Tenant vs. Landlord: Who Is Liable for Refrigerant Compliance?

Under 40 CFR Part 84 Subpart C, refrigerant compliance obligations fall on the "owner or operator" of the equipment. But in commercial real estate, that question is rarely straightforward. This article examines how the regulation's broad definition applies across common lease structures, what it means for property managers, and how to address compliance in your lease agreements.

The "Owner or Operator" Definition

Everything flows from the definition in § 84.102:

"Owner or operator means any person who owns, leases, operates, or controls any equipment, or who controls or supervises any practice, process, or activity that is subject to any requirement pursuant to this subpart."

Three things make this definition significant for commercial real estate:

  1. It is disjunctive. The definition uses "or" throughout — anyone who owns or leases or operates or controls the equipment qualifies. Multiple parties can simultaneously be the "owner or operator" of the same equipment.
  2. It extends beyond equipment ownership. A party who "controls or supervises any practice, process, or activity" related to the equipment — such as managing HVAC maintenance contracts — can also be captured.
  3. A lease does not transfer regulatory liability. Assigning maintenance responsibility to a tenant through a lease does not remove the building owner from the definition. The EPA does not recognize private contractual arrangements as a basis for regulatory exemption.

This is the same definitional structure used in the predecessor regulation (40 CFR Part 82 Subpart F) and is consistent with how "operator" is interpreted across federal environmental law. In United States v. Bestfoods (524 U.S. 51, 1998), the Supreme Court established that an "operator" under environmental law must "manage, direct, or conduct operations specifically related to" the regulated activity — with "authority to control" being the determining factor, not mere ownership.

How It Applies Across Lease Structures

Triple-Net (NNN) Lease

In a NNN lease, the tenant is responsible for maintenance, property taxes, and insurance — including HVAC maintenance. The tenant typically hires and manages HVAC contractors, making the tenant clearly an "operator" who "controls or supervises" equipment-related activities.

But the landlord is not off the hook. The building owner still "owns" the equipment (in most NNN arrangements, HVAC is a building system, not a tenant asset). Under the plain text of § 84.102, the owner qualifies as an "owner or operator" regardless of who maintains the equipment. The Colorado Real Estate Journal confirms: "it is the responsibility of the owner/operator to maintain the documentation, perform the leak rate calculations, and ensure that the equipment stays compliant."

Bottom line: Both landlord and tenant can be "owner or operator" simultaneously. A NNN lease tenant who fails to repair a leak does not absolve the building owner. The EPA will look to whoever "owns, leases, operates, or controls" the equipment.

Gross Lease (Full-Service)

In a gross lease, the landlord handles all building operations including HVAC. The landlord clearly owns the equipment, manages contractors, and controls all maintenance activities — making the landlord the primary "owner or operator."

Bottom line: This is the most straightforward scenario. The landlord bears primary Subpart C liability. Tenants would typically not be considered "operators" unless they independently control or supervise refrigerant-related activities. Compliance costs flow through as operating expenses or CAM charges.

Modified Gross and Hybrid Leases

Many commercial leases split responsibilities: the landlord handles the building shell and common area HVAC, while tenants are responsible for their own supplemental cooling or tenant-improvement-installed systems. This creates a split:

  • Landlord-owned base building HVAC: Landlord is the primary "owner or operator"
  • Tenant-installed supplemental cooling: The tenant likely owns and operates this equipment, making the tenant the primary "owner or operator"
  • Gray area: Who is responsible for a rooftop unit that the landlord owns but that serves only one tenant's space, with the tenant paying for maintenance? Both parties likely qualify.

Tenant-Owned Equipment

When a tenant installs and owns their own refrigerant-containing equipment — a restaurant tenant's walk-in cooler, for example — the tenant is clearly the "owner" under § 84.102.

The landlord's exposure: A landlord who retains approval rights over equipment installations, or who has lease provisions giving them the right to inspect or require maintenance, could be deemed to have sufficient "control" to qualify as an operator. Environmental law precedent looks at "authority to control" — not just actual day-to-day control. Prudent landlords include indemnification clauses requiring the tenant to assume full responsibility for environmental compliance related to their own equipment.

Property Managers as "Operators"

Property management companies occupy a particularly exposed position under § 84.102. A property manager who:

  • Hires and oversees HVAC contractors
  • Schedules preventive maintenance
  • Manages work orders and service documentation
  • Supervises leak repair activities
  • Approves equipment-related expenditures

...is arguably "controlling or supervising" activities subject to Subpart C, making them an "operator" under the definition. This exposure exists whether or not the property management agreement addresses refrigerant compliance.

The practical implication is significant: a property management company with 100 buildings in its portfolio could bear operator liability for hundreds of individual refrigerant-containing appliances. Maintaining compliance records across that many assets without a centralized system is extremely difficult.

This is one of the reasons compliance tracking platforms have become essential for property managers. RefriTrak was built specifically for this scenario — it provides a centralized dashboard across all properties, automatically processes work orders from any contractor, calculates leak rates, and maintains inspection-ready records. For property managers, the value is straightforward: it creates a defensible compliance record that demonstrates you were actively monitoring and managing refrigerant obligations, even across a large portfolio.

Condominiums and HOAs

Shared HVAC systems in condominiums create a unique liability question:

Central/Common Area Equipment

For a central chiller or large RTU serving common areas or multiple units, the HOA is generally responsible for maintenance and repair. The HOA would typically be the "owner or operator" for Subpart C purposes. Board members should ensure the HOA's property management company or maintenance contractor is handling refrigerant compliance for shared systems.

Individual Unit Equipment

For equipment exclusively serving a single unit (a dedicated split system, for example), the unit owner is the "owner or operator." However, most individual residential HVAC units hold less than 15 lbs and may fall under the residential exemption.

The governing documents (CC&Rs, bylaws) determine maintenance responsibility, which influences the "controls or supervises" prong of the § 84.102 definition. Condo boards should review their governing documents to understand where HOA vs. unit owner responsibility falls for refrigerant-containing equipment.

Shared Equipment Serving Multiple Tenants

Central chillers, cooling towers, and shared HVAC systems serving multiple tenants are typically owned and controlled by the building owner. Tenants receive conditioned air but do not operate or control the equipment. In this scenario, the landlord is the primary "owner or operator" for Subpart C purposes.

Compliance costs for shared equipment — including leak repair, automatic leak detection installation (if required), and recordkeeping — typically flow through CAM charges or operating expense pass-throughs. However, major capital expenditures like equipment replacement driven by the HFC phasedown may not be passable as CAM depending on lease terms. Many leases distinguish "operating expenses" from "capital improvements," though some allow amortization of capital costs driven by new regulatory requirements.

This cost allocation question will become increasingly important as the HFC phasedown forces equipment replacement decisions over the next decade.

What the Enforcement Record Shows

No published EPA enforcement case has specifically tested the landlord-vs-tenant split under Part 84 Subpart C (the rule only took effect January 1, 2026). However, the enforcement record under the predecessor Part 82 regulation is instructive:

  • In every major enforcement action — Safeway ($600K), Trader Joe's ($500K), Costco ($335K), Southeastern Grocers ($300K + $4.2M in upgrades) — the EPA pursued the entity with operational control: the party running the facility, managing the equipment, and responsible for maintenance.
  • In all of these cases, the defendant was both owner and operator. The split-liability scenario — where a landlord owns the building but a tenant controls the HVAC — has not been tested in a published enforcement action.
  • The EPA has named HFC regulation as a priority under its Mitigating Climate Change National Enforcement and Compliance Initiative through 2027, signaling that enforcement activity under the new Subpart C framework will be active.

The safest assumption is that the EPA will pursue whichever party (or parties) had the ability to prevent the violation. For a detailed analysis of enforcement cases and penalties, see our enforcement cases article.

What to Address in Your Lease

While a lease cannot override the EPA's definition of "owner or operator," it can clearly allocate compliance responsibilities and costs between the parties, and provide indemnification if one party fails. Industry groups like ICSC and DLA Piper have published guidance on environmental provisions in commercial leases. Key provisions to consider:

1. Explicit Assignment of Subpart C Obligations

Specify who is responsible for: leak rate calculations, recordkeeping, repair timelines, contractor oversight, and EPA reporting (including chronic leaker reports). Do not assume "tenant is responsible for HVAC maintenance" covers these — the regulatory obligations are specific and most maintenance clauses predate Subpart C.

2. Technician Certification Requirements

Require that any HVAC contractor engaged by the tenant use EPA Section 608-certified technicians, per § 84.102. This protects the landlord if a tenant hires an unqualified contractor.

3. Record Access and Sharing

Require that the party managing HVAC provide copies of all service records, leak rate calculations, and refrigerant data to the other party within a specified timeframe. Both landlord and tenant need access to these records to demonstrate compliance if the EPA comes asking.

4. Indemnification for Regulatory Violations

Include indemnification clauses so that if one party's failure causes a regulatory violation, that party bears the financial consequences. This does not prevent the EPA from penalizing both parties, but it provides a contractual remedy between them.

5. Cost Allocation for Equipment Replacement

Address who bears the cost when equipment must be retrofitted or retired due to regulatory triggers or the HFC phasedown. This is a capital expenditure that may not fit neatly into existing CAM or operating expense categories.

6. Right to Audit Compliance

Reserve the right for either party to audit the other's refrigerant compliance practices, including inspection of records, contractor certifications, and equipment condition. For landlords in NNN situations, this is essential — you cannot rely on a tenant's compliance without verification.

Important: These provisions should be reviewed by a commercial real estate attorney familiar with environmental compliance. For more detail on what HVAC service contracts should include, see our HVAC service contract compliance guide.

Centralizing Compliance Across Multiple Parties

The multi-party nature of commercial real estate creates a practical problem: when landlords, tenants, property managers, and HVAC contractors all touch the same equipment, compliance records can end up fragmented across emails, filing cabinets, and spreadsheets. Nobody has a complete picture.

A centralized compliance platform solves this by giving all parties access to the same equipment records and compliance status. RefriTrak is designed for exactly this dynamic: contractors forward work orders to the platform (no new software for them to learn), the system automatically extracts refrigerant data and calculates leak rates, and property managers get a real-time compliance dashboard across all properties and equipment. When the EPA asks for records, everything is in one place — organized by unit, with complete service history and audit-ready documentation.

For landlords with NNN tenants handling their own HVAC, this kind of visibility is particularly valuable. You can verify that tenants are maintaining compliance without taking over the maintenance responsibility yourself.

State and Local Requirements

Several states impose requirements that go beyond the federal baseline and may affect how landlord-tenant compliance is structured:

StateKey Differences from Federal
California (CARB)ALD required at 200 lbs (vs. federal 1,500 lbs); leak repair within 14 days (vs. 30 days); mandatory annual reporting for systems 50+ lbs; penalties up to $500,000/year
New YorkEquipment registration phased by size; annual reporting starting March 2026; ALD for 1,500+ lbs by June 2025
WashingtonRegistration in RAMP system; monthly inspections for 1,500+ lbs; repair within 14 days; 5-year record retention (vs. 3 years federal)
New JerseyEquipment registration within 90 days of installation; annual facility reports due April 1
South Coast AQMD (LA area)Registration for non-residential systems 50+ lbs; annual audits; repair within 14 days; fee structure by system size

These state requirements affect lease drafting: a NNN lease in California should address CARB registration and annual reporting obligations, not just federal Subpart C. Buildings in multiple states may need jurisdiction-specific compliance language.

Frequently Asked Questions

Can I put all compliance responsibility on the tenant through the lease?

You can contractually assign compliance tasks and costs to the tenant, and include indemnification if they fail. But you cannot eliminate your own "owner or operator" status under § 84.102. The EPA can still pursue you as an owner. The lease protects you in a dispute with the tenant, not in an enforcement action.

My property manager handles everything. Am I still liable?

Yes. As the equipment owner, you are always an "owner or operator" under § 84.102. Your property manager may also be an operator. Having a competent property manager reduces your practical risk, but does not eliminate your regulatory liability.

What if the tenant's contractor causes a violation?

The EPA has historically pursued the entity with operational control. If the tenant controls the contractor relationship, the tenant is the more likely enforcement target. But if the building owner is also an "owner or operator" (which is almost always the case), the EPA could pursue both. This is why indemnification clauses and audit rights matter.

Should I update my existing leases?

If your current leases predate January 1, 2026 and do not reference 40 CFR Part 84 Subpart C, they likely do not address these obligations. At a minimum, consider adding refrigerant compliance provisions at the next renewal or amendment opportunity. The longer leases run without these provisions, the greater the ambiguity about who is responsible.

Who pays for equipment replacement driven by the HFC phasedown?

This depends entirely on the lease. In a NNN lease, the tenant typically bears maintenance costs — but replacing a chiller is a capital expenditure, not maintenance. Many leases do not clearly address regulatory-driven capital replacement. This is a negotiation point that should be addressed explicitly in current and future leases, given the AIM Act's phasedown schedule.

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