When you are starting out with a retail, restaurant, or other brick-and-mortar small business, you may need to rent a commercial space. In California, commercial property tenants have certain rights and regulations that protect them.

One of the most important rights of California commercial tenants is the right to a habitable and safe property. Landlords have legal obligations to maintain the premises in good condition, ensuring that it meets all building and safety codes. 

This includes providing adequate security measures, functioning utilities, and proper maintenance of common areas. When you are renting a commercial space, it is important to thoroughly review a lease agreement before signing it. 

Here are some key aspects to consider:

  • Lease term: The duration of the lease should be clearly specified, including its start and end dates.
  • Rent and payment terms: The lease agreement should outline the rent amount, any additional charges, and the frequency of rent payment.
  • Maintenance and repairs: Determine the responsibilities for property maintenance and repairs. It’s important to clarify who bears the costs and obligations associated with maintaining the premises to ensure a safe and functional environment for business operations.
  • Permitted use: Clearly define the permitted use of the commercial space. Ensure that the intended business activities align with the terms specified in the lease agreement. Seek clarification from the landlord if there are any restrictions or special provisions.
  • Alterations and improvements: Understand the procedures and permissions required for making alterations or improvements to the property. Seek written consent from the landlord before undertaking any modifications to avoid breaching the terms of the lease.
  • Lease renewal and termination: Familiarize yourself with the options for lease renewal and the procedures for terminating the lease prematurely if necessary. Knowing the terms and conditions for renewal or termination can provide flexibility and help avoid potential disputes in the future.
  • Insurance and liability: Determine the insurance requirements outlined in the lease agreement. It is generally advisable to consult with an insurance professional to ensure appropriate coverage for potential risks and liabilities associated with the business operations.
  • Dispute resolution: Review the provisions for resolving disputes, such as mediation or arbitration, as specified in the lease agreement. Understanding the process for dispute resolution can be beneficial in case disagreements arise during the lease term.

It is also important to seek legal advice or consult with a real estate professional to ensure a comprehensive understanding of the commercial lease agreement. This will allow you to make better informed decisions and protect all of your rights and interests throughout the tenancy period.

Commercial vs. Residential Properties 

In addition to the rights and responsibilities outlined above, there are some key differences between commercial and residential properties that you should be aware of. These include:

  • Purpose: Commercial properties are primarily utilized for business purposes, while residential properties are designated for individuals or families as their primary places of residence.
  • Lease terms: Commercial leases typically involve longer lease terms compared to residential leases. Commercial leases commonly span several years, whereas residential leases are often for shorter durations, commonly one year.
  • Rental rates: Commercial rental rates are typically higher than residential rates due to factors like location, size, market demand, and the specific use of the property. Residential rental rates are generally lower in comparison.
  • Property use and zoning: Commercial properties have specific zoning regulations that define their approved uses and limitations. Residential properties, on the other hand, are zoned for housing purposes and may have restrictions on commercial activities.
  • Property features: Commercial properties are designed with features that cater to business needs, such as ample parking spaces, high ceilings, loading docks, and utility infrastructure. Residential properties emphasize living comfort, including bedrooms, bathrooms, kitchens, and recreational areas.
  • Maintenance and repairs: Maintenance and repair responsibilities differ between commercial and residential properties. In commercial leases, tenants often bear a larger share of these responsibilities. In residential leases, landlords typically handle most maintenance and repair tasks.
  • Lease negotiations: Commercial lease negotiations involve extensive discussions on lease terms, rent adjustments, tenant improvements, and other business-specific requirements. Residential lease negotiations generally focus on rent amount, lease duration, and basic tenant rights.
  • Legal and financial considerations: Commercial leases are subject to more complex legal and financial considerations, including commercial insurance, business licenses, and compliance with local regulations. Residential leases have fewer legal complexities and primarily address tenant rights and responsibilities.
  • Market factors: Commercial property values and lease rates are influenced by economic trends, market conditions, and business demand. Residential property values are more influenced by factors like location, amenities, and housing market conditions.

Consulting with real estate professionals and legal experts can help you fully understand the implications and nuances of commercial and residential properties. They can help provide tailored advice and guidance based on your specific requirements and objectives.

Speak with an Experienced Mountain View Small Business Attorney

Kalia Law P.C. is a California real estate law firm that helps businesses and individuals with their legal needs. We specialize in commercial leases, which are agreements between landlords and tenants outlining terms and conditions of commercial property rentals, and our approach makes legal services affordable by removing unnecessary law firm overhead.

Our firm has the experience and expertise to help businesses in these industries find the right commercial property and negotiate a fair lease. Call (650) 701-7617 or contact us online to arrange an initial appointment.

- Claire Kalia


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