Commercial Lease Laws in California
Don't sign a lease in California until you understand the local statutes, tax implications, and common landlord traps.
Key Statutes & Considerations
Property taxes are capped until a sale occurs. If the building is sold, your share of taxes could triple. Demand a 'Prop 13 Protection' audit clause.
Landlords must disclose if the site has been inspected by a Certified Access Specialist. If not, you may be liable for ADA retrofits.
Strict energy codes may require expensive lighting and sensor upgrades during your tenant improvements.
Common Red Flags in California
Commercial real estate in California typically favors the landlord in standard lease drafts. Whether you are in Sacramento or elsewhere, you need to watch out for:
- Uncapped NNN Charges: Variable costs like property taxes and insurance can skyrocket.
- Broad Indemnification: Clauses that require you to pay for the landlord's negligence.
- Relocation Clauses: Rights for the landlord to move your business to a worse location.
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Frequently Asked Questions
Is a Triple Net (NNN) lease legal in California?
Yes, NNN leases are the industry standard for commercial retail and office space in California. They shift the burden of property taxes, insurance, and maintenance to the tenant.
Can I negotiate my commercial lease in California?
Absolutely. Unlike residential leases, commercial leases are presumed to be negotiated between equal parties. Never sign the first draft.