California Commercial Lease Agreement
A California commercial lease agreement is a legally binding contract for businesses renting commercial properties within the state. This document outlines the terms for leasing various types of commercial spaces, including industrial, retail, and office properties. It is essential for ensuring clarity on the rights and protections for both landlords and tenants.
California Commercial Lease Agreement
Key Components of a Commercial Lease
The commercial lease agreement typically includes the following elements:
- Premises Description: Details about the property being leased.
- Lease Term: The duration of the lease agreement.
- Rent: The amount of rent to be paid and the payment schedule.
- Option to Renew: Terms under which the lease may be renewed.
- Expenses: Responsibilities for additional costs associated with the property.
- Security Deposit: Amount and conditions for the security deposit.
- Insurance Requirements: Necessary insurance coverage for the property.
Legal Considerations
Commercial leases in California are governed by specific state laws, which include:
- Rental Laws: California Civil Code Division 3, Part 4, Title 5, Chapter 2.6 (Commercial Rental Control).
- Consumer Protection Laws: Cal. Com. Code § 10104.
- Jurisdiction: Under Cal. Com. Code § 10106, the chosen law and judicial forum must align with the jurisdiction where the lessee resides, where the property is located, and where the lease is signed. Any deviation from these criteria renders the chosen law or forum unenforceable.
Required Disclosures
Certain disclosures must be included in the lease agreement to comply with California law:
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Certified Access Specialist (CASp) Report: The lease must indicate if a Certified Access Specialist inspected the property. If so, the tenant should receive a copy of the CASp report (CIV § 1938 (a)(b)).
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Right to Cancel: If the CASp report is not provided to the tenant at least 48 hours before lease signing, the tenant has the right to cancel the rental agreement within 72 hours after signing.
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Inspection Certificate: If the property meets all accessibility standards, the tenant must receive a copy of the inspection certificate within seven days of lease signing, along with the CASp report if it has not already been provided.
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No CASp Certificate: If the property lacks a disability access inspection certificate, the lease must include a legal notice about the tenant’s right to a CASp inspection.
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Death on the Property: Tenants must be informed of any deaths on the property within the past three years, excluding those due to HIV or AIDS-related complications (CIV § 1710.2(a)(1)).
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Energy Use: For properties over 50,000 square feet or multi-family buildings with 17 or more tenants billed directly for energy, landlords must report energy use annually by June 1 and make the data public (Assembly Bill 802).
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Methamphetamine: If the property was previously contaminated with methamphetamine or fentanyl but has been remediated, the tenant should receive the remediation order (HSC § 25400.28(b)).
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Toxic Mold: Landlords responsible for property maintenance must notify tenants promptly if mold levels exceed permissible limits (CIV §§ 26141, 26144).
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Arbitration of Disputes: If arbitration is mentioned in the agreement, the statement in BPC § 7191-b must be included and typed in 8-point Roman boldface type.
Statutes
- Civ. Code §§ 1950.5(f) – [Operative 7/1/2024] Security for rental agreement
- Civ. Code §§ 1950.5 – Security Deposit Maximum, Non-Refundable Fees, Deadline for Returning Security Deposit
- Civ. Code §§ 1947 – Rent is Due
- Civ. Code §§ 1947.3(1-2) – Payment Methods
- Civ. Code §§ 827(b)(2-3) – Rent Increase Notice
- Civ. Code §§ 1950.6(b) – Application Fees
- Civ. Code §§ 1942(a) – Tenant Allowed to Repair and Deduct Rent
- Civ. Code §§ 1951.2 – Recovery by lessor upon breach of lease and abandonment of property by lessee
- Civ. Code §§ 1946 – Renewal of hiring for term not specified by parties
- Civ. Code §§ 1946.1 – Notice of intention terminate hiring for term not specified by parties
- Civ. Code §§ 1954a – Entry of dwelling by landlord
- Civ. Code §§ 1954b – Entry of dwelling by landlord
- Civ. Code §§ 789.3a – Acts by landlord with intent to terminate occupancy
- Civ. Code §§ 789.3b(1) – Acts by landlord with intent to terminate occupancy
- Civ. Code §§ 789.3d – Acts by landlord with intent to terminate occupancy
- Civ. Code §§ 1954.602 – Duty of landlord
- Civ. Code §§ 1962(4) – Obligations of owner or party signing rental agreement or lease on behalf of owner
- Civ. Code §§ 1940.9 – Disclosure that tenant’s gas and electric meter serves area outside tenant’s dwelling unit
- Civ. Code §§ 1950.6(b) – Application Fees
- Civ. Code §§ 1940.7 – Notice of actual knowledge of former federal or state ordnance locations in neighborhood area
- Civ. Code §§ 2079.10a – Notice as to database of person required to register as to sex offenders
- Civ. Code §§ 1940.8 – Copy of notice provided by registered structural pest control company
- Civ. Code §§ 1947.5 – Prohibition of smoking of cigarettes or other tobacco products
- Civ. Code §§ 1941.5 – Changing locks of protected tenant’s dwelling unit upon request of protected tenant
- Civ. Code §§ 1941.6 – Changing locks of protected tenant’s dwelling unit upon request of protected tenant
- Civ. Code §§ 1946.7(d) – Notice by victim of domestic violence, sexual assault, stalking, human trafficking, elder abuse, and certain other crimes of intent to terminate
- Civ. Code §§ 1942.5 – Retaliation by lessor against lessee for exercising rights under chapter
- Civ. Code §§ 1965 – Generally
- Civ. Procedure Code §§ 1161.3 – Acts against tenant or tenant’s household member constituting domestic violence
- Civ. Procedure Code §§ 1161.3 – Acts against tenant or tenant’s household member constituting domestic violence
- Civ. Procedure Code §§ 1161(2) – [Operative 2/1/2025] When tenant for term less than life guilty of unlawful detainer
- Civ. Procedure Code §§ 1161(3) – [Operative 2/1/2025] When tenant for term less than life guilty of unlawful detainer
- Health & Safety Code §§ 26147 – Disclosure by residential landlords
- Business and Professional Code §§ 8538 – Written notice to owner and tenant of premises
FAQs
A California commercial lease agreement is a legally binding contract for businesses renting commercial properties in the state. It outlines terms for leasing industrial, retail, and office spaces, including details such as the premises description, lease term, rent, option to renew, expenses, security deposit, and insurance requirements.
Required disclosures in a California commercial lease include a Certified Access Specialist (CASp) report, the right to cancel if the report is not provided in time, an inspection certificate for accessibility standards, and notifications about any deaths on the property within the last three years, among others.
California law mandates that if a property has been inspected by a Certified Access Specialist (CASp), the tenant must receive the CASp report before signing the lease. If the report is not provided at least 48 hours prior to signing, the tenant has the right to cancel the lease within 72 hours after signing.
Landlords of properties over 50,000 square feet or multi-family buildings with 17 or more tenants billed directly for energy must report energy use annually by June 1 and make this data public, as per Assembly Bill 802.
If a property was previously contaminated with methamphetamine or fentanyl but has been remediated, the tenant must receive the remediation order as part of the lease disclosures, ensuring they are informed about the property’s history.
If an arbitration clause is included in a California commercial lease agreement, it must contain a specific statement typed in 8-point Roman boldface type, as required by BPC § 7191-b, ensuring that tenants are aware of the arbitration process for dispute resolution.
Yes, California commercial leases may include specific terms regarding subletting permissions, which are important for both landlords and tenants to understand to avoid potential legal issues.
Landlords responsible for property maintenance must promptly notify tenants if mold levels exceed permissible limits, as outlined in California Civil Code §§ 26141 and 26144, ensuring tenant safety and compliance with health standards.