, but businesses open to the general public such as hotels, bars, restaurants, stores and offices are covered. (FN1)

After the effective date, commercial landlords of public accommodations will have two options to achieve compliance with Chapter 38.

First, the landlord may effectuate building alterations as necessary to assure that ingress/egress and public bathrooms comply with applicable ADA requirements before making or amending a commercial lease. Also, the landlord must provide a notice regarding the disability access obligations, which may be accomplished by utilizing the "safe harbor" language of Chapter 38.2(b).(FN2) The notice must be signed by the landlord and tenant. Thus, even if the landlord brings the premises into compliance with the ADA, all leases and amendments must be preceded by a signed safe harbor notice. Next, a copy of the brochure entitled "Access Information Notice" authored by the City (and available on the Assessor-Recorder's Office website www.sfassessor.org ) must be provided to the tenant in the tenant's language. Confirmation of the tenant's receipt of said brochure should be procured to demonstrate compliance, such as sending it via certified mail or by obtaining a signed confirmation of receipt from the tenant. Finally, the landlord must include a provision in every lease and amendment subject to Chapter 38 specifying who is responsible for making and paying for ADA improvements to the property and that both parties will use reasonable efforts to notify the other of any alterations to the premises which might impact accessibility. This obligation may be satisfied by utilizing the "safe harbor" language of Chapter 38.2(b).

The second option for landlords to comply is to provide notice to a prospective tenant of the disability access obligations and that the property may not meet ADA requirements. This additional requirement may be satisfied by adding safe harbor language of Chapter 38.3(c) to the notice. [FN3] Again, the notice must be signed by the landlord and tenant. Next, a copy of the brochure entitled "Access Information Notice" authored by the City (and available on the Assessor-Recorder's Office website www.sfassessor.org) must be provided to the tenant in the tenant's language. Again, the landlord should retain proof that the notice has been given. Finally, the landlord must include a provision in every such lease and amendment specifying who is responsible for making and paying for ADA improvements to the property and that both parties will use reasonable efforts to notify the other of any alterations to the premises which might impact accessibility.

Thus, even if the tenant agrees to bring the property into compliance with the ADA, the landlord must still perform according to Chapter 38 regarding issuing a notice of disability access obligations, getting the notice signed, and providing a copy of the Access Information Notice brochure before any applicable lease or amendment is executed. The lease or amendment must specify which of the parties is to make the premises ADA compliant, pay for such modifications, and that the parties agree to notify each other of any alterations which may impact access.

Chapter 38 also includes provisions to assure that the City will expedite ADA building alteration permits.

Interestingly, there is no provided mechanism for the City to review leases for compliance, nor is there a built-in penalty provision for a failure to comply. However, the burden is on the landlord to assure compliance with the notice and lease drafting requirements, and thus the tenant could have an advantage in any ADA litigation if the landlord has not complied. Depending upon the bargaining posture of the parties, one efficient course for a commercial landlord of a small business is to place the burden of ADA improvements as well as the cost for such improvements on the tenant, so long as notice requirements have been met.

Andres Sanchez and Michael C. Hall / Law Offices of M C Hall & Associates©

FN1
42 U.S.C. 12181(7)Public accommodation
The following private entities are considered public accommodations for purposes of this subchapter, if the operations of such entities affect commerce-(A) an inn, hotel, motel, or other place of lodging, except for an establishment located within a building that contains not more than five rooms for rent or hire and that is actually occupied by the proprietor of such establishment as the residence of such proprietor; (B) a restaurant, bar, or other establishment serving food or drink; (C) a motion picture house, theater, concert hall, stadium, or other place of exhibition or entertainment; (D) an auditorium, convention center, lecture hall, or other place of public gathering; (E) a bakery, grocery store, clothing store, hardware store, shopping center, or other sales or rental establishment; (F) a laundromat, dry-cleaner, bank, barber shop, beauty shop, travel service, shoe repair service, funeral parlor, gas station, office of an accountant or lawyer, pharmacy, insurance office, professional office of a health care provider, hospital, or other service establishment; (G) a terminal, depot, or other station used for specified public transportation; (H) a museum, library, gallery, or other place of public display or collection; (I) a park, zoo, amusement park, or other place of recreation; (J) a nursery, elementary, secondary, undergraduate, or postgraduate private school, or other place of education; (K) a day care center, senior citizen center, homeless shelter, food bank, adoption agency, or other social service center establishment; and (L) a gymnasium, health spa, bowling alley, golf course, or other place of exercise or recreation.

FN2
San Francisco Administrative Code Chapter 38.3(b)
DISABILITY ACCESS OBLIGATIONS UNDER SAN FRANCISCO ADMINISTRATIVE CODE CHAPTER 38
Before you as the Tenant enter into a lease with us the Landlord for the following property [INSERT DESCRIPTION/ADDRESS](the "Property"), please be aware of the following important information about the lease: You May Be Held liable for Disability Access Violations on the Property. Even though you are not the owner of the Property you, as the tenant, as well as the Property owner may still be subject to legal and financial liabilities if the leased Property does not comply with applicable Federal and State disability access laws. You may wish to consult with an attorney prior to entering this lease to make sure that you understand your obligations under Federal and State disability access laws. The Landlord must provide you with a copy of the Small Business Commission Access Information Notice under Section 38.6 of the Administrative Code in your requested language. For more information About disability access laws applicable to small businesses, you may wish to visit the website of the San Francisco Office of Small Business or call 415-554-6134.
The Lease Must Specify Who Is Responsible for Making Any Required Disability Access Improvements to the Property. Under City law, the lease must include a provision in which you, the Tenant, and the Landlord agree upon your respective obligations and liabilities for making and paying for required disability access improvements on the leased property. The lease must also require you and the Landlord to use reasonable efforts to notify each other if they make alterations to the leased Property that might impact accessibility under federal and state disability access laws. You may wish to review those provisions with your attorney prior to entering this lease to make sure that you understand your obligations under the lease.
By signing below I confirm that I have read and understood this Disability Access Obligations Notice.
Signed _______________________, Tenant
Signed _______________________, Landlord

FN3
PLEASE NOTE: The Property may not currently meet all applicable construction-related accessibility standards, including standards for pubic restrooms and ground floor entrances and exits.