Hunton Retail Law Resource

Retailers should mark January 1, 2020, on their calendars. It’s the date R-22, a hydrochlorofluorocarbon-based refrigerant being used in roughly 50 percent of all HVAC equipment, is set to phased out. Most triple-net commercial retail leases provide that tenants are responsible for the maintenance of their HVAC systems. As the deadline approaches, R-22 will be in short supply and prices will quickly become the highest line item in most repairs, likely to be hundreds of dollars per pound. For those who are not prepared, HVAC repairs of R-22 based units may quickly get out of hand and availability issues may cause interruptions in service. Retailers should be advised to review their existing leases and their existing HVAC units to help to plan for the coming transition and to be mindful of the phase-out of R-22 when entering into new leases, especially since retrofits of alternative refrigerants will likely not result in the same cooling capacities. In many cases, a replacement may be a more economical solution once R-22 is no longer produced or imported.

Retailers should be taking several steps to prepare. First, they should be taking an inventory of their existing units and taking note of any units requiring repair. A properly operating HVAC unit should not leak, and can be maintained for years without requiring additional R-22. Second, they should review their leases to make note of the allocation of responsibility for replacement of HVAC units if necessary. Finally, new space should be inspected to ensure that the newer R-410A refrigerant is being used or that budgets account for increased repair costs or replacements in the future as the deadline nears.