What SB 1103 asks of commercial landlords.

A tenant of commercial real property that (A) is a microenterprise, a restaurant with fewer than 10 employees, or a 501(c)(3) nonprofit with fewer than 20 employees, and (B) has given the landlord, within the previous 12 months, written notice that it is a qualified commercial tenant and a self-attestation of its employee count (Civil Code 1950.9(h)(5)).[1]

A microenterprise is a sole proprietorship, partnership, LLC or corporation that has five or fewer employees, including the owner, part or full time, and that generally lacks sufficient access to loans, equity or other financial capital (Business and Professions Code 18000(a)).[2]

Our readingMany summaries leave out the second part, about access to capital. How it is applied is unsettled, so ask counsel about a specific tenant.[2]

For a lease with a fixed term, the notice and attestation come before or when the lease is signed, and every year after. The protections start when they are given.[1]

Commercial real property here means all real property in California except dwelling units, mobilehomes and recreational vehicles.[1]

No such fee may be charged until the landlord provides the supporting documentation (1950.9(b)).[1]

The allocation method may not change during the tenancy in a way that raises the tenant's share without written notice and documentation (1950.9(c)).[1]

Building operating costs include common area maintenance, utilities that aren't separately metered, and taxes or assessments charged to the landlord because it owns the property (1950.9(h)(1)). So a property tax increase passed through to a qualified commercial tenant falls under these rules.[1]

Supporting documentation means a dated, itemized quote, contract, receipt or invoice from a licensed contractor or service provider, with a tabulation of how costs are allocated among tenants and a signed, dated landlord attestation that the documentation and costs are true and correct (1950.9(h)(6)).[1]

The tenant may raise a violation as an affirmative defense in an unlawful detainer based on unpaid operating cost fees, and may recover actual damages, attorney fees at the court's discretion, and three times damages plus punitive damages for willful, oppressive, fraudulent or malicious conduct. A district attorney, city attorney or county counsel may seek an injunction, and waivers are void (1950.9(d) to (g)).[1]

These rules cover leases executed, and tenancies commenced or renewed, on or after January 1, 2025; week-to-week, month-to-month and shorter periodic tenancies; and earlier leases with no building operating cost provision. They don't apply to property and business improvement district assessments (1950.9(i) and (j)).[1]

Our readingFor a calendar-year reconciliation, January's costs pass the 18-month mark around July 1 of the next year, so an owner with qualified commercial tenants would deliver the reconciliation and its documentation by about June 30. Ask counsel before relying on that date.[1]

For a qualified commercial tenant on a week-to-week, month-to-month or shorter tenancy, not the fixed term of a lease: if the increase, alone or with other increases in the 12 months before it takes effect, is 10% or less of the rent charged at any time in those 12 months, the landlord gives at least 30 days' notice. Over 10%, at least 90 days.[3]

The notice is delivered in person or by mail under Code of Civil Procedure 1013, and the increase takes effect only when the notice period ends. The notice must include information on these provisions. A violation doesn't entitle the tenant to civil penalties (827(b)(6)).[3]

If a statute, regulation, recorded regulatory agreement or contract, such as the lease, gives a longer notice period, the longer one applies (827(c)).[3]

Mailing within California adds five calendar days (Code of Civil Procedure 1013(a)).[4]

For a periodic qualified commercial tenancy, the landlord gives at least 60 days' notice, or 30 days if the tenant has occupied the premises less than a year. The tenant gives notice at least as long as the rental period.[5]

Notice is served under Code of Civil Procedure 1162 or by certified or registered mail, and must include the abandoned-property statement in 1946.1(h) and information on the section's provisions (1946.1(j)).[5]

A lease of nonresidential-zoned commercial space between a landlord and a qualified commercial tenant, entered into on or after January 1, 2025 and negotiated primarily in Spanish, Chinese, Tagalog, Vietnamese or Korean, needs a translation of every term delivered before signing.[6]

The exception for a tenant who negotiates through its own interpreter doesn't apply to these leases (1632(h)(3)), and only the qualified commercial tenant may rescind for noncompliance (1632(k)(2)).[6]