California Landlord-Tenant Law: Commercial Property Rules Explained

California's landlord-tenant laws apply to commercial properties, but they differ from those for residential properties. Commercial tenants are generally offered fewer protections and rights than residential tenants. Commercial tenants are presumed to be sophisticated and strong, not needing protection from the law. Commercial landlords in California have unique rights and responsibilities that differ significantly from those of residential landlords. Commercial leases are generally less regulated and offer more flexibility in terms of negotiation.

Commercial tenants' rights

Commercial tenants in California have certain rights and protections under the law. These rights help create a fair and equitable business environment, allowing tenants to operate with confidence and peace of mind. It is important to note that commercial tenants' rights differ from those of residential tenants. Commercial tenants are presumed to be sophisticated and strong, not needing any protection from the law.

• Habitable and Safe Property: Landlords have a legal obligation to maintain the premises in good condition, ensuring that it meets all building and safety codes. This includes providing adequate security measures, functioning utilities, and proper maintenance of common areas.
• Lease Agreements: Commercial tenants should thoroughly review and understand the lease agreement before signing it. Key aspects to consider include lease term, rent and payment terms, maintenance and repairs, permitted use, alterations and improvements, lease renewal and termination, insurance and liability, and dispute resolution.
• Rent Negotiation: Commercial rent is often subject to negotiation between the landlord and tenant. The lease agreement outlines the terms, including rent amount, frequency of payment, and any additional charges or escalations.
• Eviction Procedures: In the case of non-payment of rent or other lease violations, commercial evictions follow a legal process. Landlords must issue a notice of default or demand for compliance, allowing tenants an opportunity to rectify the issue. If the matter remains unresolved, landlords may proceed with legal eviction proceedings.
• Tenant Rights and Defenses: During eviction proceedings, commercial tenants may have certain rights and defenses, such as contesting the validity of the eviction notice, seeking mediation or arbitration, or presenting evidence of mitigating circumstances.
• Lease Termination: Termination of a commercial lease can occur through mutual agreement between the landlord and tenant, as specified in the lease agreement. It is important to follow the termination provisions and ensure proper notice is given.
• Legal Assistance: Both landlords and tenants are advised to seek legal assistance from real estate attorneys experienced in commercial leases to protect their rights and interests.

Eviction procedures

Evicting a commercial tenant in California requires careful adherence to legal procedures. Commercial tenants have fewer protective laws than residential tenants and are presumed to be sophisticated and strong, so they are not afforded ample legal protections or rights when renting commercial real estate. It is easier to evict commercial tenants, and the eviction process is generally controlled by the terms of the lease.

The eviction process often starts with serving a three-day notice to the tenant, which is required for issues like unpaid rent or other lease violations. This notice must:

• Clearly state the reason for eviction
• Specify the total amount of rent due (if applicable)
• Be properly served to the tenant through personal delivery, by leaving it with someone of a suitable age at the premises, or by posting it on the property while also mailing a copy

After the three-day notice, if the tenant does not remedy the breach or vacate the property, the landlord can file an unlawful detainer lawsuit. Here are the steps to follow:

• Review the lease agreement to understand the rights and obligations of the parties with respect to the breach at issue. Ensure that the tenant's default is material and provides legal grounds for eviction.
• Provide the tenant with a written notice to quit, which informs them of the specific lease violations and the required corrective actions. The notice period varies depending on the nature of the violation and the terms of the lease. Generally, if the default is unpaid rent, the notice period is three days, but it is important to review the default provisions in a commercial lease, as they may provide the tenant with more time to cure (e.g., 5, 10, or 30 days).
• If the tenant fails to comply with the notice to quit, the next step is to file an unlawful detainer lawsuit in the appropriate California court, which is the county where the property is located. This legal action is initiated to regain possession of the property and potentially to get damages for unpaid rent or other costs.
• After the lawsuit is filed, the landlord must serve the tenant with a summons and complaint, officially notifying them of the lawsuit. This step must be done according to California law, which may involve using a registered process server.
• After receiving the summons and complaint, the tenant has five days to file a response with the court, excluding weekends and holidays. If they do not respond or contest the eviction, the landlord can apply for a default judgment, which expedites the process. In some cases, a tenant will voluntarily vacate after being served with an unlawful detainer lawsuit.
• If the tenant contests the eviction and files a response with the court, the landlord, tenant, or both can request a trial date, which the court will then schedule. Since unlawful detainer cases are expedited, the court generally sets the trial within 20 days of the request. At trial, both parties will present their case via relevant documents and witness testimony, and the judge will make a determination based on the evidence provided.
• If the court enters judgment in the landlord's favour, the next step to regain possession of the premises is for the landlord to obtain a writ of possession from the court. This is an order signed by the court, allowing law enforcement to physically remove the tenant from the property if they refuse to vacate voluntarily.
• The writ of possession must be served on the tenant by a levying officer, usually the sheriff's office, who oversees the eviction process, ensuring it is carried out legally and peacefully. The sheriff will serve a notice to vacate on the tenant, providing them with five days to vacate the premises. If the tenant does not vacate, the sheriff will return to forcibly remove them and any occupants from the premises.
• In the event that the landlord was also awarded damages as part of the unlawful detainer judgment, the landlord may pursue legal efforts to collect on the judgment by levying on the tenant's property, wage garnishment, etc.

It is important to note that California has specific laws governing commercial tenant evictions, and these may differ from residential eviction laws. Consulting with a qualified attorney is strongly advised to navigate the legal complexities and ensure compliance with the law.

Lease agreements

• Lease Term: The duration of the lease should be explicitly stated, including the commencement and termination dates. This allows tenants to plan accordingly and assess their long-term business needs.
• Rent and Payment Terms: The lease should specify the rent amount, additional charges, and the frequency of rent payments. Tenants must ensure that these terms align with their financial capabilities.
• Maintenance and Repairs: The lease should delineate the responsibilities for maintaining the property and making repairs. Typically, commercial landlords are responsible for maintaining the roof, exterior walls, and utilities, while tenants are responsible for the remainder.
• Permitted Use: The lease should clearly define the permitted use of the commercial space to ensure it aligns with the tenant's business activities.
• Alterations and Improvements: Tenants should understand the procedures and permissions required for making alterations or improvements to the property. Written consent from the landlord is often necessary to avoid breaching the lease terms.
• Lease Renewal and Termination: Both parties should be aware of the options for lease renewal and the procedures for early termination, if necessary. Knowing these terms can help prevent potential disputes in the future.
• Insurance and Liability: The lease may outline insurance requirements, and tenants should consult with insurance professionals to ensure adequate coverage for potential risks.
• Dispute Resolution: The lease should detail the steps for resolving disputes, such as mediation or arbitration. Understanding these provisions can be beneficial if disagreements arise during the lease term.
• Key Money: "Key money" refers to a lump sum that tenants may be required to pay upfront to secure the lease. California law now requires this to be specified in the lease agreement.
• Rent Increases: Commercial rent increases are typically negotiated between the landlord and tenant, and the lease should specify the terms and frequency of adjustments.
• Eviction Procedures: In the event of non-payment of rent or other lease violations, landlords must follow legal eviction procedures, including providing proper notice and allowing the tenant an opportunity to rectify the issue.
• Tenant Rights and Defenses: Commercial tenants have certain rights and defenses during eviction proceedings, such as contesting the validity of the eviction notice or presenting mitigating circumstances.
• Lease Termination: The lease should outline the terms for mutual agreement on lease termination and ensure that proper notice is given.

It is imperative for both landlords and tenants to seek legal advice or consult with real estate professionals to ensure a comprehensive understanding of their rights and obligations under the lease agreement.

Tenant privacy

Commercial tenants in California have fewer rights than residential tenants. Commercial tenants are also more vulnerable to abuse and are at the mercy of the landlord, who calls the shots from the beginning to the end of the lease.

Commercial tenants are not protected by the implied warranty of habitability, which requires landlords to maintain suitable living conditions. This means that if there is an issue with the property, such as a broken window or a leaking roof, it is up to the tenant to fix it, unless the lease states otherwise.

Additionally, commercial tenants cannot withhold rent payments to force the landlord to make repairs. If the tenant does not make the repairs, the landlord can evict them.

The eviction process for commercial tenants is also more straightforward for landlords than for residential tenants. Commercial tenants can be evicted for non-payment of rent or violating the lease, such as subletting when it is prohibited. Upon receiving an eviction notice, commercial tenants only have three days to resolve the issue.

Commercial tenants should carefully review their lease agreements and consult with a lawyer to understand their rights and protections, as these may vary depending on the specific terms of the lease.

Maintenance responsibilities

In California, landlords are legally obligated to maintain commercial properties in a habitable and safe condition. This includes ensuring that the premises meet all building and safety codes, providing adequate security measures, maintaining common areas, and ensuring functioning utilities. However, the specific maintenance and repair responsibilities of landlords and tenants are typically outlined in the commercial lease agreement.

In a commercial lease, landlords are generally responsible for maintaining the structural integrity of the building and making larger repairs, such as those related to the roof, foundation, exterior walls, and utilities. On the other hand, tenants are typically responsible for routine maintenance and ordinary repairs within the leased space. This includes fixing items that break down due to frequent use, such as light bulbs or wall coverings, and maintaining any equipment necessary for their operations.

It is important to carefully negotiate and clearly define the maintenance and repair obligations of both parties in the lease agreement to avoid potential disputes. Tenants should also be aware that they cannot withhold rent payments to force landlords to make repairs, and landlords can evict tenants for non-payment of rent.

To protect themselves, tenants should ensure that the lease includes provisions allowing them to make repairs and deduct the costs from their rent payments or reducing their rent until repairs are completed. Additionally, tenants can include terms in the lease that hold the landlord liable for any adverse impact on their business due to defective conditions.

Overall, commercial tenants in California have fewer legal protections than residential tenants, and it is easier for landlords to evict commercial tenants. Therefore, it is crucial for tenants to thoroughly review and understand their lease agreements before signing them and to seek legal advice if necessary.

Frequently asked questions