California Commercial Landlord Disclosures: Required and Recommended

California imposes more disclosure obligations on commercial landlords than most states, driven by its extensive environmental regulations, Proposition 65, and the new SB 1103 requirements for Qualified Commercial Tenants. Understanding these requirements is essential for avoiding liability.

State-Mandated Disclosures

Official Law Citation: The rules and regulations outlined on this page are strictly configured under the official California Proposition 65 - Safe Drinking Water and Toxic Enforcement ActIl-preview mhux disponibbli. Landlords must always ensure their lease agreements directly adhere to this state code.

1. Proposition 65 Warning (Safe Drinking Water and Toxic Enforcement Act)

California's Proposition 65 requires businesses to provide "clear and reasonable warning" before knowingly exposing individuals to chemicals known to cause cancer, birth defects, or reproductive harm. Commercial landlords must:

• Post Prop 65 warnings if the property contains listed chemicals (common in older buildings with lead, asbestos, or certain industrial residues).
• Ensure tenants who operate businesses open to the public are aware of their own Prop 65 obligations.

2. Environmental Contamination

Under the California Environmental Quality Act (CEQA) and federal CERCLA, landlords who know of environmental contamination must disclose it. Specific situations include:

• Hazardous substance storage or release - past or current.
• Underground storage tanks - whether active, closed, or removed.
• Contamination from neighboring properties - if the landlord is aware.

3. Asbestos Disclosure

If the building contains asbestos-containing materials (ACMs), OSHA and California regulations require landlords to inform tenants and their employees of the presence and location of asbestos.

4. Earthquake Fault Zone Disclosure

For properties located within a designated Alquist-Priolo Earthquake Fault Zone, landlords must disclose this fact. California's seismic disclosure requirements are among the most detailed in the nation.

5. Flood Zone and Natural Hazard Disclosures

Commercial landlords should disclose if the property is in a:

• FEMA-designated flood zone.
• State-designated fire hazard severity zone.
• Dam inundation zone.
• Tsunami hazard zone.

While the formal Natural Hazard Disclosure Statement (NHD) is primarily required for residential sales, providing comparable information in commercial leases is prudent and may be required by lenders.

SB 1103 Disclosures (Effective January 1, 2025)

For Qualified Commercial Tenants (QCTs), SB 1103 introduces new disclosure and documentation requirements:

Building Operating Cost Transparency

Landlords cannot charge QCTs fees for building operating costs unless:

• Costs are proportionately allocated.
• Documentation covers costs incurred within the last 18 months or expected in the next 12 months.
• The landlord provides supporting documentation upon request.

Lease Translation Requirement

If the lease was primarily negotiated in Spanish, Chinese, Tagalog, Vietnamese, or Korean, the landlord must provide a written translation of the lease in that language. Failure to do so gives the tenant the right to rescind the lease.

Federal Disclosures

ADA Compliance

The Americans with Disabilities Act impacts commercial properties open to the public. While there is no specific "disclosure" requirement, landlords should:

• Clearly allocate ADA compliance responsibility in the lease.
• Disclose any known ADA deficiencies.
• Address who pays for accessibility modifications.

Lead-Based Paint The federal lead-based paint disclosure rule applies only to residential properties and does not extend to commercial leases. Mixed-use buildings must comply for any residential portions.

Recommended Lease-Based Disclosures

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