Commercial and industrial rental property generates two kinds of legal work: transactions and disputes. A good commercial landlord tenant attorney handles both, because the lease you sign decides the fight you later have.
VK Law drafts commercial leases, amendments, guaranties, and workout agreements, and litigates what goes wrong: defaulted rent, contested operating costs, holdovers, and commercial evictions. We work across California. We handle commercial and industrial property only. We do not take residential matters, for either side. For a free consultation, call 877-780-4727.
What Changed for California Commercial Leases in 2025?
Two laws took effect on January 1, 2025. The Commercial Tenant Protection Act, SB 1103, gave “qualified commercial tenants” — microenterprises, restaurants with fewer than 10 employees, and nonprofits with fewer than 20 — new rights on rent-increase notice, lease termination, and the recovery of building operating costs, codified at Civil Code sections 827, 1632, 1946.1, and a new section 1950.9. Separately, AB 2347 extended the time to respond to an unlawful detainer complaint from five days to 10 days, excluding weekends and judicial holidays, under Code of Civil Procedure section 1167.
Key Takeaways
- Commercial landlord-tenant disputes are contract fights first: the lease usually controls, which is why it deserves a lawyer before signature.
- SB 1103 protections cannot be waived by contract, and a violation can be raised as an affirmative defence in an unlawful detainer.
- Willful violation of section 1950.9 can expose a landlord to treble and punitive damages.
- The unlawful detainer response window doubled in 2025, which changes case timing on both sides.
- Even in commercial tenancies, self-help — lockouts, utility shutoffs — is not a lawful substitute for the court process.
SB 1103: Qualified Commercial Tenants
The Commercial Tenant Protection Act was signed on September 30, 2024 and took effect January 1, 2025. It was the first California statute to extend consumer-style protections into commercial leasing, and standard landlord forms and practices have to account for it.
Who qualifies
A “qualified commercial tenant” is a tenant of commercial real property that meets both of two requirements:
- It is a microenterprise as defined in Business and Professions Code section 18000(a) — broadly, five or fewer employees including the owner — a restaurant with fewer than 10 employees, or a nonprofit under section 501(c)(3) with fewer than 20 employees; and
- It has given the landlord written notice of that status, with an attestation as to employee numbers — within the previous 12 months for periodic tenancies of a month or less, or on lease execution and annually thereafter for longer leases.
That second requirement matters to both sides. A tenant that never gives notice does not get the protections; a landlord that receives one needs to change how it handles that tenancy.
What changes
Rent increases. For qualified commercial tenants in periodic tenancies, an increase of 10 percent or less requires 30 days’ notice; an increase of more than 10 percent, counting all increases within the previous 12 months, requires 90 days’ notice. The notice itself must include information about the Civil Code section 827(b) provisions on rent increases and qualified commercial tenants.
Building operating costs. Civil Code section 1950.9 limits a landlord’s ability to pass building operating costs through to a qualified commercial tenant unless specified conditions on transparency and proportionality are met. It reaches leases signed, commenced, or renewed on or after January 1, 2025; periodic tenancies of less than a month regardless of when signed; and leases signed before January 1, 2025 that contain no provision on reimbursement of operating expenses.
The consequences are real. Under section 1950.9, a qualified commercial tenant may raise a landlord’s violation as an affirmative defence in an unlawful detainer or other action to recover possession based on failure to pay an operating-cost fee. A landlord may also face a separate civil action for actual damages plus discretionary attorney’s fees and costs, and a willful violation can carry treble and punitive damages. These rights cannot be contractually waived.
Lease translation obligations under Civil Code section 1632 also apply where a lease is negotiated primarily in certain languages.
Commercial Evictions (Unlawful Detainer)
When a commercial tenancy has to end and the tenant will not leave, California requires the unlawful detainer process: a lawsuit, not a locksmith. The track is fast but technical.
- The notice. A three-day notice to pay rent or quit excludes Saturdays, Sundays, and judicial holidays from the count, and its contents are prescribed by Code of Civil Procedure section 1161.
- The response window, now doubled. Under section 1167 as amended by AB 2347, a defendant has 10 days, excluding Saturdays, Sundays, and judicial holidays, to respond after service — up from five. Where service was by mail, or through the Secretary of State’s confidentiality program, the defendant gets an additional five days.
- More response options. Under section 1170 as amended, a defendant may now file a motion to strike, alone or with a demurrer, in addition to answering or demurring.
- Then trial and the writ. A priority trial setting, and on judgment a writ of possession the sheriff enforces.
Most losses trace to defective notices — wrong amounts, wrong service, wrong periods — and self-help shortcuts convert a routine eviction into the tenant’s damages case. We prosecute commercial unlawful detainers from notice through lockout, and pursue the money judgment behind them.
Disputes We Handle
- Rent defaults and workouts: nonpayment, deferral negotiations, and enforcement when negotiation fails.
- Operating-cost and CAM reconciliation fights: contested pass-throughs, missing backup, audit-right disputes — now overlaid, for qualifying tenants, by section 1950.9.
- Holdovers: tenants staying past expiration, and the rent and damages that follow.
- Unauthorised assignments and sublets: transfers the lease did not permit.
- Abandonment: tenants who disappear mid-term, and the correct steps for retaking and re-letting the space.
- Guaranty enforcement: pursuing the personal or corporate guarantors behind a defaulted lease.
- Use, nuisance, and maintenance disputes: conflicts over what the space may be used for and who must fix what.
Commercial Security Deposits
Commercial deposits are governed mostly by the lease, but not only by it. Civil Code section 1950.7 limits the purposes for which a landlord may claim a non-residential deposit — remedying rent defaults, repairing tenant-caused damage, or cleaning the premises — and sets a period within which the balance must be returned after the landlord recovers possession. Bad faith retention carries statutory penalties on top of actual damages.
Deposit fights are small in dollars and large in principle; most settle fast once someone reads the statute to the other side.
The Lease Clauses That Decide Disputes
The same handful of clauses decides most of these cases:
- Default and cure: how much notice, how long to cure, and what counts as a non-curable default.
- Remedies: what the landlord may recover after termination, and how future rent is measured and discounted.
- Holdover rate: the multiplied rent a tenant owes for staying past expiration, and whether it was ever negotiated.
- Audit rights: whether the tenant can inspect the books behind CAM and operating-cost charges.
- Guaranty scope: who signed, for how much, for how long, and whether amendments extended it.
- Assignment consent: the standard the landlord must meet when refusing a transfer.
- Estoppels and SNDAs: the certificates lenders and buyers demand, which can lock a party into positions taken carelessly.
We negotiate these clauses on the way in and litigate them on the way out, which is exactly why the same firm should do both.
Nothing Residential
We do not handle residential landlord-tenant matters, for landlords or for tenants. Residential tenancies in California sit under their own dense regulatory layer — deposit caps, rent caps, habitability, just-cause rules, local ordinances — and it is a practice we have deliberately chosen not to run.
Residential parties can find help through their county court’s self-help centre or local legal aid organisations. In San Mateo County, the Superior Court operates a landlord-tenant self-help resource, and legal aid services are available locally.
Commercial Tenancies in San Mateo and on the Peninsula
Our office at 15 North Ellsworth Avenue, Suite 105, San Mateo, CA 94401 works with commercial landlords and tenants across the Peninsula. Unlawful detainer matters for this county are heard in the San Mateo County Superior Court.
The SB 1103 categories land squarely on this market. Downtown San Mateo, Burlingame, and Redwood City retail is full of exactly what the statute describes — owner-operated microenterprises, small restaurants, and nonprofits under 20 employees. A Peninsula landlord with a mixed rent roll may have qualified commercial tenants in some suites and ordinary commercial tenants in others, with different notice and pass-through rules applying in the same building. Identifying which is which, and papering the attestations, is now part of routine lease administration rather than an edge case.
Details about the office are on our San Mateo page.
How We Help
We read the lease first, tell you where it actually puts you, resolve what negotiation can resolve, and litigate what it cannot. On the front end, we write the lease terms that make the next dispute shorter.
Commercial landlord-tenant work is part of our broader California real estate practice, alongside purchase and sale and land use, and connects to our California business law and civil litigation practices.
To talk with VK Law about a commercial property dispute, call 877-780-4727. The consultation is free.
This page provides general information about California law and is not legal advice; reading it or contacting the firm does not create an attorney-client relationship. Commercial leasing statutes were amended recently and are amended from time to time; provisions should be confirmed against current text. Every case is different, and prior results do not guarantee a similar outcome.
Reviewed by Alan D. Khalfin, Partner and Managing Attorney, Vaksman Khalfin, PC (admitted in California). Last reviewed: 08/28/2026
Frequently Asked Questions
No — not for landlords and not for tenants. We handle commercial and industrial property only. Residential parties can find help through their county court's self-help centre or local legal aid organisations.
Under SB 1103, a tenant of commercial real property that is a microenterprise (broadly, five or fewer employees including the owner), a restaurant with fewer than 10 employees, or a 501(c)(3) nonprofit with fewer than 20 employees — and that has given the landlord written notice of that status with an attestation about employee numbers, within the previous 12 months for short periodic tenancies, or on execution and annually for longer leases.
Longer notice for rent increases in periodic tenancies — 30 days for increases of 10 percent or less, 90 days for more than 10 percent counting the previous 12 months — plus limits under Civil Code section 1950.9 on passing through building operating costs, and lease translation obligations under section 1632. These rights cannot be waived by contract.
The tenant may raise the violation as an affirmative defence in an unlawful detainer based on failure to pay an operating-cost fee, and may bring a separate civil action for actual damages with discretionary attorney's fees and costs. A willful violation can carry treble and punitive damages.
No. Even in a commercial tenancy, self-help — changing locks, shutting off utilities — is not a lawful substitute for the unlawful detainer process, and it tends to convert a routine eviction into the tenant's damages case.
Faster than ordinary civil litigation, but slower than it used to be. Since January 1, 2025, a defendant has 10 days excluding weekends and judicial holidays to respond, up from five, with an additional five days where service was by mail. Unlawful detainer still carries a priority trial setting.
A fight over common area maintenance and operating-cost pass-throughs — whether the charges are permitted by the lease, whether the backup supports them, and whether the tenant can audit the books. For qualifying tenants, section 1950.9 now adds statutory transparency and proportionality requirements on top of the lease terms.
The lease usually sets a holdover rate, frequently a multiple of base rent, and the landlord may pursue possession through unlawful detainer along with the rent and damages the holdover caused. Whether that rate was ever negotiated tends to determine how the dispute resolves.
A signed statement, usually demanded by a lender or buyer, confirming the lease terms and the status of the tenancy — rent paid to date, defaults, amendments. Signing one carelessly can lock a party into a position it would rather not have taken, which is why they deserve review rather than a signature.
Yes, and it is the cheaper half of the work. We draft and negotiate commercial and industrial leases, amendments, renewals, guaranties, and workout agreements, and we keep landlord forms current with the SB 1103 requirements.
