New Energy Usage Disclosure Requirement for California Commercial Real Estate Owners

Beginning  July 1, 2013, all owners of non-residential commercial buildings with a total gross floor area of over 50,000 square feet shall be required to disclose the building’s energy usage information in the following circumstances:

(1) A prospective buyer of the building, no later than 24 hours prior to execution of the sales contract.
(2) A prospective lessee of the entire building, no later than 24 hours prior to execution of the lease.
(3) A prospective lender financing the entire building, no later than submittal of the loan application.

Under Assembly Bill 1103, a commercial real estate building owner shall disclose the Disclosure Summary Sheet, Statement of Energy Performance, Data Checklist, and the Facility Summary for the building.  At least 30 days before a disclosure is required, an owner will need to register for a “Portfolio Manager” account with the U.S. Environmental Protection Agency’s ENERGY STAR program online, which manages building energy use data.  Once a profile has been created, owners will use the Portfolio Manager to generate the Disclosure Data by providing space use characteristics and requesting that all utilities and energy providers serving the building release energy use data for the entire building for the last 12 months.

A building owner should require the counterparty to execute an acknowledgement of receipt of the disclosures once the disclosures have been made.  Owners should consider updating their purchase agreements, lease forms and financing documents to include this express acknowledgement as by next year, the disclosure requirement will apply to buildings with a total gross floor area of less than 50,000 square feet.

Beginning January 1, 2014, a building with a total gross floor area measuring more than 10,000 square feet and up to 50,000 square feet will also be subject to the new disclosure requirements put in place by Assembly Bill 1103.  By July 1, 2014, all buildings with a total gross floor area measuring at least 5,000 square feet and up to 10,000 square feet will also be required to comply.

For more information on these or other California commercial real estate matters, please contact Evelyn Ginossi at 310.746.3837 or evelyn@ibvadvisorygroup.com.