News & Insights

With a stated goal of protecting a new category of small business tenants, on September 30, 2024, California Governor Newsom signed into law the Commercial Tenant Protection Act (SB 1103). 

The bill is claimed to be the nation’s first to provide commercial tenant protections for small business owners. Beginning on January 1, 2025, landlords of commercial properties will be required to follow new practices when entering into lease agreements or tenancies with “qualified commercial tenants” – defined as tenants that are a microenterprise, a restaurant with fewer than 10 employees or a nonprofit organization with fewer than 20 employees.  Microenterprises are defined as a sole proprietorship or business entity that has five or fewer employees including the owner, who may be part-time or full-time and “generally lacks sufficient access to loans, equity, or other financial capital.”  To be treated as a qualified commercial tenant, the tenant also must have provided the landlord with written notice of its qualification as well as a self-attestation regarding the number of its employees within the time frames provided in the statute. 

Owners that are leasing, or planning to lease, commercial space to qualified commercial tenants are encouraged to carefully review SB 1103, consider its impact to their operations and take into account the documentation and practices that need to be implemented to achieve compliance with the new law.  

CGS3 partner Steven Otto and senior counsel Dorothy Groza recently discussed unique issues for landlords as well as key protections of the new law in a recent article published in The Daily Journal and The Daily Transcript

The full article can be read in The Daily Journal here and The Daily Transcript here (subscriptions required).