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.
Issue link: http://cire.epubxp.com/i/306204
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.
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