A client closed on a small retail center in March. Eight tenants, a nail salon, a sandwich shop, a tax preparer. The first rent checks were due on the first of April.
The complaint arrived on March 27th. The plaintiff had never been a customer of any tenant. The claim concerned the parking lot: one accessible stall short of the required count, no van-accessible space, and a curb ramp steeper than the standard allows.
Every one of those conditions predated our client by years. None of that mattered.
Why the new owner inherits it
Title III of the Americans with Disabilities Act applies to places of public accommodation, which covers most retail, restaurants, medical offices and anything else the public walks into. Liability attaches to current conditions. A barrier that exists today is a violation today, regardless of who built it or when.
Two consequences follow for anyone buying one of these properties:
- You inherit every existing barrier the moment you take title.
- Landlord and tenant can both be named. The lease decides who ultimately pays between the two of you. It does not decide who a plaintiff may sue.
There is also an established pattern of repeat litigation against commercial properties, often built on conditions visible from the parking lot. Federal claims generally seek an order to fix the barrier plus the plaintiff's attorney's fees. Some states add statutory damages on top, California most prominently, which is why exposure there is materially higher.
What a survey actually turns up
Here is what an accessibility survey found on a hypothetical small center of the kind exchangers buy every week:
| Finding | Illustrative cost to fix |
|---|---|
| One accessible stall short, no van-accessible space | $3,500 |
| Curb ramp slope exceeds the standard | $9,000 |
| Restroom clearances in two tenant suites | $22,000 |
| Entrance door hardware and closing force | $1,800 |
| Total remediation | $36,300 |
Illustrative estimates only; actual costs vary with the site and the market. The point is the shape: the parking lot and the route from it are where claims start, and restrooms are where the money goes.
Individually these are modest. Together, arriving after an exchange has spent every available dollar at closing, they are a capital problem of exactly the kind we described in funding capital work after an exchange.
Why exchangers are exposed
Two reasons, and they are familiar ones by now.
The 45-day window pushes accessibility behind inspection, financing and title, and a standard property condition report is not an accessibility survey. It may mention obvious items. It will not measure ramp slopes or restroom clearances.
And a seller has no incentive to raise it. Barriers that have never drawn a claim look like non-issues from the seller's chair.
What to do inside the window
- Commission an accessibility survey from a qualified specialist, separately from the property condition report. In California, a Certified Access Specialist inspection also carries procedural benefits in litigation.
- Read the lease allocation. Who is responsible for accessibility in common areas versus inside each suite? Net leases often push suite interiors to tenants and keep parking and paths of travel with the landlord.
- Ask the seller in writing about any accessibility demand letters or claims, open or settled, and confirm through tenant estoppels that tenants are not holding claims against the landlord.
- Price the fixes into the deal. A price reduction is cleaner than a seller credit, which can have its own consequences for the value you are replacing.
- Fix the parking lot first. It is the most visible, the most commonly cited, and usually the cheapest.
A tax point worth knowing
Qualifying costs of removing architectural barriers may be deductible under Section 190, up to a stated annual limit, rather than capitalized and depreciated over decades. Some small businesses may also qualify for the Disabled Access Credit. Whether your spending qualifies, and how it interacts with the rest of your return, is a determination for your CPA.
Accessibility is not a reason to avoid retail. It is a reason to survey it before you own it, because the day title transfers is the day the barriers become yours. Getting that survey ordered early is part of the diligence sequence in our exchange process, and your attorney should review any open claims before you close.
Common questions about ADA risk on replacement property
Am I liable for barriers the previous owner created?
Generally yes. Accessibility claims concern current conditions, so a new owner inherits existing barriers from the day of acquisition.
If my lease makes the tenant responsible, am I protected?
Only between you and the tenant. A plaintiff can typically name both landlord and tenant, and the lease then governs who ultimately bears the cost.
Does a property condition report cover accessibility?
Not in any detail. Order a separate accessibility survey that measures parking, routes, ramps, entrances and restrooms.
What are the most common problem areas?
Parking stall counts and van-accessible spaces, ramp slopes, the route from parking to the entrance, door hardware, and restroom clearances.
Are barrier removal costs deductible?
Qualifying costs may be deductible under Section 190 up to an annual limit, and some small businesses may qualify for a credit. Your CPA determines eligibility.
Disclosure: Numerical example is for illustration purposes only; individual circumstances will vary.