Commercial properties in Los Angeles and throughout California are subject to a number of state, local, and federal laws. Understanding, enforcing, and complying with these laws is critical to the success of your rental business. A legal mistake can be difficult to untangle yourself from, and also expensive to rectify.
Avoid liability and risk by surrounding yourself with experts in the management of commercial spaces and the legal requirements that come with those spaces.
Federal Laws Pertaining to Commercial Property
The federal laws that you need to know when you own commercial real estate and rent it out to tenants include the Americans with Disabilities Act (ADA), Fair Housing Act (FHA), as well as environmental laws, consumer laws around marketing and advertising, and requirements that come from the Securities and Exchange Commission.
You’re responsible for following these laws, and the tenants who rent your commercial space are, too. Here’s a closer look at what you need to know.
Americans with Disabilities Act
The ADA is a federal law that prohibits discrimination against people with disabilities. In commercial real estate, this law requires property owners and landlords to make reasonable accommodations for people with disabilities. This can include installing wheelchair ramps, adding accessible restrooms to a property, and modifying entryways to accommodate wheelchairs. You may need to establish a dedicated parking space for someone with a disability. As a real estate investor, you need to be sure your properties are ADA-compliant, otherwise there could be legal issues for you. The ADA also covers service animals and support animals. You might not want to allow pets into your commercial property, but if a tenant or their customer has a service dog, you cannot prohibit it.
Fair Housing Act
What does fair housing have to do with a commercial property, you may be wondering?
If your property is in any way mixed use or includes residential units such as condos, apartments, or townhomes, you’re subject to the FHA. It’s another federal law that aims to eliminate discrimination. This housing law requires compliance from landlords, property owners, property investors, real estate agents, lenders, insurance agents, and anyone dealing with the residential property industry – whether we’re talking about sales or rentals.
Federal Laws Enforced by the Environmental Protection Agency (EPA)
The EPA has several laws applicable to commercial real estate. As a property owner, you’ll need to comply with The Clean Air Act, The Clean Water Act, and the Resource Conservation and Recovery Act. These laws are in place to protect the environment and public health by regulating emissions, waste disposal and other environmental factors. As a commercial property owner, you must understand your responsibilities under these environmental laws and ensure your properties are compliant with any applicable regulations.
Federal Trade Commission (FTC) Regulations
The FTC regulates advertising and marketing practices in commercial real estate, including disclosure requirements and preventing false advertising. As an investor, it's crucial to ensure that all advertising and marketing practices for your properties comply with FTC regulations to avoid any legal issues.
You’ll also want to understand the Fair Credit Reporting Act. When you’re screening tenants, you’ll be collecting a lot of personal and financial information about those applicants. You must protect their privacy and keep that information secure.
Security and Exchange Commission (SEC) Regulations
The SEC regulates the sale of investments, including those in commercial real estate. As an investor, it’s important to be aware of SEC regulations and ensure that any investments or syndications comply with those regulations.
There are just a few of the federal laws and agencies that you need to be familiar with when you own and rent out commercial property. There will be other relevant laws depending on the type of property you’re renting out and the tenants you rent to.
Commercial State and Local Laws
Protect your commercial investment property by paying attention to the state and local laws that govern how you operate within the industry. Here’s what you should be paying attention to when you own commercial property in California:
Zoning Laws
Zoning laws can be some of the most important regulations to consider when it comes to commercial real estate and the way you do business in and around Los Angeles. Zoning laws determine which types of businesses can operate in specific areas. In California, zoning is regulated at the local level by city and county governments, which means that the regulations can vary widely from one location to another.
Before you purchase a commercial property or lease it out to tenants, make sure that the intended use of the property is allowed under the local zoning laws.
Building and Safety Codes
Building and safety codes are another essential aspect of commercial real estate in California and your local area. These codes are designed to ensure the safety and well-being of the occupants and the public at large. The building code covers the design, construction, and maintenance of commercial properties, while the safety code covers fire safety, electrical safety, and other safety-related issues.
As a commercial property owner, you’ll be responsible for complying with all relevant building and safety codes. Failure to do so can result in fines, legal expenses, and even lawsuits. You need to have the required fire exits and extinguishers in your property, for example. Evacuation routes need to be planned and posted.
Cover all the bases when it comes to building requirements and safety codes. This is your most basic responsibility as a property owner: ensuring your property is safe.
State Environmental Regulations
It may not surprise you that California has stricter environmental regulations than the federal government. The state also has strict rules on what types of chemicals and toxins can be used, and what types of disclosures are necessary about what’s included in products and environments.
If your commercial property handles hazardous materials or waste, there may be additional environmental regulations that you must follow. Commercial property owners are responsible for ensuring that their properties comply with all relevant environmental regulations, including reporting requirements and cleanup obligations.
Property Taxes
Property taxes are a significant cost for commercial property owners in California. Your taxes will be based on the assessed value of your property, and you’ll pay them to the local government. The rate of property tax varies depending on the location of the property and other factors, such as the age and condition of your building. You’ll want to budget for these taxes and prepare to pay them on time to avoid expensive penalties and even potential liens.
Laws Protecting Tenant Rights
You need to treat your tenants fairly and in accordance with the protections that are in place for them. Some of these protections include providing proper notice before making changes to the lease agreement or increasing rent. You’ll also have to follow the legal process should you need to evict a tenant.
Structure your lease agreement to include all of the disclosures that are necessary, and make sure all of your rules, requirements, and responsibilities are in accordance with state and local laws.
How to Access Expert Legal Knowledge
It’s important that you stay up to date on the current laws impacting your property, and also that you understand how to anticipate new laws that may be coming down the pike. If you don’t have a lot of time and resources to invest in learning and understanding these laws, you may want to partner with a Southern California commercial property management company. Bell Properties Commercial Real Estate makes it a priority to learn about all the laws that pertain to the properties we manage. We can protect you from liability and risk by ensuring you are and remain compliant.
Los Angeles has a number of organizations and publications dedicated to commercial real estate. So does the state of California. You can stay up to date on commercial laws by joining social media groups, subscribing to newsletters and podcasts, and joining local organizations.
The County of Los Angeles also provides small business resources, and you can find a lot of information and support from associations such as AIR CRE. They’ll offer templates you can download for things like business contracts and lease agreements. You can also get referrals for contractors, brokers, insurance agents, accountants, attorneys, and other service providers.
Bell Properties Commercial Real Estate encourages you to take advantage of all of these resources, especially when you’re unsure of what the laws are and whether you’re compliant with them. Nothing can take the place of solid Southern California commercial property management however. Not only do you get a lot of information and protection when it comes to your legal requirements, you can also count on:
Help with pricing your commercial property.
Help establishing a lease agreement for your commercial tenants
Help finding high-quality tenants for your commercial space
Assistance with maintenance, repairs, and renovations
Expert advice on everything from improvements to lease terms and vendor referrals for things such as landscaping, pest control, cleaning, and parking.
Your Southern California commercial property management partner knows the market. Bell Properties Commercial Real Estate can protect you and your property by keeping you compliant with the law.
If you have any questions, please don’t hesitate to contact us at Bell Properties Commercial Real Estate.
