Commercial Investment Real Estate

MAY-JUN 2014

Commercial Investment Real Estate is the magazine of the CCIM Institute, the leading provider of commercial real estate education. CIRE covers market trends, current developments, and business strategies within the commercial real estate field.

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19 May | June | 2014 CCIM.com ever, it turns out that most courts say that any violation of the ADA Standards is a barrier that has to be removed, and anything that doesn't put the business in bankruptcy can be readily achieved. As a practical matter, original and subsequent owners are in the same boat. Under the Fair Housing Act, only the orig- inal owner of a property is responsible for making sure it complies with the applicable accessibility guidelines. As most courts read the statute, later owners cannot be made to bring the property into compliance with these guidelines. T e most they can be compelled to do is allow the original owner access so the original owner can do the work. T is is a bur- den, but much less of a burden than paying for all the work to be done. If the original owner is out of business, it is no burden at all. T ere are, however, a few recent decisions in which a district court found that a later owner might be liable. Most of these deci- sions base later owner liability on some af liation with the original owner, but one Florida district court has ruled that an unaf- f liated later owner might be liable if it had "wrongful knowledge" that the property was not in compliance with the guidelines. T e court never explained what "wrongful knowledge" might be, but some purchasers of multifamily housing are worried that if they know there is a problem they will have "wrongful knowledge" and be treated like an original owner. T at would turn an inconve- nience into a major f nancial liability. So far this position has been taken only by the Florida court, with a court in Okla- homa reserving judgment on the matter. T e Florida case is on appeal to the 11th Circuit U.S. Court of Appeals. In that appeal, the plaintif has taken the position that knowl- edge is irrelevant and every owner has the same liability. If the 11th Circuit agrees, then the situation will be just like the ADA, where ignorance is no help but knowledge at least allows a plan to be made. T e defendant argues that knowledge is irrelevant and that later owners cannot be liable. If the 11th Circuit agrees, then there is no liability for subsequent owners regard- less of knowledge. Only in the event that it adopts some middle position will knowledge be a bad thing. Until the 11th Circuit rules, the best advice is that the devil you know is better than the devil you don't know. T e modest expense of a survey to f nd FHA violations will allow an existing owner to assess its risk and make plans based on that assessment. It will allow a prospective buyer to accurately assess the risk of ownership before that risk becomes a fact. In the world of accessibility litigation, what you don't know almost always hurts you, and hoping that ignorance will protect you is a long shot gamble. Richard Hunt is an attorney with Hunt Huey PLLC in Dallas. Contact him at rhunt@ hunthuey.com. 2013 President's Cup Congratulations to the following CCIM Chapters: &&,0&KDSWHUVHDUQHGWKH3UHVLGHQWV;&XS;$ZDUGLQDFRPSHWLWLRQFRQGXFWHGE\WKH&&,0 ,QVWLWXWH 7KH 3UHVLGHQWV &XS; $ZDUGV SURJUDP LV GHVLJQHG WR REMHFWLYHO\ UHFRJQL]H DQG UHZDUGDFKLHYHPHQWVDQGPHPEHUSURJUDPVE\&&,0&KDSWHUVGHPRQVWUDWLQJWKHKLJKHVW; GHJUHH RI VNLOO LQJHQXLW\ DQG LQQRYDWLRQ LQ SURPRWLQJ WKH ,QVWLWXWHV PHPEHUVKLS EHQHILWV 7KHWKUHHWLHUVDUHEDVHGRQWKHQXPEHURIFKDSWHUPHPEHUV7KHDZDUGVZHUHSUHVHQWHGDW WKH,QVWLWXWHV$QQXDO6SULQJ%XVLQHVV0HHWLQJVKHOGLQ1DVKYLOOH7HQQ 7,(5 VW3ODFHz$ODEDPD&&,0&KDSWHU; QG3ODFHz6RXWKHUQ1HYDGD&&,0&KDSWHU; UG3ODFHz+RXVWRQ*XOI&RDVW;&&,0&KDSWHU; 7,(5 VW3ODFHz6RXWK&DUROLQD;&&,0&KDSWHU; QG3ODFHz0LGGOH7HQQHVVHH&&,0&KDSWHU; UG3ODFHz,RZD&&,0&KDSWHU; 7,(5 VW3ODFHz.DQVDV&&,0&KDSWHU; QG3ODFHz1RUWKZHVW$UNDQVDV&&,0&KDSWHU; UG3ODFHz8SVWDWH1HZ

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