Effective January 1, 2015, commercial landlords are prohibited from entering into leases or other occupancy agreements that include any unreasonable restriction or prohibition on the installation or use of an electric vehicle charging station (“EV Station”) in a parking space associated with the commercial property. AB 2265 was enacted in an effort to promote, encourage and remove obstacles to the use of EV Stations, and effective January 1, 2015, the bill became law with the addition of Section 1952.7 to the California Civil Code. This new law invalidates any term in a commercial lease or lease amendment which adversely affects the installation of EV Stations.
What the New Law Allows
- A commercial tenant may install a number of EV Stations equivalent to the number of parking spaces allotted under its lease or, if no parking spaces are allotted under the lease, a number of parking spaces determined by multiplying the total rentable square feet at the property by a fraction, the denominator of which is the total rentable square feet at the property and the numerator of which is the rentable square feet leased by the tenant at the property.
- If a tenant utilizes an unreserved parking space under its lease for installation of an EV Station, the landlord may treat the space as a reserved parking space and impose a reasonable monthly fee for any such space.
- If, under the terms of a lease, landlord approval is required for installation of an EV Station, approval or denial of the application must be in writing, and may not be “willfully avoided or delayed.”
- A landlord may condition its approval of a tenant’s EV Station installation upon compliance with reasonable requirements, including the tenant bearing all responsibility for all costs associated with the installation of the EV Station and its infrastructure including, but not limited to, the cost of permits, supervision, construction and in some cases, performance bonds. The tenant must also provide proof of insurance within 14 days of landlord’s approval of the EV Station installation and is responsible for the cost of any electrical usage, damage, maintenance, repair, removal and replacement of the EV Station.
What the New Law Does Not Require
The new law does not require a commercial landlord to install an EV Station at any property, nor does it require a landlord to maintain an EV Station once it has been installed. The law is simply intended to encourage EV Station installation by precluding commercial landowners from unreasonably prohibiting or conditioning such installation.
The only remedy set forth under the new law is to render void and unenforceable any specific provisions in a lease or agreement which are in violation of the stated requirements.
Also, the new law does not provide guidance for commercial landowners wishing to install an EV Station at their commercial properties. The law does specifically refer to a State of California guidebook which provides further information. This can be found at http://opr.ca.gov/docs/ZEV_Guidebook.pdf. This Guidebook provides useful information for commercial landlords contemplating the installation of EV Stations.
Exemptions from the New Law
New Section 1952.7 does not apply to:
- A commercial property where charging stations already exist for use by tenants in a ratio equal to or greater than two stations for every 100 parking spaces.
- A commercial property having less than 50 parking spaces. It also expressly provides that “reasonable restrictions on the installation of electric vehicle charging stations” are permissible.
We recommend that commercial landlords consider additions to their lease forms to address the possible installation of EV Stations. These lease form additions may include updated rules and regulations to address EV Station installation and use, and possible new lease provisions to set forth the terms and conditions for installation by a tenant, or by the landlord. Such EV Station provisions may (i) designate the maximum number of parking spaces that may be converted for use of an EV Station, (ii) designate specific areas of the parking facility for installation of an EV Station, (iii) provide the right for relocation of such EV Station in the event of future development of the property, (iv) specify that any parking spaces dedicated to an EV Station will be included within the total parking allocation for the tenant, (v) provide for the current reserved parking rates for the parking facility even if the tenant is not allocated any reserved parking (to avoid any arguments over the reasonableness of the rate if an EV Station is installed in the future), and (vi) include a reference in the alterations and surrender provisions of the lease to confirm tenant obligations relating to the installation and removal of the EV Station.
If a commercial tenant is considering installation of an EV Station at any future date, it will want to confirm the costs associated with converting unreserved parking for such use. Even if a commercial tenant has no perceived interest in installation of an EV Station, it should consider the impact of such installation by other tenants of the property on its parking rights under its lease.
Should you have any questions, please feel free to contact any member of the Sheppard Mullin commercial leasing team.