Who's Responsible for Making a Tenant's Space ADA-Accessible?

SITUATION

An electronics store leases 3,000 square feet of shopping center space. But the city won’t let the store operate until wheelchair ramps are installed and the parking lot is re-striped to comply with the Americans with Disabilities Act (ADA). The owner refuses to do the work. So the tenant pays a contractor $30,000 to make the required modifications and sues the owner for its costs, claiming breach of the lease. Key lease terms:

• Sec. A says the owner is responsible for “operation, management, and maintenance” of the common area, defined as the parts of the center intended for common use of all tenants, including parking lots, loading areas, and sidewalks;
• Sec. B says the tenant is responsible for ADA compliance within the “demised premises,” defined as the store’s interior and doorways;
• Sec. C says the demised premises are leased “AS IS” and that the owner doesn’t have to do any construction or improvement work in connection with the tenant’s use.

QUESTION

Did the owner’s failure to make the ADA repairs violate the lease?

1. Yes, because the repairs were in the common area.
2. No, because the repairs were in the demised premises.
3. Yes, because the “AS IS” clause is unenforceable under the ADA.
4. No, because Sec. B makes the tenant responsible for ADA compliance.

ANSWER

A. The owner’s refusal to install access ramps and re-paint the parking lot violated its duty to maintain the common areas under Sec. A of the lease.

EXPLANATION

The 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. Because both owners and tenants can be liable for violations, most commercial leases include provisions allocating responsibility for ADA compliance between the parties. Typical arrangement: The owner is responsible for ADA compliance in the common areas it controls, and the tenant is responsible for compliance within the leased space, or “demised premises.” This scenario, which is based on an actual Texas case, illustrates the kinds of disputes these arrangements typically lead to.

In this case, the repairs had to be made to the parking lot and walkways leading to the store. These locations were used by all tenants and thus part of the “common area” as defined by the lease. So the owner had to pay for the repairs under its Sec. A duty to maintain the common area.

WHY WRONG ANSWERS ARE WRONG

B is wrong because the lease defines “demised premises” as the interior and doorways to the store—from front to rear threshold. According to this definition, everything on the outside was “common area,” including the entry and exit ways and parking areas that needed the ADA repairs.

C is wrong because the ADA doesn’t necessarily prevent an owner from using an “AS IS” clause to transfer liability to a tenant. The reason the “AS IS” clause in this case didn’t get the owner off the hook is that it applied only to the “demised premises” and not the common area.

D is wrong because, like the Sec. C “AS IS” clause, the Sec. B clause assigning tenant responsibility for ADA compliance applied only to the demised premises.

PRACTICAL POINTERS

While you must be prepared to be responsible for making and keeping common areas ADA-compliant, you can also:

• Make tenants responsible for ADA compliance within their demised premises;
• Make tenants responsible for ADA alterations in common areas necessitated by their uses or improvements;
• Ask tenants to share costs of major ADA upgrades in common areas on an allocated basis, for example, as part of CAM.

Further reading: For more help with ADA issues, including a Model Lease Clause, see "Avoid Liability for ADA Accessibility Violations within Tenant’s Space, available to subscribers here.