California Commercial Lease Guide

Commercial Lease Guide for California

A practical, tenant-focused guide to reviewing California commercial leases — not legal advice.

Key Lease Considerations

California leases can look “standard” while hiding major cost triggers: property tax reassessment, ADA/accessibility exposure, and energy-code compliance during buildouts.

Use this guide to identify who pays for compliance work, how CAM and property taxes are handled, and what “repair/replace” language could cost you over a 3–10 year term.

Major markets

Where we see the most leasing activity.

Los Angeles
San Francisco Bay Area
San Diego
Sacramento

Common lease types

Typical structures and what to watch.

Retail: NNN (watch CAM, taxes, insurance, and rebuild/remodel clauses)
Office: full service gross or modified gross (expense stops and exclusions matter)
Industrial: NNN (roof, slab, fire/life safety, and loading areas are key)

Cost drivers

Items that often create surprise bills.

Property taxes and reassessment exposure (e.g., sale-driven tax increases)
ADA/accessibility and who pays for compliance/claims defense
Energy and building code compliance during tenant improvements (e.g., lighting/HVAC triggers)
Insurance and deductibles (including earthquake and wind/fire considerations depending on region)
CAM definitions (capital items, admin fees, and management markups)

Negotiation checklist

Property taxes: define and cap pass-throughs

Ask how property taxes are calculated and billed, and what happens if taxes increase due to a sale or reassessment. Negotiate notice, documentation, and limits where possible.

ADA/accessibility allocation

Clarify who pays for accessibility upgrades and how claims are handled. Avoid vague “tenant responsible for all compliance” language without boundaries.

Tenant improvements + code triggers

Buildouts can trigger expensive upgrades. Add a TI scope, a cap, and a rule that landlord pays for base-building compliance items not caused by tenant’s work.

CAM: budgets, audits, exclusions

Require an annual CAM budget, reconciliation, and audit rights. Exclude capital replacements and landlord overhead that doesn’t directly benefit the center/building.

Repairs vs. replacements

Define “maintain” vs. “replace” for HVAC, roof, plumbing, and electrical. Ask for a replacement cap or landlord amortization for major items.

Default language and remedies

Add written notice + cure periods. Avoid rent acceleration and one-sided attorney-fee provisions that can make small issues catastrophic.

Assignment/sublease flexibility

Negotiate reasonable transfer rights for common business events (sale, restructure, ownership change). If you can’t transfer, the lease becomes a trap.

Official resources

California Secretary of State — business search CalGOLD — permits and licensing guide California Department of Tax and Fee Administration (CDTFA)

Not legal advice. Always verify local requirements and consult qualified professionals for your situation.

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

Are NNN leases common in California?

Yes — NNN is common in retail and industrial. The key is ensuring CAM and taxes are defined, documented, and don’t include capital replacements and unrelated landlord costs.

What is the biggest California lease “gotcha” for tenants?

Compliance cost allocation. ADA/accessibility and building/energy code upgrades during buildouts can be expensive if the lease makes the tenant responsible without limits.

How does property tax risk show up in a lease?

Many leases pass property taxes through as NNN. If taxes increase (including from reassessment events), your share can jump. Ask exactly how taxes are calculated and billed.

Can I negotiate California commercial lease terms?

Yes — especially around CAM exclusions, repairs vs. replacements, compliance responsibilities, and default remedies. Ask for clarity and caps on the items that can explode your budget.

Does BizLeaseCheck replace a California lease attorney?

No. It helps you spot common risks quickly, but it’s not legal advice. For a high-stakes lease, use it alongside a commercial lease attorney.