California Commercial Lease Laws: Complete Guide for Property Owners
Comprehensive 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.
California's commercial lease landscape 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.
Disclaimer: This guide provides general legal information for educational purposes only and does not constitute legal advice. Commercial real estate transactions are complex. Always consult a licensed attorney in California for guidance specific to your situation. Information last verified: March 2026.
Key California Commercial Lease Laws at a Glance
| Feature | Rule | Statute |
|---|---|---|
| Security Deposit Return | 30 days after receiving possession | Civil Code § 1950.7 |
| Security Deposit Cap | No statutory cap | Civil Code § 1950.7 |
| Eviction Notice — Nonpayment | 3-day notice to pay or quit | CCP § 1161 |
| Eviction Notice — Lease Violation | 3-day notice to cure or quit | CCP § 1161 |
| UD Response Time | 10 business days (as of 2025) | AB 2347 |
| QCT Rent Increase ≤10% | 30 days' notice | SB 1103 |
| QCT Rent Increase >10% | 90 days' notice | SB 1103 |
| QCT Lease Termination | 60 days' notice (30 if under 1 yr occupancy) | SB 1103 |
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 landscape.
Explore more California commercial compliance topics:
Sources & Official References
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