California Energy Use Disclosure Requirements

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California Energy Use Disclosure Requirements

As of January 1, 2014, new energy use disclosure requirements were enacted in California for non-residential buildings. The objective of the new law is to increase energy efficiency and to lower energy consumption. Compliance with the new law is required by the California Energy Commission (CEC).

The disclosures are required to be made when the purchase, lease, or financing of a nonresidential building is imminent. Owners must measure their building’s energy use with the Environmental Protection Agency’s Energy Star Portfolio Manager system and present a disclosure of an energy use report to potential buyers, lessees, and lenders.

How Do I Adhere to the California Law?

If you are an owner of a nonresidential building, then you an adhere to the new law by opening or updating an account for your building with the Energy Star Portfolio Manager system a minimum of 30 days prior to the date on which you are required to disclose the energy use report. You can obtain a copy of the energy use data for the most recent 12 months from the utilities and energy providers who service your building. You will receive this information in your Portfolio Manager account.

You are then required to produce a Data Verification Checklist report regarding energy use with Portfolio Manager, present the report to the CEC, and disclose the report to a potential buyer or lessee a minimum of 24 hours prior to the time at which the sales contract or lease is executed. The report must be presented to the lender by or before the time at which the loan application is submitted.

When Am I Required to Comply with the New Law?

Compliance with the new disclosure requirements is dependent on the square footage of the buildings. If your building’s square footage is greater than 10,000 square feet, then you must comply with the new law starting January 1, 2014. If your building’s square footage is between 5,000 and 10,000 square feet, then you must comply with the new law starting July 1, 2014. And if your building’s square footage is fewer than 5,000 square feet, then you do not have to comply with the new law.

What Are the Consequences If I Don’t Comply?

Currently, there is no penalty for failure to comply with the disclosure requirements. However, the CEC has stated that it may inquire about accusations of noncompliance, and attempt to obtain an administrative order compelling owners to comply with the law. It may also engage in negotiations that result in settlements, including payments constituting a penalty.

Should I Consult a California Lawyer?

If you are an owner of a nonresidential building that meets the criteria for compliance with the new law in California, then you should contact a real estate lawyer who can help you navigate through the new disclosure requirements.

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Last Modified: 06-20-2014 04:37 PM PDT

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