Avoid Liability for ADA Accessibility Violations within Tenant’s Space

Each year, literally thousands of private individuals file ADA lawsuits against landlords for money damages claiming their properties aren’t accessible to the disabled. In many of these cases, the alleged violation occurs not in the common areas but inside the tenant’s premises.

The Americans with Disabilities Act (ADA) is a federal law that requires owners, tenants, and operators of public buildings to tear down physical barriers and make modifications necessary to make property accessible to the disabled. These modifications include designated parking spaces, wheelchair ramps, and grab bars in restrooms. The question: If a part of commercially leased property doesn’t measure up to ADA accessibility criteria, who’s responsible—the landlord, the tenant, or both?

What the Law Says

To answer this question, there are three things you need to look at:

1. The ADA statute. Section 12182(a) of the ADA statute spells out that the law’s ban on discrimination and accessibility requirements apply to “any person who owns, leases (or leases to), or operates a place of public accommodation.”

2. The ADA regulations. Section 36.201(b) of the ADA regulations specifies that the requirements of the ADA apply to both the landlord that owns the building and the tenant that owns or operates the place of public accommodation. But it also gives the parties leeway to make lease arrangements addressing their respective ADA obligations. The exact language: “As between the parties, allocation of responsibility for complying with the obligations of this part may be determined by lease or other contract.”

3. The lease. Many commercial landlords take advantage of Section 36.201(b) by including lease language that assigns the tenant control over the space it leases, which may include parking lots and other common areas, along with responsibility for ensuring that those areas meet ADA requirements.

The Three Basic Rules of ADA Liability

Accordingly, landlords and tenants typically share liability for ADA violations.

Rule 1: Landlords can never contract out of ADA liability. There are limits to how far landlords can go in shifting ADA responsibilities to tenants. The operative phrase in the regulations is “as between the parties.” In other words, while landlords may shift the costs of ADA compliance to tenants, they can’t contract out of their responsibility to ensure that the places of public accommodation they lease meet ADA accessibility requirements.

Example: This rule comes from a seminal ADA case from 2000, Botosan v. Paul McNally Realty, which began when a would-be customer in a wheelchair couldn’t patronize a local real estate broker because there were no disabled parking spaces in the office lot. In his anger and frustration, he sued not only the agency but its landlord for not making the premises accessible under the ADA. The landlord acknowledged the ADA violation but denied responsibility for it, noting that the lease gave the tenant control over the parking area and responsibility for installing disabled parking spaces. But the court found that the lease clause did not and could not relieve the landlord of liability for ADA violations on its premises.

Rule 2: Tenant’s liability depends on control over space. While a landlord is still liable for ADA violations on leased property even if that property is under the tenant’s control, a tenant isn’t liable for ADA violations on leased property under the landlord’s control. In other words, the tenant’s liability depends on whether the lease assigns it control and responsibility for ADA compliance over the property.

Example: A disabled customer sued Bed, Bath & Beyond for not making its store fully wheelchair accessible. Don’t blame us, replied BB&B, we’re just the tenants. The accessibility problems were all in the shopping center parking lots and common areas under the landlord’s control. The court agreed, noting that unlike in the Botosan case, the lease in this case didn’t assign the tenant control over the parking lots and common areas. Result: The customer’s only recourse under the ADA was to sue the landlord [Kohler v. Bed, Bath & Beyond California, 2015].

Rule 3: Shared liability is joint and several. Where it’s shared, landlord-tenant liability under the ADA is what’s called “joint and several.” Translation: Either or both parties can be made to pay any or all of the damages for the violation. While this may sound like legal gobbledy-gook, joint and several liability becomes a matter of huge practical importance when one of the defendants is insolvent and the other isn’t.

Five Lease Protections from ADA Liability Caused by Tenants

Although it can’t totally eliminate your liability for ADA violations within tenants’ premises, smart leasing can minimize the costs of violations and, even better, prevent them from occurring in the first place by requiring tenants to:

1. At a minimum, comply with all applicable ADA requirements within their own premises and areas under their control;
2. Make physical alterations necessary to ensure compliance with ADA accessibility requirements within their premises and under their control;
3. Pay for any ADA alterations within the premises or common areas necessitated by their uses, improvements, or changes in use;
4. Share costs of major ADA upgrades in common areas on an allocated basis, for example, as part of CAM; and
5. Indemnify you for all losses you incur as a result of their failure to comply with ADA obligations in their use of the leased premises.

Get Tenant to Indemnify You Against ADA Losses It Causes

Although landlords can’t delegate their duty to comply with ADA requirements to tenants, they can add lease provisions “allocating their compliance responsibilities” with tenants. U.S. Department of Justice guidelines (ADA Title III Technical Assistance Manual, Sec. III-1.2000 Public accommodations) suggest that this may include language requiring a tenant to indemnify the landlord against losses caused by its failure to comply with its obligations under the lease, including the duty to meet all applicable ADA requirements. Two options:

• Review your current lease indemnity clause and ensure it’s broad enough to cover a tenant’s failure to meet ADA requirements; or
• Insert a separate ADA indemnification clause like our Model Clause: Require Tenant to Indemnify You for ADA Violations.