The short version. Since January 1, 2025, California gives extra protections to "qualified commercial tenants": very small businesses, small restaurants, and small nonprofits. The main changes cover notice before rent increases and month-to-month terminations, limits on operating cost pass-throughs, and lease translations. The protections don't apply automatically: you have to qualify and tell your landlord in writing.
This page summarizes what commercial real estate law firms have published about SB 1103. It isn't legal advice. Some provisions are already being read differently by different firms (noted below), so confirm how they apply to your lease with a California attorney.
Who qualifies
You're a qualified commercial tenant if you are one of these:
| Type | Size limit |
|---|---|
| Microenterprise | 5 or fewer part-time or full-time employees, including the owner |
| Restaurant | Fewer than 10 employees |
| Nonprofit (501(c)(3)) | Fewer than 20 employees |
And you give the landlord written notice that you qualify, with a self-attestation of your employee count. Depending on the length of your tenancy, that notice is due at signing, within the prior 12 months, or annually. If you never send the notice, you may not get the protections, so this is the most important step for most tenants.
Source: Cox Castle.
What changed
1. Rent increases need advance notice (month-to-month and shorter tenancies)
For week-to-week, month-to-month, or shorter tenancies, the landlord must give you written notice:
- At least 30 days before an increase of 10% or less
- At least 90 days before an increase of more than 10% (measured against the rent charged at any time in the prior 12 months)
2. Longer notice to end a month-to-month tenancy
If you've occupied the space for more than a year, the landlord must give at least 60 days' notice to end a month-to-month tenancy (30 days if under a year). This also covers holdover situations where the landlord keeps accepting rent and the lease becomes month-to-month.
3. Limits on operating cost pass-throughs
New Civil Code § 1950.9 limits how landlords pass building operating costs (CAM, maintenance, repairs, and similar) to qualifying tenants:
- Costs must be allocated proportionately, such as by square footage, or by another method the landlord can substantiate.
- The landlord can recover only costs incurred in the past 18 months, or reasonably expected in the next 12 months based on reasonable estimates.
- Before you sign, the landlord must tell you that you can inspect the supporting documentation, and must provide it within 30 days of your written request.
- The landlord can't change the allocation method to increase your share without written notice and documentation.
Law firms disagree on how far this reaches. Buchalter reads the pass-through rules as applying to month-to-month tenancies and leases that have no operating cost provision. Cox Castle describes them as applying to qualifying tenancies more broadly. If you're on a fixed-term lease with its own CAM clause, ask an attorney which reading applies to you.
4. Lease translations
For leases signed on or after January 1, 2025, if a landlord negotiates primarily in Spanish, Chinese, Tagalog, Vietnamese, or Korean, it must give you a translation of the lease before you sign. The English version controls, but if the translation wasn't provided, the tenant may have a right to rescind.
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What happens if a landlord doesn't comply
According to the firms' summaries, tenants can recover actual damages and reasonable attorneys' fees. Punitive damages are possible in cases of oppression, fraud, or malice. A pass-through violation can be raised as a defense in an eviction (unlawful detainer), and local district attorneys can enforce the pass-through rules.
What to do now
- Check whether you qualify: count employees, including yourself if you're a microenterprise.
- Send your landlord a written self-attestation of your status and employee count, and keep a copy. Repeat it on the schedule your tenancy requires (for many tenants, annually).
- Request the operating cost documentation behind your CAM or pass-through charges, in writing.
- If you're month-to-month, note your notice rights before agreeing to any rent increase or move-out date.
- Before signing a new lease, still negotiate the operating cost clause itself: caps, exclusions, and audit rights. SB 1103 sets a floor, not a good deal. See what's normal for CAM and operating expenses and how to audit CAM charges.
Other California-specific points worth knowing: courts imply a reasonableness standard when a lease requires landlord consent to assignment but doesn't say what standard applies, and pre-dispute jury trial waivers are unenforceable in California.
Sources: Cox Castle, Buchalter, Husch Blackwell, Public Counsel.
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