Building Owners and Managers Association

Improving the Performance of the Commercial Real Estate Industry
Bill Mandates Lease Language for Building Code
Monday, July 13, 2015
by: Robin Jochims

Section: Association Business

A bill that was recently gut-and-amended would require commercial leases to have provisions in them that allow a tenant to withhold rent, if the leased building is not fully compliant with provisions of a bill from 2009 (SB 407 – see below for more information) that requires that building built prior to 1994 upgrade water fixtures, including toilets. 
AB 723 (Rendon; D-Lakewood) seeks to give tenants building code enforcement authority through lease provisions if water fixtures in the leased building does not meet water savings requirements.
Our industry supported the underlying law that this bill is seeking to enforce, SB 407 (Padilla; Chapter 587, 2009).  That law gives property owners until January 1, 2019, and the state should not overreact with this leasing provision.  Commercial buildings have three and a half years to comply; and the state should first focus on making sure all owners now about the requirement through public education, then assist those properties that want to comply but are having a hardship, before taking such a drastic measure.
Any building that has been built since 1994 already complies and many commercial buildings that are older have already been upgraded through the natural course of tenant improvements, ADA upgrades, and/or water efficiency investments made by businesses who own and/or manage commercial real estate. 
We understand that the author and committee are discussing potential amendments and we are doing everything possible to help inform that discussion.  Again, we do acknowledge there are buildings (both public and private) that may have trouble in complying with the 2019 deadline, however, we think that is a very small segment of our membership and believe that outreach, education, and financial assistance for those owners that don’t have access to capital is a much better initial approach than deputizing tenants as Code Officers and allowing them to withhold rent with no recourse for the property owner/manager.
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