Legislature approves new bill

The California Legislature recently passed the Commercial Tenant Protection Act (SB 1103), a first-in-the-nation law designed to protect small businesses and nonprofits from displacement. It adds extra protections for minority-owned companies. Before pushing the bill, tenants like “Abby” were being taken advantage of and forced to pay additional fees that never matched the maintenance of the property.
Abby started her own business in the music industry with her husband 20 years ago, and for 10 years, they both worked out of their homes before moving to a warehouse due to an uptick in workload. While the first few years with the landlord were good, once the landlord turned over the title of the building to a management company, issues arose for Abby.
“They made all of us resign leases, and the new lease made us responsible for the warehouse roof, which made no sense to me, and I was now responsible for the Common area maintenance (CAM) charges, which skyrocketed the price,” she said.” Abby also talks about how there’s no cap on how much a commercial landlord can charge their tenants because they don’t need a license to own the building. “There’s no organization for tenants to complain to, our only option is to sue, which would cost more than some of us can afford.” Abby continued by stating that she received an unknown assessment from the management company at the end of the year, which would require her to pay within 10 days. These assessments would reach thousands of dollars but aren’t in the lease.
Abby signed an A.I.R. (American Industrial Real Estate Assn.) lease, which is known to favor the landlord. In this lease agreement, she is not responsible for paying the capital expense, but due to the unknown assessment, she feels like she is being scammed into paying them. “Unfortunately, I can’t tell if I am paying for them because I am not allowed to look at their books, and the tenants aren’t given any receipts to show what expenses they are paying for. There’s zero transparency.” Abby feels relief with the bill signed by Gov. Gavin Newsom on Sept. 30.
With this signing, SB 1103 enshrines into California law these key protections for the smallest businesses and nonprofits in the state:
• Expanding language access by requiring commercial leases to be provided to tenants in the languages in which they are negotiated;
• Creating transparency and standards with respect to building operating costs;
• Giving small businesses and small nonprofits more time to prepare for rent increases or termination of their tenancies so they can stay in their neighborhoods.
“Small businesses and nonprofits are economic generators and community anchors. Their success is directly linked to the health and vibrancy of our communities,” said Ritu Mahajan Estes, directing attorney and public counsel. “Our work directly providing legal assistance to small businesses and small nonprofits has shown us time and time again how hard it is for them to keep their doors open. We are so pleased the Governor has signed SB 1103 into law, increasing transparency in commercial leasing and giving our community pillars a fighting chance to stay in business.”