Key takeaways
- Commercial tenants in California have few protections beyond what the lease itself says.
- Since 2025, qualifying small tenants who notify their landlord get rights on operating-cost charges and rent-increase notice.
- If the space will be open to the public, the lease must state whether the premises have had a CASp accessibility inspection.
California gives commercial tenants far fewer protections than residential tenants. Most of what protects you is whatever you negotiate into the lease. These are the clauses that most often cost small businesses money.
1. Rent and increases
Check the base rent, how and when it rises (fixed steps, a percentage, or the Consumer Price Index), and whether there's a cap. Ask for a few months of free or reduced rent while you build out the space.
2. Operating costs, CAM and "triple net"
In a triple net (NNN) lease you pay your share of property taxes, insurance and common area maintenance (CAM) on top of rent. Ask for:
- last year's charges per square foot;
- a cap on yearly increases in controllable CAM;
- exclusions for the landlord's capital improvements, management fees above a set percentage, and costs caused by other tenants; and
- the right to audit the landlord's figures.
Extra protections for small tenants (since 2025)
SB 1103 gives "qualified commercial tenants" extra rights. These are microenterprises, restaurants with fewer than 10 employees, and 501(c)(3) nonprofits with fewer than 20 employees. You only get them if you tell the landlord in writing that you qualify, with a self-attestation of your employee count, within the past 12 months. If your tenancy isn't week to week, month to month or another period under a month, give it before or when you sign, and then every year.
- Operating costs (Civil Code §1950.9):
- Costs must be split proportionately among tenants.
- Costs must have been incurred in the last 18 months, or be reasonably expected in the next 12.
- If you ask in writing, the landlord must give you itemized documents within 30 days, and can't collect the charge until they do.
- Rent increases (§827): on month-to-month and other periodic tenancies, you get 30 days' notice for an increase of 10% or less and 90 days' notice for anything more.
- Ending a periodic tenancy (§1946.1): the landlord must give 60 days' notice, or 30 days if you've been there less than a year.
- Translation (§1632): if the lease is negotiated mainly in Spanish, Chinese, Tagalog, Vietnamese or Korean, the landlord must give you a translation.
3. Personal guarantee
Landlords often ask owners to guarantee an LLC's lease personally, which removes much of the LLC's protection. Try to limit the guarantee to a fixed number of months' rent, a "good guy" guarantee that ends when you hand back the keys, or one that falls away after you've paid on time for a set period.
4. Term, renewal and early exit
A longer term with options to renew at a set or capped rate protects a location you've invested in. Also negotiate how you can leave: an early termination right with a fee, or the right to assign the lease if you sell the business.
5. Assignment and subletting
Many leases forbid assignment without the landlord's consent. Ask that consent "not be unreasonably withheld", and that selling your business to a qualified buyer is allowed.
6. Repairs and maintenance
Who pays for the roof, structure, plumbing and especially HVAC? In many leases the tenant maintains HVAC, and a replacement can cost thousands of dollars. Ask the landlord to warrant that systems work at move-in and to replace (not just repair) major systems.
7. Tenant improvements (TI)
If you need to build out the space, agree in writing who pays, the allowance amount, who hires the contractor, the timeline, and what happens if the landlord's work is late.
8. Accessibility and CASp
If the space will be open to the public (a store, restaurant, clinic and so on), California requires a lease signed since 2017 to say whether the premises have been inspected by a Certified Access Specialist (CASp) (Civil Code §1938).
- If the premises were inspected (and nothing relevant has changed since): the landlord must give you the CASp report before you sign. If you get it less than 48 hours before signing, you can cancel within 72 hours after signing.
- If the premises don't have a disability access inspection certificate: the lease must also say you may get a CASp inspection and the landlord can't refuse. You and the landlord agree on timing and on who pays for the inspection and any repairs.
- Repairs: fixing violations listed in a CASp report is presumed to be the landlord's job unless the lease says otherwise.
Accessibility claims are common in California; make sure the lease says who pays for required fixes.
9. Use clause and exclusives
Make the permitted use broad enough for how your business might grow. In a shopping center, ask for an exclusive: the landlord won't lease to a direct competitor.
10. Insurance, indemnity and disputes
Check the insurance you must carry, whether indemnity runs both ways, and how disputes are resolved (court, mediation or arbitration, and who pays attorney fees).
Checklist: what to ask for before you sign
This table sums up the clauses above. Use it to mark up a draft lease.
| Clause | What to look for | What to ask for |
|---|---|---|
| Rent and increases | The base rent, how it rises (fixed steps, a percentage or the CPI) and whether there's a cap | A cap on increases and a few months of free or reduced rent during build-out |
| Operating costs, CAM and NNN | Your share of property taxes, insurance and CAM on top of rent | Last year's charges per square foot, a cap on controllable CAM increases, exclusions and the right to audit |
| Personal guarantee | Whether you must personally guarantee your LLC's lease | A limit of a fixed number of months' rent, a "good guy" guarantee, or one that ends after a period of on-time rent |
| Term, renewal and early exit | The length of the term and whether you can renew | Renewal options at a set or capped rate, and an early termination right with a fee |
| Assignment and subletting | Whether assignment needs the landlord's consent | Consent that won't be unreasonably withheld, and the right to sell the business to a qualified buyer |
| Repairs and maintenance | Who maintains and who replaces the roof, structure, plumbing and HVAC | A landlord warranty that systems work at move-in, and landlord replacement of major systems |
| Tenant improvements | Who pays, the allowance, who hires the contractor and the timeline | All of it in writing, including what happens if the landlord's work is late |
| Accessibility and CASp | If the space is open to the public, the required statement on whether the premises have had a CASp inspection (Civil Code §1938) | The CASp report before you sign if there was an inspection, and, if there's no access certificate, the right to an inspection and an agreement on who pays for it and any repairs |
| Use clause and exclusives | How narrow the permitted use is | A use broad enough for growth, and an exclusive in a shopping center |
| Insurance, indemnity and disputes | Required insurance, one-way indemnity and how disputes are resolved | Indemnity that runs both ways, and clear terms on court, mediation or arbitration and attorney fees |
- Last year's operating cost and CAM charges, per square foot
- A written cap on yearly increases in controllable CAM
- If the space is open to the public, the CASp disclosure, and the CASp report if the premises have been inspected
- If you qualify as a small tenant, your written notice and employee-count self-attestation to the landlord
- The rent increase schedule and any free or reduced rent period
- A written list of who maintains and who replaces the roof, structure, plumbing and HVAC
- The tenant improvement allowance, timeline and what happens if the landlord's work is late
- The exact wording of any personal guarantee, and when it ends
- Renewal options, early exit terms and assignment rights if you sell the business
- The permitted use clause and any exclusive
Frequently asked questions
Is there commercial rent control in California?
No. State law bars cities, counties and other public entities from adopting or enforcing commercial rent control, with limited exceptions (Civil Code §1954.27). That leaves rent and increases to the lease, so the increase terms you negotiate matter. Qualifying small tenants on periodic tenancies do get notice rules for rent increases under §827.
Who counts as a qualified commercial tenant?
A qualified commercial tenant is a microenterprise, a restaurant with fewer than 10 employees, or a 501(c)(3) nonprofit with fewer than 20 employees that has given the landlord written notice of its status. A microenterprise is a business with five or fewer employees, including the owner, that generally lacks enough access to loans, equity or other financing (Bus. & Prof. Code §18000). The notice must include a self-attestation of your employee count and must have been given within the past 12 months. If your tenancy isn't week to week, month to month or another period under a month, give it before or when you sign the lease and then every year.
How much notice does a commercial landlord need to give for a rent increase?
For a qualified commercial tenant on a month-to-month or other periodic tenancy, 30 days' notice is required for an increase of 10% or less and 90 days' notice for more (Civil Code §827). On a fixed-term lease, the increase schedule in the lease itself sets what you pay, which is why it's worth negotiating before you sign.
What does triple net (NNN) mean in a commercial lease?
In a triple net lease, you pay your share of the property taxes, insurance and common area maintenance on top of base rent. Ask for last year's charges, a cap on controllable increases and the right to audit the landlord's figures.
Do I have to sign a personal guarantee for my LLC's lease?
Landlords often ask for one, but its terms can be negotiated. A guarantee limited to a set number of months' rent, a "good guy" guarantee that ends when you hand back the keys, or one that ends after a period of on-time payments keeps more of the LLC's protection. See DBA vs LLC for how LLC protection works.
What is a CASp inspection?
It's an accessibility inspection by a Certified Access Specialist. If the space will be open to the public, a California lease signed since 2017 must say whether the premises have had one (Civil Code §1938). If they have, the landlord must give you the report before you sign. If the premises don't have a disability access inspection certificate, you may get an inspection and the landlord can't refuse.
Sources
We use primary sources: statutes, court rules, official forms and government pages. Read our editorial standards.
- Civil Code §1950.9 (operating costs), §827 (rent increases), §1946.1 (ending a tenancy), §1632 (translation)
- Civil Code §1938 (CASp disclosure)
- Civil Code §1954.27 (no local commercial rent control)
- Business and Professions Code §18000 (definition of microenterprise)
Before you sign
Have a California real estate attorney review the lease. It's a small cost compared with five or ten years of obligations. For an overview of this topic, see Property and leases.