Whether you own commercial property or lease space for your business, California’s Senate Bill 1103 (SB 1103) introduced new rules that may affect commercial lease negotiations, rent increases, operating expenses, and lease administration. While the law only applies to certain small businesses, both landlords and tenants should understand these new requirements before signing or renewing a lease.

Who Does the Law Apply To?

SB 1103 protects “qualified commercial tenants,” which generally include:

• Microenterprises with five or fewer employees;
• Restaurants with fewer than 10 employees; and
• Nonprofit organizations with fewer than 20 employees.

To receive these protections, tenants must provide their landlord with a written notice and self-attestation confirming they qualify under the law.

What Changed?

The new law provides additional protections for qualified tenants while creating new compliance obligations for landlords.

For example, landlords must provide advance written notice before certain rent increases take effect. Depending on the amount of the increase, notice may need to be provided at least 30 or 90 days in advance.

SB 1103 also increases transparency regarding building operating costs. Before charging qualified tenants for these expenses, landlords must allocate costs using a reasonable method and, upon request, provide supporting documentation explaining how the charges were calculated. The law also limits changes to cost allocation methods without proper notice.

In addition, qualifying tenants may be entitled to receive translated commercial lease documents when lease negotiations are conducted primarily in certain languages, including Spanish, Chinese, Tagalog, Vietnamese, or Korean.

Why It Matters

Commercial leases often govern a business relationship for years. Understanding these new requirements before entering into or renewing a lease can help reduce misunderstandings and avoid costly disputes later.

Whether you are a landlord updating your lease documents or a business owner negotiating commercial space, taking the time to understand your rights and responsibilities is well worth the investment.

Protect Your Business

Whether you’re a landlord updating your lease documents or a business owner negotiating commercial space, SB 1103 may affect your rights and obligations.

Every lease is different, and these new requirements don’t apply to every commercial tenancy. Before signing a new lease, renewing an existing one, or making changes to your lease terms, it’s important to understand how the law applies to your specific situation.

Contact Chase Law Group to review your commercial lease and help you understand California’s evolving commercial leasing laws.

Not sure whether SB 1103 applies to your lease?
Contact Chase Law Group to help you understand your rights and protect your business.

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310-545-7700

_{Please note that this article is for informational purposes only and should not be considered legal advice and does constitute an attorney-client relationship. It is recommended to consult with an attorney directly for specific guidance pertaining to your business and its practices.}