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Starting January 1, 2025, small commercial tenants in California will experience significant changes in their lease agreements, thanks to the newly signed Commercial Tenant Protection Act (SB 1103). This law introduces protections typically reserved for residential tenants, providing smaller businesses a stronger footing in commercial lease negotiations. 
If you’re a small business owner or a landlord, it’s important to understand these changes and how they affect your rights and responsibilities.
What Is SB 1103?
SB 1103 was signed by Governor Gavin Newsom to extend protections to small commercial tenants. The bill defines “qualifying commercial tenants” as microenterprises, non-profits with fewer than 20 employees, or restaurants with fewer than 10 employees. These protections aim to create a fairer leasing environment for small businesses, especially in times of economic uncertainty.
Key Protections for Tenants
The new law provides three major protections for qualifying commercial tenants:
- Translation of Lease Agreements: If a commercial lease is negotiated in a language other than English, the lease must be translated into that language. This requirement ensures transparency for tenants, giving them the chance to fully understand the contract’s terms.
- Notice for Rent Increases and Lease Terminations: The law now requires landlords to provide at least 30 days’ notice for rent increases under 10%, and 90 days’ notice for rent hikes over 10%. Additionally, if the landlord does not intend to renew the lease, they must provide 60 days’ notice (or 30 days if the tenant has been in the space for less than one year).
- Building Operating Fees: Landlords must now provide detailed documentation when charging tenants for building operating costs. This includes explaining how the costs are allocated and providing supporting documentation upon request.
What This Means for Landlords
While these changes bring more responsibilities for landlords, they are not unduly burdensome. Most of the new requirements, such as lease translation and rent increase notifications, are already standard in residential leases. For landlords, the most significant impact may come from the new regulations regarding building operating fees, which now require clear documentation and transparency.
How Should Business Owners Prepare?
As a business owner, it’s essential to review your current lease agreements and consult with legal professionals to ensure you are protected under the new law. If you believe your business qualifies as a “qualifying commercial tenant,” consider informing your landlord to take advantage of these protections.
Conclusion: Time to Protect Your Commercial Interests
With SB 1103, California is making strides in creating a more balanced and fair commercial leasing environment for small businesses. Whether you’re a tenant or a landlord, now is the time to ensure you fully understand these changes and prepare accordingly.
If you are a business owner concerned about how SB 1103 may impact your lease or need guidance in navigating these new regulations, contact our business litigation law firm today. Our team is ready to provide you with expert legal advice and help you protect your interests. Schedule an appointment today!
