Los Angeles Commercial Lease Law: SB 1103 Compliance and Risk Mitigation

Expert Strategic Guidance from Simantob Law Group on the Commercial Tenant Protection Act

As Los Angeles commercial real estate attorneys at Simantob Law Group, we specialize in commercial real estate and finance, offering decades of experience navigating complex negotiations, regulatory compliance, and landlord-tenant disputes.

California’s Commercial Tenant Protection Act (SB 1103)—effective January 1, 2025—imposes new compliance obligations on landlords leasing to small commercial tenants. These rules create significant risks, including litigation exposure, limits on CAM cost recovery, and strict documentation standards.

This blog provides a strategic summary for landlords and property owners seeking to protect their assets and comply with California Civil Code §1950.9 and related statutes.

Compliance with SB 1103 begins with determining whether your tenant qualifies as a Qualified Commercial Tenant (QCT). This designation activates the law’s protections and imposes new obligations on landlords. The requirements apply only when the tenant meets specific size criteria and provides written notice and self-attestation before or at lease signing.

Under the 5/10/20 Rule, a QCT falls into one of three categories:

• A microenterprise with five or fewer employees, including the owner.
• A restaurant with fewer than ten employees.
• A nonprofit organization with fewer than twenty employees.

If the tenant meets these thresholds and submits the required attestation, SB 1103 protections are triggered. Without this attestation, the law generally does not apply—but landlords should never assume. Verification is essential to avoid compliance risks.

To mitigate risk, we recommend adding a QCT Representation and Warranty Clause to your lease. This clause confirms the tenant’s status and provides indemnification if the representation proves inaccurate. For example:

“Tenant represents and warrants that, as of the execution date of this Lease, Tenant is not a Qualified Commercial Tenant as defined under California Civil Code §1950.9. Tenant shall indemnify and hold Landlord harmless from any expense arising from a breach of this representation.”

California’s SB 1103 imposes strict disclosure requirements on landlords leasing to QCTs. These disclosures are non-negotiable, and failure to include any one of them can create grounds for legal challenge.

Every commercial lease must include a notice informing tenants of their right to request an inspection by a Certified Access Specialist (CASp) to determine whether the premises comply with California’s construction-related accessibility standards. The statutory language must appear in full within the lease.

Before executing a lease with a QCT, landlords must provide written notice explaining the tenant’s right to inspect supporting documentation for building operating costs. This disclosure is critical because failure to deliver it can jeopardize the landlord’s ability to recover CAM fees. If a QCT submits a written request, the landlord has 30 days to provide itemized invoices, a proportional allocation tabulation, and a signed attestation confirming accuracy.

If lease negotiations occur primarily in Spanish, Chinese, Tagalog, Vietnamese, or Korean, the landlord must provide a written translation before signing. Failure to comply grants the QCT a non-waivable right to rescind the lease, creating significant financial exposure.

One of the most critical compliance points in SB 1103 is that the protections granted to a QCT under Civil Code §1950.9cannot be waived. Any lease clause attempting to limit or remove these rights is void as a matter of public policy.

Recovering Common Area Maintenance (CAM) fees from a QCT now requires more than standard accounting—it demands a legal defense mechanism built into your property management process. SB 1103 sets strict documentation standards that landlords must meet to avoid disputes and penalties.

If a QCT requests supporting documentation, the landlord has a 30-day deadline to provide all required elements:

• Allocation Tabulation: A clear breakdown showing how operating costs are proportionately allocated among tenants.
• Itemized Documentation: Valid quotes, invoices, or receipts for each expense.
• Landlord Attestation: A signed and dated statement by the landlord or authorized agent certifying that the documentation is accurate and complete.

This attestation is more than a formality—it is the point of verification that protects landlords from claims that could be used as an affirmative defense in an Unlawful Detainer action. Failure to comply can halt eviction proceedings and expose landlords to statutory penalties, including treble damages for willful violations.

California’s SB 1103 introduces several critical compliance requirements that every landlord must implement before January 1, 2025. These rules affect security deposits, rent increase notices, termination timelines, and the timing of operating cost recovery.

Security deposits are now capped at one month’s rent plus the first month’s rent.

Rent increases exceeding ten percent require 90 days’ notice when leasing to a QCT.

Termination of a QCT tenancy after one year requires at least 60 days’ notice.

Operating costs billed to QCTs must fall within a strict timeframe: expenses must have been incurred within the previous 18 months or be reasonably projected for the next 12 months. These rules ensure transparency and prevent landlords from passing through outdated or speculative charges.

Question	Answer
When does SB 1103 take effect?	January 1, 2025.
Can commercial tenants waive their SB 1103 rights?	No. These protections are non-waivable under California law.
What is the deadline for providing CAM documentation?	Thirty days after receiving a written request.
What penalties apply for willful violations?	Actual damages and potentially treble damages.
What is the maximum security deposit for a QCT?	One month’s rent plus the first month’s rent.
What happens if a landlord fails to provide a required lease translation?	The tenant gains a non-waivable right to rescind the lease.

 

The complexity of SB 1103 and the potential for statutory penalties make immediate compliance a business necessity. The law took effect on January 1, 2025, and failure to act could expose your portfolio to litigation, treble damages, and costly delays in eviction proceedings.

At Simantob Law Group, we provide a comprehensive SB 1103 compliance audit that includes reviewing your lease agreements, operating cost protocols, and risk mitigation strategies. Our goal is to ensure your commercial properties meet every requirement under California Civil Code §1950.9 and related statutes.

Simantob Law Group is a law firm of business attorneys and real estate lawyers in Los Angeles. We have represented the business and real estate legal needs of individuals and companies, from start-ups to regional and national US corporations for over 20 years.

CALL FOR A CONSULTATION: Protect Your Assets in Los Angeles, California.

Please contact us at 310.281.0041 or complete our online contact form to discuss your SB 1103 Compliance Audit with a Los Angeles Commercial Real Estate Attorney.

This blog post is for informational purposes only and does not constitute legal, tax, or financial advice. Reading this article does not create an attorney-client relationship. For advice specific to your situation, please consult a qualified professional.