Making Sense of Accessibility Laws in Multifamily Transactions

When it comes to multifamily acquisitions, accessibility compliance presents unique challenges. A host of different legislation and regulations may come into play, depending on a variety of factors: type of financing, configuration of the property, year of construction, and more. Given all these variables, how can you make sure your deal doesn’t get tripped up by an unforeseen regulatory issue/?

The short answer: engage Certified Access Specialist (CASp) to perform an accessibility survey and help you navigate the unique regulatory requirements for your deal. When possible, select a CASp with multifamily experience in your market to ensure you meet any local ordinances that may apply, as well as federal guidelines.

You can get ahead of your due diligence by developing a working knowledge of the various accessibility regulations that impact multifamily transactions. The short primer below outlines these regulations and when they may apply to your deal.

Americans with Disabilities Act (Title III): The ADA has limited reach when it comes to multifamily properties, because it applies only to “places of public accommodation.” It does not apply to individual dwelling units. A leasing office, however, is a place of public accommodation, so if your property has an on-site leasing office, ADA guidelines apply to the office, the parking lot that serves the office, and at least one walkway between the two. One thing to note: there is no such thing as a grandfather clause; therefore, no matter the age of the property, ADA compliance is always required.

Fair Housing Amendments Act: The FHAA applies to multi-family properties built after March 13, 1991. Among other provisions, it requires that all “covered” ground floor units, and all units in buildings with elevators, be adaptable. “Adaptable” units are designed in such a way that accessibility features can be incorporated without structural modification. Improvements are also required to all common areas on the property including pools, laundry facilities, clubhouses, access to units, and any other amenity that services the complex.

Section 504 of the Recovery Act of 1973/Uniform Fair Accessibility Standard: Section 504 applies to properties that are are “constructed, renovated, operated or purchased by a recipient of project-based federal financial assistance” (i.e., Section 8, HAP, HOME Grant, etc.). A minimum of 5% of the dwelling units must be accessible to people with physical disabilities, and at least one additional unit or a minimum of 2% of the units must be accessible to people with hearing and vision disabilities (sensory). In California, it is required that a minimum of 10% of the units be accessible with 4% being sensory units.

The level of reporting and compliance required as part of real estate due diligence activities varies depending on your debt financing options/refinance requirements (such as FHA/HUD, Fannie Mae, Freddie Mac, and SBA). However, the above-noted accessibility regulations are federal laws, and all properties are required to comply with these laws to the maximum extent required (as applicable) per the individual standards. Furthermore, the unique location and attributes of your building may warrant the application of additional standards, as dictated by historic preservation codes, tribal laws, or other local considerations.

The complex landscape of accessibility regulations can be frustrating for both borrower and lender. Failing to apply the right accessibility regulations can cause delays in your transaction, as well as exposure to future liability. This overview is not intended to replace the expert counsel of a CASp, but as basic context to help you know what to expect as you work with your CASp to complete the due diligence process, verify and document your property’s compliance, and design solutions for equal access at your site.