California Commercial Lease Laws: Complete Guide for Property Owners
Complete overview of California commercial property laws including SB 1103 tenant protections, security deposits, eviction, NNN leases, and Prop 13.
Legal Disclaimer
This content is for general informational and educational purposes only. It does not constitute legal advice and should not be relied upon as such. Laws change frequently — always verify current regulations and consult a licensed attorney in your jurisdiction for advice specific to your situation. Landager is a property management platform, not a law firm.Information last verified: May 2026.
California's commercial lease legal environment is primarily governed by the California Civil Code (enacted March 21, 1872) and has undergone significant changes with the enactment of SB 1103 (Commercial Tenant Protection Act) and AB 2347, both effective January 1, 2025. These laws introduce new protections for small commercial tenants while maintaining California's broadly contract-driven approach to commercial leasing.
Key California Commercial Lease Laws at a Glance
Official Law Citation: The rules and regulations outlined on this page are strictly configured under the official California Civil Code § 1925 et seq. and Code of Civil Procedure § 1161. Landlords must always ensure their lease agreements directly adhere to these state codes.
SB 1103: Qualified Commercial Tenants (QCTs)
Starting January 1, 2025, certain small commercial tenants qualify for enhanced protections under SB 1103. A tenant qualifies as a Qualified Commercial Tenant (QCT) if they are:
- A microenterprise - 5 or fewer employees, including the owner
- A restaurant - fewer than 10 employees
- A nonprofit - fewer than 20 employees
QCTs must provide written self-attestation of their status upon lease execution and annually thereafter. Protections include enhanced notice requirements for rent increases (CIV § 827) and lease terminations (CIV § 1946.1), required lease translations (CIV § 1632.1), and transparency restrictions on operating cost charges (CIV § 1950.9).
For more detail, see our Commercial Rent Increases and Commercial Lease Requirements guides.
Common Lease Structures
Gross (Full-Service) Lease
Common in Class A office buildings. Landlord includes most operating expenses in the rent.
Modified Gross Lease
Tenant pays a portion of operating expenses (often utilities and janitorial). Common in multi-tenant office and light industrial spaces.
Triple Net (NNN) Lease
Tenant pays base rent plus property taxes, insurance, and CAM charges. Standard for retail, industrial, and single-tenant properties.
Percentage Lease
Base rent plus a percentage of gross revenue. Common in shopping centers.
Security Deposits
California Civil Code § 1950.7 governs commercial security deposits. There is no statutory cap on the deposit amount, and landlords must return the deposit within 30 days of receiving possession. Unlike residential deposits, commercial deposits do not require interest payments or itemized deduction statements (unless the lease requires it).
For more detail, see our Commercial Security Deposits deep dive.
Eviction Process
California uses the unlawful detainer process for commercial evictions, adjudicated in the Superior Court of California. As of 2025 (AB 2347), commercial tenants now have 10 business days (up from 5) to respond to an unlawful detainer complaint per CCP § 1167. Self-help evictions are strictly prohibited.
For more detail, see our Commercial Eviction Process guide.
Maintenance and Repairs
There is no implied warranty of habitability for commercial properties. Maintenance is entirely governed by the lease contract. NNN tenants bear most responsibilities; gross lease landlords handle the majority.
For more detail, see our Commercial Maintenance Obligations guide.
Getting Started with Compliance
California's rapidly evolving commercial tenant protections - especially the SB 1103 QCT framework - make compliance management more complex than ever. Landager helps commercial landlords track QCT certifications, manage notice periods, and stay compliant with California's unique regulatory legal environment.
Explore more California commercial compliance topics:
Sources & Official References
- California Civil Code §§ 1925-1954.06 - Hiring of Real Property
- California Civil Code § 1950.7 - Commercial Security Deposits
- California Civil Code § 1950.9 - Commercial Operating Cost Disclosures
- California Code of Civil Procedure § 1167 - Summons and Response Time
- California Civil Code § 827 - Notice of Rent Increase
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