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.
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California's commercial lease legal environment 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 § 1950.7 - Commercial Security Deposits. Landlords must always ensure their lease agreements directly adhere to this state code.
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 and lease terminations, required lease translations, automatic lease renewals, and restrictions on operating cost charges.
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. As of 2025, tenants now have 10 business days (up from 5) to respond to an unlawful detainer complaint. 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. 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.
Compliance Process Timeline in california
Lease Execution
Ensure all statutory disclosures (e.g., CASp report, Prop 65) are acknowledged and signed.
Active Tenancy
Adhere to the lease matrix regarding maintenance, CAM charges, and property use.
Termination / Renewal
Provide required statutory notice to terminate, or negotiate renewal options prior to expiration.
Explore more California commercial compliance topics:
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