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Who pays for ADA modifications to a commercial rental unit?

On Behalf of | Jun 14, 2024 | Commercial Real Estate

Leasing out commercial properties can be a viable source of revenue. Commercial tenants pay quite a bit for space in the right neighborhood or units with certain amenities. Commercial leases tend to come with a long-term rental period, which ensures multiple years of revenue for the landlord before they have to market the property to prospective tenants again in the future.

Of course, there are certain risks and responsibilities that come with working as a landlord. Maintenance and repair expenses can sometimes fall to a landlord and might diminish how profitable a lease actually is for the property owner. One of the biggest potential expenses might relate to making massive property adjustments to make a facility more accessible.

The Americans with Disabilities Act (ADA) requires that businesses accommodate members of the public and that employers accommodate workers. Does a landlord or a tenant generally have to absorb the cost of reworking a space to make it accessible?

The lease and other details determine responsibility

Some commercial leases specifically include provisions passing on all costs related to property maintenance or adjustments to the tenant. For example, if a tenant rents a vacant warehouse, the business tenant may assume all responsibilities related to making the space usable for business purposes and addressing any make issues that arise during their tenancy. Those renting one unit in a multi-tenant space, like an office park, may pay for the landlord to handle maintenance matters.

Modifications and additions to ensure ADA compliance could fall under standard maintenance and repair obligations. In some cases, a landlord may have a degree of financial and legal responsibility for the costs generated by modifying the space. A multi-unit office building may need to have accessible bathrooms and appropriate parking available. The landlord may have to make adjustments even if no prior tenants have ever requested them.

On the other hand, the business may have to cover modification expenses if the lease passes maintenance costs to them or there are unique requests made by an employee. The nature of the modification request, the terms of the lease and other details may influence whether or not a commercial landlord has any responsibility to help make a space more accessible.

Commercial landlords may need to consider the possibility of accessibility issues when negotiating a new commercial lease with a prospective tenant. Including the right terms in a commercial lease can reduce the issues that might diminish how profitable the arrangement is for both parties.