Real estate investors and developers of public accommodations and facilities, both large and small, should take note of recent case-law regarding retrofit liability for non-compliant facilities under the Americans with Disabilities Act of 1990 (ADA), 42 U.S.C. § 12101 et seq., and the Fair Housing Act of 1968 (FHA), 42 U.S.C. § 3601 et seq.

In separate cases, one before the Nevada Supreme Court and the other before the U.S. Court of Appeals for the Fourth Circuit, the owners/developers of a “public accommodation” were denied in their efforts (under contract and state law) to seek reimbursement and indemnities from design professionals for the costs to retrofit their properties required by the United States Department of Justice (DOJ) to comply with the ADA.  In Nevada, the subject property was a casino.  15 apartment communities were the subject of the case before the Fourth Circuit. In both cases, applying the same rationale, the courts dismissed the claims.

The courts essentially held that allowing these claims to move forward would undermine the fundamental objectives of these laws: allowing an owner to “completely insulate itself” from liability for violations by contract or through common law principles would likely reduce the incentive to comply and to ensure compliance.

Please see Rolf Jensen & Associates v. District Court, 282 P.3d 743 (Nev. 2012) and Equal Rights Center v. Niles Bolton Associates, 602 F.3d 597 (4th Cir. 2010).

Federal district courts in Maryland, Mississippi, and Tennessee have dismissed similar owner/developer claims against design professionals.  See United States v. The Bryan Co., No. 3:11-CV-302-CWR-LRA, 2012 WL 2051861, at *5 (S.D. Miss. June 6, 2012); Equal Rights Ctr. v. Archstone Smith Trust, 603 F. Supp. 2d 814, 824 (D. Md. 2009); United States v. Murphy Dev., LLC, No. 3:08-0960, 2009 WL 3614829, at *2 (M.D. Tenn. Oct. 27, 2009).

Owners and developers of “public accommodation” facilities should carefully consider how to draft their contracts with design professionals with regard to the allocation of responsibility for compliance with the ADA and FHA. Also, owners likely need to stay actively involved in the design and construction phases, as opposed to contracting to delegate away this responsibility and fully relying on the design professionals and contractors.

Investing, developing and operating commercial real estate assets, especially “public accommodations” under the ADA and FHA, require a mix of real estate, land use, regulatory, environmental, construction, finance, leasing, litigation and zoning experience.  We’re there. Always.  For retail, hospitality, and multi-family properties both large and small.