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Real Estate Sale Stalled by Non-Compliance with Energy Disclosure Law

Energy disclosure is proving to be critical to real estate transactions as failure to comply with AB1103 is opening up potential for significant delays, price negotiations and missed deals.

By Tony Liou | Updated on February 03, 2014

AB 1103 – California’s energy disclosure law which requires commercial building owners to benchmark and disclose a building’s historical energy usage prior to selling, leasing or financing the entire building– is causing some issues for real estate transactions.  I just took a call from a client needing an emergency Building Energy Disclosure Report, as their buyer refused to close without it!  Unfortunately, these reports can’t be delivered instantly.  While we’re of course rushing to get it done so that the client can complete the transaction, very short turnaround times can be problematic.

California law demands compliance with AB 1103 and now buyers are demanding it too.  In this client’s case, did the buyer really need to know or was she just using it as an excuse to delay closure?   While many in the CRE business see benchmarking and energy disclosure as “just another report that must be completed”, the bottom line is that in our regulated State of California, complying with the law is always the best course of action. AB 1103 needn’t always be painful, but the key is to plan for it early.

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