What Landlords Need to Know About New Real Estate Law Requirements in 2025
Effective January 1, 2025, California’s Commercial Tenant Protection Act (SB 1103) introduces significant changes to real estate law that will impact how commercial landlords structure leases and manage relationships with a new category of protected tenants, qualified commercial tenants.
Who Are Qualified Commercial Tenants?
Under this new statute, a qualified commercial tenant includes:
- Microenterprises (businesses with five or fewer employees, including the owner)
- Restaurants with fewer than 10 employees
- Nonprofits with fewer than 20 employees
To be treated as a qualified commercial tenant, the tenant must provide the landlord with written notice of their status and a self-attestation of their employee count, following the timeline requirements outlined in the law.
Key Real Estate Law Changes for 2025
1. Limitations on Pass-Through Operating Expenses
Landlords face tighter restrictions on billing qualified commercial tenants for operating costs, especially for leases executed or renewed after January 1, 2025. To charge these costs, landlords must:
- Provide itemized, attested documentation
- Limit costs to those directly tied to property operation, maintenance, or repair
- Allocate costs proportionately and transparently
- Deliver documentation before any recovery of fees
Violations expose landlords to civil liability, including actual and treble damages, attorney’s fees, and even punitive damages if the violation is willful.
2. Lease Translation Requirements
If a lease is negotiated primarily in Spanish, Tagalog, Chinese, Vietnamese, or Korean, landlords must provide a translated copy of the lease before signing. This translation requirement cannot be waived, even if a translator is present, and failure to comply gives the tenant the right to rescind the lease.
3. Rent Increases and Lease Modifications
For short-term leases (month-to-month or less), the law requires:
- Advance written notice for rent increases, up to 90 days depending on the increase
- Written notice of any non-rent modifications, with effective dates dependent on the lease term
These protections ensure that tenants have adequate time to respond to changes in their leasing terms.
4. Lease Termination and Renewal Protections
When a lease ends, and the landlord continues to accept rent from a qualified commercial tenant:
- The lease is deemed renewed on the same terms, for up to one year
- 30-day notice is required to terminate tenants with less than one year of occupancy
- 60-day notice is required for tenants occupying for one year or more
These provisions aim to prevent sudden evictions and promote leasing stability for vulnerable small businesses.
Preparing for Compliance
These sweeping updates to real estate law mean landlords must revisit and revise their leasing procedures, cost allocations, and communication strategies. The law is clear: protections for qualified commercial tenants cannot be waived, and failure to comply may result in significant legal consequences.
Before these changes take effect, landlords should:
- Review existing lease forms
- Establish internal procedures for handling tenant self-attestations
- Prepare for multilingual translations, if applicable
- Adjust billing systems to ensure compliance with cost documentation rules
Strategy Law Is Here to Help
At Strategy Law LLP, our real estate law attorneys are experienced in helping landlords adapt to evolving regulations. If you lease commercial property in California, SB 1103 is a law you cannot afford to ignore.
Need help understanding how this law impacts your leases? Contact us today to schedule a consultation, and let our real estate law team help you navigate these complex changes with confidence.
This blog is written as of August 2025. Recommendations and legal requirements are changing rapidly, so please continue to review our legal updates or review postings on relevant government websites.
All blogs on this site are for educational purposes only, do not constitute legal advice or opinion, and should not be applied to your situation, or any specific situation, without consultation with counsel. Strategy Law, LLP does not provide any legal advice concerning any matter discussed in a blog except upon formal engagement including, without limitation, execution of Strategy Law, LLP’s formal legal services agreement, and with respect to specific factual situations. No blog constitutes a guaranty, warranty, or prediction regarding the result of any legal matter discussed in the blog or any representation
