We recently closed a $5-million hotel loan secured by a Hampton Inn in Florida. During property diligence, we noticed a $25,000 legal fee under the “professional expense” category on the profit and loss statement. Since we figured it was a one-time expense, we wanted to back it out of the underwriting. We needed to confirm what the expense was incurred for to be able to do the adjustment.
“Mike, we were sued by a guest who said our ADA grab bars in the shower were too high. I could not believe it,” said the sponsor. “We called our attorney and he immediately knew what was happening. He said the lowest cost option was to settle.”
Then recently, we were working on a loan on another Hampton Inn in California. The purchase transaction was muddling along when the owner received a lawsuit for purported ADA violations regarding the substandard size of the ADA designation parking spaces.
Based on these two events, I was riveted by the recent article written by Pratik (Prat) Patel, chairman of AAHOA, called “ADA Litigation: Roadblock to Access.” Prat reports a rash of ADA lawsuits against hotels in California. Prat reports that 13 hotels have been sued by the same two people for alleged ADA violations, such as inappropriate ADA parking, non-accessible entrances and non-complaint bathrooms.
To combat this business model for some unscrupulous law firms, AAHOA is supporting H.R. 777 sponsored by Rep. Duncan Hunter (R., CA) that would restore the proper balance between ADA litigation and increased accessibility. In the meantime, hoteliers need to be aware that predatory ADA lawsuits are spreading.