On January 1, a new law goes into effect in California that makes it the first state to provide commercial tenant protections for eligible small businesses and nonprofits who are occupying space on short-term leases.
SB 1103, known as the Commercial Tenant Protection Act, applies to “qualified commercial tenants,” a new class defined as a “micro-enterprise,” a restaurant with fewer than 10 employees, or a private, nonprofit organization with less than 20 employees.
A micro-enterprise is defined under the Business and Professions Code as a sole proprietorship, partnership, limited liability company or a corporation with five or fewer part-time or full-time employees (including the owner) that generally lacks sufficient access to loans, equity or other financial capital.
SB 1103 imposes new notice requirements on landlords that increase rent when the term of the lease is week-to-week, month-to-month or any period less than a month.
Building owners leasing to qualified commercial tenants must now give at least a 30-day notice before the effective date of the increase if the rent is raised by 10% or less and 90 days’ notice if the hike is greater than 10%.
On January 1, a new law goes into effect in California that makes it the first state to provide commercial tenant protections for eligible small businesses and nonprofits who are occupying space on short-term leases.
SB 1103, known as the Commercial Tenant Protection Act, applies to “qualified commercial tenants,” a new class defined as a “micro-enterprise,” a restaurant with fewer than 10 employees, or a private, nonprofit organization with less than 20 employees.
A micro-enterprise is defined under the Business and Professions Code as a sole proprietorship, partnership, limited liability company or a corporation with five or fewer part-time or full-time employees (including the owner) that generally lacks sufficient access to loans, equity or other financial capital.
SB 1103 imposes new notice requirements on landlords that increase rent when the term of the lease is week-to-week, month-to-month or any period less than a month.
Building owners leasing to qualified commercial tenants must now give at least a 30-day notice before the effective date of the increase if the rent is raised by 10% or less and 90 days’ notice if the hike is greater than 10%.
Under existing law, month-to-month leases generally can be extended after their termination date if the landlord keeps accepting rent, with the building owner required to provide a 30 days notice of termination. For SB 1103, a qualified tenant must be given 60 days’ notice of termination if the renter has occupied the property for more than one year.
SB 1103 establishes restrictions on landlords charging building operating costs (which includes maintenance, or repair of commercial property) to qualified small tenants, requiring landlords to provide documentation of the charges and when the costs were assessed.
Qualified commercial tenants are required under SB 1103 to provide the landlord with a written notice that the renter is qualified for these protections, including a “self-attestation” regarding the number of employees in the small enterprise.
The Commercial Tenant Protection Act, passed by the state legislature in September, was authored by Sen. Caroline Menjivar, who represents San Fernando Valley. It was supported by a coalition of sponsors including Bet Tzedek Legal Services, CAMEO Network, Inclusive Action for the City, the Lawyers’ Committee for Civil Rights of the San Francisco Bay Area, and Small Business Majority.
“Micro-enterprises and small nonprofits exist because of the passion, sweat equity, and determination of individuals who bring their dreams to reality,” Menjivar said, in a statement.
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