Hotel Online  Special Report
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The Global Hospitality Advisor

Condo Hotels and the Americans with Disabilities Act: 
A Case of Mistaken Identity? 
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Is your condo hotel a “residence” or a
“place of public accommodation”? 

by Martin Orlick, February 2006

Condo hotels are not expressly mentioned in the Americans with Disabilities Act (ADA) nor are they specifically included in the Americans with Disabilities Act Architectural Guidelines (ADAAG). This is not surprising. In 1990—the year the ADA was enacted by Congress—there were relatively few condo hotels in existence, and they had not become a phenomenon. 

Despite the current proliferation of condo hotels, the Access Board’s newly proposed ADAAG technical requirements still include no specific mention of condo hotels, nor have we seen any state law that includes requirements for condo hotel accessibility. There is very limited judicial direction, as legal precedents regarding the ADA and condo hotels have not yet been clearly established. Consequently, developers of condo hotels are left largely on their own to interpret how and when the ADA applies to their projects.

Is the condo hotel primarily a dwelling?

In 1998, a Florida court addressed the specific issue of whether a residential condominium—not a condo hotel—was subject to Title III of the ADA’s “public accommodation” requirements because of the existence of a rental program. The judge determined that because the condominium was primarily residential in nature, it was not a “place of public accommodation” and did not fall under the requirements of the ADA. 

The judge noted that each condo unit was furnished with the individual owner’s personal property and maintained, repaired, and cleaned by the unit owner. Although units were rented out to guests on occasion, the property was not considered to be a “place of lodging.” (This was a lower court opinion and is not binding legal precedent.)

Is the condo hotel primarily for lodging?

In contrast, we can assume that where condo hotel units are needed or are expected to be used in the rooms inventory for a viable hotel operation, they will be subject to the requirements of the ADA. Additionally, local building departments will likely require compliance with both state and federal accessibility standards, and will require the project's developer to set aside the required number of fully accessible hotel rooms—including visual and auditory accessibility—across the room types, according to the formula set forth in ADAAG and state building codes. Currently, our condo hotel lawyers are involved in many California developments where accessibility requirements have been designated as specific development conditions. We expect to see this trend in other states, as well. 

What else controls the condo’s characterization?

Many factors could affect the characterization of a condo as primarily for residential or “public accommodation” purposes. If a property is operating as a hotel but has no dedicated room inventory and must rely on rental agreements with unit owners, it “feels” like a hotel. A lodging facility is also indicated when the hotel operator furnishes, repairs and controls the unit. The same is true when the unit owner’s rental agreement with the hotel operator limits the number of days that the owner can occupy the condo, because the manager is counting on the availability of condo units for hotel room inventory. Similarly, if the “condo” is only 400 square feet in size and has no kitchenette, it is likely to be deemed a lodging facility or “public accommodation.”

If a condo hotel is judged to be “public accommodation,” it must comply with all ADA-related requirements. 

New builds v. conversions

Condo hotel developers whose new projects include a substantial lodging component must follow the ADA guidelines set forth in the ADAAG for new construction. (The ADA requires that newly constructed hotels built after January 1993 must be completely “access barrier-free.”) 

Conversions may be treated differently. Existing buildings that are altered must be barrier free in the areas that are altered and in the path of travel leading to the altered area. Addition-ally, public restrooms, water fountains, public telephones and other facilities for the general public that serve the altered areas must be barrier-free. Developers converting existing properties to condo hotels will want to get knowledgeable advice on the ADA requirements for their specific property. ADA violations—even for minor infractions—can be costly.

Beware of ADA lawsuits

In both California and Florida—which together account for more than one-third of the nation’s condo hotel rooms—state laws allow for private individuals to sue under the ADA to force modifications. California allows plaintiffs to also recover actual, punitive and statutory damages, in addition to attorneys’ fees. This lucrative litigation has given rise to a proliferation of ADA suits in those states, and hotels continue to be a major target for such litigation.

No ADA standard has yet been tested for condo hotels in particular. The “condo hotel” label encompasses a wide range of multi-use projects with lodging and residential components. These hybrid developments allow for creativity and profitability in ways not seen before in the industry. For the uninitiated, they can also trigger governmental roadblocks and private lawsuits. As developers and operators move forward into this new arena, expert advice and a dose of common sense are recommended.
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ADA Cases Can Be Won
JMBM Helps Hotel Owner Beat the Shakedown

In an important case for the hospitality industry, JMBM attorney Martin (Marty) Orlick, along with insurance defense counsel, helped a Santa Barbara hotel avoid paying plaintiffs’ attorneys’ fees and costs in a lawsuit filed against it under the Americans With Disabilities Act (ADA).

In a recent trial court decision, U.S. District Judge Dale Fischer denied the plaintiff's motion to recover $360,000 in attorney’s fees and costs in the case against the hotel.

The Court determined it had no authority to award attorney’s fees because the plaintiff failed to meet the burden of establishing “Article III standing,” a necessary requirement to achieve Federal Court jurisdiction. According to the Court, standing was not established because the plaintiff failed to prove she had concrete plans to return to the hotel at the time she filed her complaint and therefore faced no actual or imminent injury. 

Marty Orlick has defended more than 175 ADA lawsuits, many of them for hotels and restaurants. In a number of his cases, courts have substantially reduced plaintiffs’ attorneys fees and in some instances the formula used to determine fees as been given a “negative multiplier.” 

“Courts are concerned about how the ADA is implemented through the legal system,” says Orlick. “But few ADA cases go trial to where courts can set these kinds of precedents.” He adds that the specter of paying plaintiffs’ attorney's fees is often the reason that those sued under the ADA decide to settle instead of having their day in court.

The case against this hotel is one of the few cases addressing ADA standing requirements in California. “The decision dealt a sharp blow to professional ADA plaintiffs and their lawyers,” says James O. Abrams, President and CEO of the California Hotel & Lodging Association. “More importantly, however,” he adds, “it proves to lodging establishments and other businesses that ADA cases can in fact be defended successfully, and it shows exactly how to win them.”

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Marty Orlick is a partner in the Real Estate Group of Jeffer, Mangels, Butler & Marmaro's San Francisco office and is a senior member of the Firm's Global Hospitality Group®. He has handled more than 175 ADA cases for hotels and other businesses. He can be reached at 415.984.9667 or morlick@jmbm.com.


Copyright © 2005 Jeffer, Mangels, Butler & Marmaro LLP (JMBM). 
All rights reserved. Global Hospitality Advisor® and Ask the Hotel Lawyer™ are trademarks/service marks of JMBM. 
The Global Hospitality Advisor® is published four times a year for the clients and friends of JMBM.
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For more information:
Jeffer Mangels Butler & Marmaro LLP
1900 Avenue of the Stars, 7th Floor
Los Angeles, CA 90067-4308
Attn: Jim Butler
310.201.3526 • 310.203.0567 fax
jbutler@jmbm.com
http://www.jmbm.com

The premier hospitality practice
in a full-service law firm
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Also See: Outlook 2006: GHA Hospitality Roundtable / JMBM / December 2005
The Condo Hotel Boom - What Does it Mean for the Hotel Industry / JMBM / December 2005
Ask the Hotel Lawyer™ / New Business Uncertainty: Jury Trial Waivers Struck / December 2005
Five Keys to Successful Condo Hotel Regimes / “Ask the Hotel Lawyer”  / October 2005
Americans With Disabilities Act Update: the Hospitality Industry, A Consistent Target of Abusive ADA Litigation, May Get Some Relief from Abusive Lawsuits / Marty Orlick / October 2005
Labor Wars: A Hotel Survival Guide - Watch Out For Neutrality Agreements / Marta M. Fernandez / September 2005
How to Make a Condo Hotel Deal - Part II / Jim Butler and Guy Maisnik / June 2005
Avoiding The Pitfalls of Condo Hotel Structuring; Steps To SEC Compliance / Peter Connolly / June 2005
The 2005 Lodging Industry Investment Council Top Ten; LIIC's List of Major Hotel Investment Opportunities and Challenges / May 2005
Copyright Laws Applicable to Hotels / Jim Abrams / March 2005
Condo Hotels - How to Make Them Work / Jim Butler and Guy Maisnik / February 2005
The Condo Part of Condo Hotels; A Primer on How to Create a Common Interest Development / David Waite, JMBM / The Global Hospitality Advisor / February 2005
Catching the Buzz on Condo Hotels, A Roundtable Discussion / The Global Hospitality Advisor / JMBM / December 2004 
Outlook 2005: Hotel Industry Fundamentals, Where have we been? Where are we going? / The Global Hospitality Advisor / JMBM / December 2004
How to Master Your Next Disaster Protect your guests, educate your employees, and limit your liability / Julia L. Rider / JMBM / October 2004
Wage & Hour Class Action Lawsuits: Hospitality Employers Caught in the Cross Hairs / Marta Fernandez / JMBM / September 2004
Adopting Pet And Service Animal Policies To Avoid Lawsuits from Disabled Hotel Guests / Marty Orlick / JMBM / September 2004
Politics Over, New ‘Overtime’ Law Takes Effect; The Significant Changes / JMBM / September 2004
Hotel Franchise Agreements: Opportunities And Pitfalls / JMBM / September 2004
ADA Lawsuit Alert: Beware the Internet Surf-by; A new twist on the ADA drive-by lawsuit / JMBM / September 2004
Hotel Unions Challenging Work Rules Found in Hotel Employer / The Global Hospitality Advisor Handbooks; Claim Interference with Employees’ Rights to Organize / JMBM / October 2003
Wage and Hour Lawsuits and Audits Continue to Sweep the Hospitality Industry / The Global Hospitality Advisor / JMBM / October 2003
Prepare NOW for an ADA Attack; Myths and Tips on How to Minimize Exposure / The Global Hospitality Advisor / JMBM / October 2003
Sarbanes-Oxley Update / The Global Hospitality Advisor / JMBM / Arpil 2003
Equal Public Access or Access to Deep Pockets? The Hospitality Industry Remains a Target of Lawsuits by Disability Rights Groups Under the Americans with Disabilities Act / The Global Hospitality Advisor / JMBM / March 2003
Outlook 2003: A Roundtable Discussion / The Global Hospitality Advisor / JMBM / Dec 2002 
Time Bomb Waiting to Explode: Wage & hour Claims Over Exempt Employees / The Global Hospitality Advisor / JMBM / Oct 2002
I'm Mad as Hell, and I'm Not Going to Take it Anymore! / The Global Hospitality Advisor / JMBM / Oct 2002
Settlement Procedure Available to California Hotels Plagued by Prop 65 Cases - The Global Hospitality Advisor / April  2002 
Top Ten Investment Challenges Facing the Lodging Industry / Lodging Industry Investment Council / April 2002 
Decertifying a Union? The Employer’s Bill of Rights / The Global Hospitality Advisor / JMBM / April 2002 
Outlook 2002: A Roundtable Discussion /  Bruce Baltin, Bjorn Hanson, Randy Smith, Jack Westergom - The Global Hospitality Advisor / January 2002 
New Rules for Hotel Workouts: REMICs for Dummies / The Global Hospitality Advisor / JMBM / December 2001 
Living in the Wake: Predictions & Practical Implications / The Global Hospitality Advisor / JMBM / December 2001 
Avoiding Liability for Lay-Offs / The Global Hospitality Advisor / December 2001
The Worker Adustment and Retraining Notification Act: Impact on the Hotel Industry / JMBM 
When is an Apartment a Hotel ... and Who Cares? / The Global Hospitality Advisor / JMBM / September 2001 
The 'Perfect Storm' / The Global Hospitality Advisor / JMBM / September 2001 
Richard Kessler's Grand Theme Hotels - Interview with GHG Chairman  Jim Butler / March 2001
Stephen Rushmore's  Industry Trends / Top Markets, Predictions & Opportunities  / Jan 2001
Outlook 2001: A Roundtable Discussion The Global Hospitality Advisor / Jan 2001
Perspectives on Hotel Financing in 2001; Jim Butler, JMBM's Global Hospitality Group Chairman, Interviews Two Active Players in Hotel Finance / Jan 2001 
Robert J. Morse: Millennium’s New President / Interview with GHG Chairman Jim Butler / Nov 2000 


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