SB 1103: Tenancy of commercial real properties: agreements: building operating costs.
- Session Year: 2023-2024
- House: Senate
- Latest Version Date: 2024-09-30
Current Status:
Passed
(2024-09-30: Chaptered by Secretary of State. Chapter 1015, Statutes of 2024.)
Introduced
In Committee
First Chamber
In Committee
Second Chamber
Enacted
(1)Existing law requires a landlord of a residential dwelling to give notice to the tenant a certain number of days before the effective date of a rent increase depending on the amount of the increase, as specified.
This bill would apply this requirement to leases of commercial real property by a qualified commercial tenant, as defined. The bill would specify, in all leases for commercial real property by a qualified commercial tenant, that a rent increase would not be effective until the notice period required by these provisions has expired. The bill would also specify that a violation of these provisions would not entitle a qualified commercial tenant to civil penalties. The bill would require a landlord of a commercial real property to include information on these provisions in the notice.
(2)Existing law requires a person engaged in a trade or business who negotiates primarily in Spanish, Chinese, Tagalog, Vietnamese, or Korean, in the course of entering into specified agreements, to deliver to the other party a translation of the agreement in the language in which it was negotiated, as specified. Existing law authorizes a person to rescind an agreement if the agreement does not comply with that translation requirement, as specified. Existing law creates an exemption from the translation requirement for specified agreements if the other party negotiates the terms through the other partys own interpreter. Under existing law, both the translation requirement and the interpreter exemption apply to a tenancy agreement covering a dwelling unit normally occupied as a residence.
This bill would apply the translation requirement, but not the interpreter exemption, to a tenancy agreement covering a nonresidential-zoned commercial space entered into between a landlord and a qualified commercial tenant, as defined, on or after January 1, 2025. The bill would only authorize the tenant to rescind the agreement for noncompliance with the translation requirement.
(3)Existing law specifies that a hiring of residential real property, for a term not specified by the parties, is deemed to be renewed at the end of the term implied by law unless one of the parties gives written notice to the other of that partys intention to terminate the tenancy. Existing law requires an owner of a residential dwelling to give notice at least 60 days prior to the proposed date of termination, or at least 30 days prior to the proposed date of termination if a tenant or resident has resided in the dwelling for less than one year, as specified.
This bill would generally apply these provisions to a hiring of commercial real property hired by a qualified commercial tenant, as defined. The bill would require a landlord of a commercial real property to include information on these provisions in the notice.
(4)Existing law applicable to commercial leases and nonresidential tenancies of real property prohibits a landlord from demanding a payment as a condition of initiating, continuing, or renewing a lease or rental agreement, unless the amount of the payment is stated in a written lease or rental agreement. Existing law specifies that these provisions do not prohibit a landlord from increasing a tenants rent for nonresidential real property in order to recover building operating costs incurred on behalf of the tenant, if the right to rent, the method of calculating the increase, and the period of time covered by the increase is stated in the lease or rental agreement.
This bill would prohibit a landlord of a commercial real property from charging a qualified commercial tenant, as defined, a fee to recover building operating costs, as defined, unless specified conditions are met, including, among other things, that the costs are allocated proportionately per tenant and the qualified commercial tenant is provided supporting documentation, as specified. The bill would allow a qualified commercial tenant to raise a violation of this provision as an affirmative defense in an action to recover possession based on a failure to pay the fee. The bill would make a landlord of a commercial real property who violates this provision liable to a qualified commercial tenant for specified damages, and would authorize the district attorney, city attorney, or county counsel, as specified, to seek injunctive relief. The bill would apply these provisions to specified leases and tenancies, but not to assessments levied pursuant to the Property and Business Improvement District Law of 1994.
(5)This bill would incorporate additional changes to Section 1632 of the Civil Code proposed by AB 3281 to be operative only if this bill and AB 3281 are enacted and this bill is enacted last.
(6)This bill would incorporate additional changes to Section 1946.1 of the Civil Code proposed by SB 611 to be operative only if this bill and SB 611 are enacted and this bill is enacted last.
(1)Existing law requires a landlord of a residential dwelling to give notice to the tenant a certain number of days before the effective date of a rent increase depending on the amount of the increase, as specified.
This bill would apply this requirement to leases of commercial real property by a qualified commercial tenant, as defined. The bill would specify, in all leases for commercial real property by a qualified commercial tenant, that a rent increase would not be effective until the notice period required by these provisions has expired. The bill would also specify that a violation of these provisions would not entitle a qualified commercial tenant to civil penalties. The bill would require a landlord of a commercial real property to include information on these provisions in the notice.
(2)Existing law requires a person engaged in a trade or business who negotiates primarily in Spanish, Chinese, Tagalog, Vietnamese, or Korean, in the course of entering into specified agreements, to deliver to the other party a translation of the agreement in the language in which it was negotiated, as specified. Existing law authorizes a person to rescind an agreement if the agreement does not comply with that translation requirement, as specified. Existing law creates an exemption from the translation requirement for specified agreements if the other party negotiates the terms through the other partys own interpreter. Under existing law, both the translation requirement and the interpreter exemption apply to a tenancy agreement covering a dwelling unit normally occupied as a residence.
This bill would apply the translation requirement, but not the interpreter exemption, to a tenancy agreement covering a nonresidential-zoned commercial space entered into between a landlord and a qualified commercial tenant, as defined, on or after January 1, 2025. The bill would only authorize the tenant to rescind the agreement for noncompliance with the translation requirement.
(3)Existing law specifies that a hiring of residential real property, for a term not specified by the parties, is deemed to be renewed at the end of the term implied by law unless one of the parties gives written notice to the other of that partys intention to terminate the tenancy. Existing law requires an owner of a residential dwelling to give notice at least 60 days prior to the proposed date of termination, or at least 30 days prior to the proposed date of termination if a tenant or resident has resided in the dwelling for less than one year, as specified.
This bill would generally apply these provisions to a hiring of commercial real property hired by a qualified commercial tenant, as defined. The bill would require a landlord of a commercial real property to include information on these provisions in the notice.
(4)Existing law applicable to commercial leases and nonresidential tenancies of real property prohibits a landlord from demanding a payment as a condition of initiating, continuing, or renewing a lease or rental agreement, unless the amount of the payment is stated in a written lease or rental agreement. Existing law specifies that these provisions do not prohibit a landlord from increasing a tenants rent for nonresidential real property in order to recover building operating costs incurred on behalf of the tenant, if the right to rent, the method of calculating the increase, and the period of time covered by the increase is stated in the lease or rental agreement.
This bill would prohibit a landlord of a commercial real property from charging a qualified commercial tenant, as defined, a fee to recover building operating costs, as defined, unless specified conditions are met, including, among other things, that the costs are allocated proportionately per tenant and the qualified commercial tenant is provided supporting documentation, as specified. The bill would allow a qualified commercial tenant to raise a violation of this provision as an affirmative defense in an action to recover possession based on a failure to pay the fee. The bill would make a landlord of a commercial real property who violates this provision liable to a qualified commercial tenant for specified damages, and would authorize the district attorney, city attorney, or county counsel, as specified, to seek injunctive relief. The bill would apply these provisions to specified leases and tenancies, but not to assessments levied pursuant to the Property and Business Improvement District Law of 1994.
(5)This bill would incorporate additional changes to Section 1632 of the Civil Code proposed by AB 3281 to be operative only if this bill and AB 3281 are enacted and this bill is enacted last.
(6)This bill would incorporate additional changes to Section 1946.1 of the Civil Code proposed by SB 611 to be operative only if this bill and SB 611 are enacted and this bill is enacted last.
(1)Existing law requires a landlord of a residential dwelling to give notice to the tenant a certain number of days before the effective date of a rent increase depending on the amount of the increase, as specified.
This bill would apply this requirement to leases of commercial real property by a qualified commercial tenant, as defined. The bill would specify, in all leases for commercial real property by a qualified commercial tenant, that a rent increase would not be effective until the notice period required by these provisions has expired. The bill would also specify that a violation of these provisions would not entitle a qualified commercial tenant to civil penalties. The bill would require a landlord of a commercial real property to include information on these provisions in the notice.
(2)Existing law requires a person engaged in a trade or business who negotiates primarily in Spanish, Chinese, Tagalog, Vietnamese, or Korean, in the course of entering into specified agreements, to deliver to the other party a translation of the agreement in the language in which it was negotiated, as specified. Existing law authorizes a person to rescind an agreement if the agreement does not comply with that translation requirement, as specified. Existing law creates an exemption from the translation requirement for specified agreements if the other party negotiates the terms through the other partys own interpreter. Under existing law, both the translation requirement and the interpreter exemption apply to a tenancy agreement covering a dwelling unit normally occupied as a residence.
This bill would apply the translation requirement, but not the interpreter exemption, to a tenancy agreement covering a nonresidential-zoned commercial space entered into between a landlord and a qualified commercial tenant, as defined, on or after January 1, 2025. The bill would only authorize the tenant to rescind the agreement for noncompliance with the translation requirement.
(3)Existing law specifies that a hiring of residential real property, for a term not specified by the parties, is deemed to be renewed at the end of the term implied by law unless one of the parties gives written notice to the other of that partys intention to terminate the tenancy. Existing law requires an owner of a residential dwelling to give notice at least 60 days prior to the proposed date of termination, or at least 30 days prior to the proposed date of termination if a tenant or resident has resided in the dwelling for less than one year, as specified.
This bill would generally apply these provisions to a hiring of commercial real property hired by a qualified commercial tenant, as defined. The bill would require a landlord of a commercial real property to include information on these provisions in the notice.
(4)Existing law applicable to commercial leases and nonresidential tenancies of real property prohibits a landlord from demanding a payment as a condition of initiating, continuing, or renewing a lease or rental agreement, unless the amount of the payment is stated in a written lease or rental agreement. Existing law specifies that these provisions do not prohibit a landlord from increasing a tenants rent for nonresidential real property in order to recover building operating costs incurred on behalf of the tenant, if the right to rent, the method of calculating the increase, and the period of time covered by the increase is stated in the lease or rental agreement.
This bill would prohibit a landlord of a commercial real property from charging a qualified commercial tenant, as defined, a fee to recover building operating costs, as defined, unless specified conditions are met, including, among other things, that the costs are allocated proportionately per tenant and the qualified commercial tenant is provided supporting documentation, as specified. The bill would allow a qualified commercial tenant to raise a violation of this provision as an affirmative defense in an action to recover possession based on a failure to pay the fee. The bill would make a landlord of a commercial real property who violates this provision liable to a qualified commercial tenant for specified damages, and would authorize the district attorney, city attorney, or county counsel, as specified, to seek injunctive relief. The bill would apply these provisions to specified leases and tenancies. tenancies, but not to assessments levied pursuant to the Property and Business Improvement District Law of 1994.
This bill would incorporate additional changes to Section 1632 of the Civil Code proposed by AB 3281 to be operative only if this bill and AB 3281 are enacted and this bill is enacted last.
This bill would incorporate additional changes to Section 1946.1 of the Civil Code proposed by SB 611 to be operative only if this bill and SB 611 are enacted and this bill is enacted last.
(1)Existing law requires a landlord of a residential dwelling to give notice to the tenant a certain number of days before the effective date of a rent increase depending on the amount of the increase, as specified.
This bill would apply this requirement to leases of commercial real property by a qualified commercial tenant, as defined. The bill would specify, in all leases for commercial real property by a qualified commercial tenant, that a rent increase would not be effective until the notice period required by these provisions has expired. The bill would also specify that a violation of these provisions would not entitle a qualified commercial tenant to civil penalties. The bill would require a landlord of a commercial real property to include information on these provisions in the notice.
(2)Existing law requires a person engaged in a trade or business who negotiates primarily in Spanish, Chinese, Tagalog, Vietnamese, or Korean, in the course of entering into specified agreements, to deliver to the other party a translation of the agreement in the language in which it was negotiated, as specified. Existing law authorizes a person to rescind an agreement if the agreement does not comply with that translation requirement, as specified. Existing law creates an exemption from the translation requirement for specified agreements if the other party negotiates the terms through the other partys own interpreter. Under existing law, both the translation requirement and the interpreter exemption apply to a tenancy agreement covering a dwelling unit normally occupied as a residence.
TheThis bill would apply the translation requirement, but not the interpreter exemption, to a tenancy agreement covering a nonresidential-zoned commercial space, and space entered into between a landlord and a qualified commercial tenant, as defined, on or after January 1, 2025. The bill would only authorize the tenant to rescind the agreement for noncompliance with the translation requirement.
(3)Existing law specifies that a hiring of residential real property, for a term not specified by the parties, is deemed to be renewed at the end of the term implied by law unless one of the parties gives written notice to the other of that partys intention to terminate the tenancy. Existing law requires an owner of a residential dwelling to give notice at least 60 days prior to the proposed date of termination, or at least 30 days prior to the proposed date of termination if a tenant or resident has resided in the dwelling for less than one year, as specified.
This bill would generally apply these provisions to a hiring of commercial real property hired by a qualified commercial tenant, as defined. The bill would require a landlord of a commercial real property to include information on these provisions in the notice.
(4)Existing law applicable to commercial leases and nonresidential tenancies of real property prohibits a landlord from demanding a payment as a condition of initiating, continuing, or renewing a lease or rental agreement, unless the amount of the payment is stated in a written lease or rental agreement. Existing law specifies that these provisions do not prohibit a landlord from increasing a tenants rent for nonresidential real property in order to recover building operating costs incurred on behalf of the tenant, if the right to rent, the method of calculating the increase, and the period of time covered by the increase is stated in the lease or rental agreement.
This bill would prohibit a landlord of a commercial real property from charging a qualified commercial tenant, as defined, a fee to recover building operating costs costs, as defined, unless specified conditions are met, including, among other things, that the costs are allocated proportionately per tenant and the qualified commercial tenant is provided supporting documentation before the rent increase, documentation, as specified. The bill would allow a qualified commercial tenant to raise a violation of this provision as an affirmative defense in an action to recover possession based on a failure to pay the fee. The bill would subject make a landlord of a commercial real property who violates this provision to a civil penalty, as specified, and would entitle a qualified commercial tenant to an award of costs reasonably incurred in connection with obtaining the civil penalty. liable to a qualified commercial tenant for specified damages, and would authorize the district attorney, city attorney, or county counsel, as specified, to seek injunctive relief. The bill would apply these provisions to specified leases and tenancies.
(1)Existing law requires a landlord of a residential dwelling to give notice to the tenant a certain number of days before the effective date of a rent increase depending on the amount of the increase, as specified.
This bill would apply this requirement to leases of commercial real property by a qualified commercial tenant, as defined. The bill would specify, in all leases for commercial real property by a qualified commercial tenant, that a rent increase would not be effective until the notice period required by these provisions has expired. The bill would also specify that a violation of these provisions would not entitle a qualified commercial tenant to civil penalties. The bill would require a landlord of a commercial real property to include information on these provisions in the notice.
(2)Existing law requires a person engaged in a trade or business who negotiates primarily in Spanish, Chinese, Tagalog, Vietnamese, or Korean, in the course of entering into specified agreements, to deliver to the other party a translation of the agreement in the language in which it was negotiated, as specified. Existing law authorizes a person to rescind an agreement if the agreement does not comply with that translation requirement, as specified. Existing law creates an exemption from the translation requirement for specified agreements if the other party negotiates the terms through the other partys own interpreter. Under existing law, both the translation requirement and the interpreter exemption apply to a tenancy agreement covering a dwelling unit normally occupied as a residence.
The bill would apply the translation requirement, but not the interpreter exemption, to a tenancy agreement covering a nonresidential-zoned commercial space, and would only authorize the tenant to rescind the agreement for noncompliance with the translation requirement.
(3)Existing law specifies that a hiring of residential real property, for a term not specified by the parties, is deemed to be renewed at the end of the term implied by law unless one of the parties gives written notice to the other of that partys intention to terminate the tenancy. Existing law requires an owner of a residential dwelling to give notice at least 60 days prior to the proposed date of termination, or at least 30 days prior to the proposed date of termination if a tenant or resident has resided in the dwelling for less than one year, as specified.
This bill would generally apply these provisions to a hiring of commercial real property hired by a qualified commercial tenant, as defined. The bill would modify the application of these provisions to commercial real property by requiring notice 90 days prior to the proposed date of termination if the tenant has occupied the property for 3 years or more. The bill would require a landlord of a commercial real property to include information on these provisions in the notice.
(4)Existing law regulates the payment or deposit of money to secure a rental agreement for nonresidential property. Existing law, among other requirements, requires a landlord to use the payment or deposit only as reasonably necessary to remedy tenant defaults in paying rent, to repair damages caused by the tenant, or to clean the premises, if the deposit or money is made for these purposes. Existing law specifies that these requirements are declarative of existing law and therefore operative as to all tenancies, leases, or rental agreements for nonresidential property created or renewed on or after January 1, 1971.This bill would prohibit a landlord from demanding or receiving payment or deposit from a qualified commercial tenant, as defined, greater than one months rent in addition to rent for the first month paid on or before initial occupancy. The bill would delete the provision specifying that these requirements are declarative of existing law.(5)Existing law prohibits an owner of residential real property from, over the course of any 12-month period, increasing the gross rental rate for a dwelling or a unit more than 5% plus the percentage change in the cost of living, or 10%, whichever is lower, of the lowest gross rental rate charged for that dwelling or unit at any time during the 12 months before the effective date of the increase, subject to specified conditions.(4)Existing law applicable to commercial leases and nonresidential tenancies of real property prohibits a landlord from demanding a payment as a condition of initiating, continuing, or renewing a lease or rental agreement, unless the amount of the payment is stated in a written lease or rental agreement. Existing law specifies that these provisions do not prohibit a landlord from increasing a tenants rent for nonresidential real property in order to recover building operating costs incurred on behalf of the tenant, if the right to rent, the method of calculating the increase, and the period of time covered by the increase is stated in the lease or rental agreement.
This bill would authorize prohibit a landlord to increase the rent of of a commercial real property from charging a qualified commercial tenant, as defined, a fee to recover building operating costs only if unless specified conditions are met, including, among other things, that the costs are allocated proportionately per tenant and the tenant is provided notice supporting documentation before the rent increase, as specified. The bill would allow a qualified commercial tenant to raise a violation of this provision as an affirmative defense in an action to recover possession. possession based on a failure to pay the fee. The bill would subject a landlord of a commercial real property who violates this provision to a civil penalty, as specified, and would entitle a qualified commercial tenant to an award of costs reasonably incurred in connection with obtaining the civil penalty.
(1)Existing law requires a landlord of a residential dwelling to give notice to the tenant a certain number of days before the effective date of a rent increase depending on the amount of the increase, as specified.
This bill would apply this requirement to leases of commercial real property by a qualified commercial tenant, as defined.
(3)(2)Existing law requires a person engaged in a trade or business who negotiates primarily in Spanish, Chinese, Tagalog, Vietnamese, or Korean, in the course of entering into specified agreements, to deliver to the other party a translation of the agreement in the language in which it was negotiated, as specified. Existing law authorizes a person to rescind an agreement if the agreement does not comply with that translation requirements, requirement, as specified. Existing law creates an exemption from the translation requirement for specified agreements if the other party negotiates the terms through the other partys own interpreter. Under existing law, both the translation requirement and the interpreter exemption apply to a tenancy agreement covering a dwelling unit normally occupied as a residence.
This bill would expand the translation requirement to cover any language other than English. TheThe bill would apply this expanded the translation requirement, but not the interpreter exemption, to a tenancy agreement covering a nonresidential-zoned commercial space, and would only authorize the tenant to rescind the agreement for noncompliance with the translation requirement.
(4)(3)Existing law specifies that a hiring of residential real property, for a term not specified by the parties, is deemed to be renewed at the end of the term implied by law unless one of the parties gives written notice to the other of that partys intention to terminate the tenancy. Existing law requires an owner of a residential dwelling to give notice at least 60 days prior to the proposed date of termination, or at least 30 days prior to the proposed date of termination if a tenant or resident has resided in the dwelling for less than one year, as specified.
This bill would generally apply these provisions to a hiring of commercial real property hired by a qualified commercial tenant, as defined. The bill would modify the application of these provisions to commercial real property by requiring notice 90 days prior to the proposed date of termination if the tenant has occupied the property for 3 years or more.
(5)(4)Existing law regulates the payment or deposit of money to secure a rental agreement for nonresidential property. Existing law, among other requirements, requires a landlord to use the payment or deposit only as reasonably necessary to remedy tenant defaults in paying rent, to repair damages caused by the tenant, or to clean the premises, if the deposit or money is made for these purposes. Existing law specifies that these requirements are declarative of existing law and therefore operative as to all tenancies, leases, or rental agreements for nonresidential property created or renewed on or after January 1, 1971.
This bill would prohibit a landlord from demanding or receiving payment or deposit from a qualified commercial tenant, as defined, greater than one months rent in addition to rent for the first month paid on or before initial occupancy. The bill would delete the provision specifying that these requirements are declarative of existing law.
(5)Existing law prohibits an owner of residential real property from, over the course of any 12-month period, increasing the gross rental rate for a dwelling or a unit more than 5% plus the percentage change in the cost of living, or 10%, whichever is lower, of the lowest gross rental rate charged for that dwelling or unit at any time during the 12 months before the effective date of the increase, subject to specified conditions.
This bill would authorize a landlord to increase the rent of a qualified commercial tenant, as defined, to recover building operating costs only if specified conditions are met, including, among other things, that the costs are allocated proportionately per tenant and the tenant is provided notice before the rent increase, as specified. The bill would allow a qualified commercial tenant to raise a violation of this provision as an affirmative defense in an action to recover possession. The bill would subject a landlord who violates this provision to a civil penalty, as specified, and would entitle a qualified commercial tenant to an award of costs reasonably incurred in connection with obtaining the civil penalty.
(1)Existing law regulates the terms and conditions of tenancies, including the charging of certain fees for commercial leases.
This bill would state the intent of the Legislature to subsequently amend this bill to increase transparency and equity in the application of common area maintenance and other fees charged to qualifying commercial tenants for leases executed on or after January 1, 2025.
(2)Existing law requires a landlord of a residential dwelling to give notice to the tenant a certain number of days before the effective date of a rent increase depending on the amount of the increase, as specified.
This bill would apply this requirement to leases of commercial real property by a qualified commercial tenant, as defined.
(3)Existing law requires a person engaged in a trade or business who negotiates primarily in Spanish, Chinese, Tagalog, Vietnamese, or Korean, in the course of entering into specified agreements, to deliver to the other party a translation of the agreement in the language in which it was negotiated, as specified. Existing law authorizes a person to rescind an agreement if the agreement does not comply with that translation requirements, as specified. Existing law creates an exemption from the translation requirement for specified agreements if the other party negotiates the terms through the other partys own interpreter. Under existing law, both the translation requirement and the interpreter exemption apply to a tenancy agreement covering a dwelling unit normally occupied as a residence.
This bill would expand the translation requirement to cover any language other than English. The bill would apply this expanded translation requirement, but not the interpreter exemption, to a tenancy agreement covering a nonresidential-zoned commercial space, and would only authorize the tenant to rescind the agreement for noncompliance with the translation requirement.
(4)Existing law specifies that a hiring of residential real property, for a term not specified by the parties, is deemed to be renewed at the end of the term implied by law unless one of the parties gives written notice to the other of that partys intention to terminate the tenancy. Existing law requires an owner of a residential dwelling to give notice at least 60 days prior to the proposed date of termination, or at least 30 days prior to the proposed date of termination if a tenant or resident has resided in the dwelling for less than one year, as specified.
This bill would generally apply these provisions to a hiring of commercial real property hired by a qualified commercial tenant, as defined. The bill would modify the application of these provisions to commercial real property by requiring notice 90 days prior to the proposed date of termination if the tenant has occupied the property for 3 years or more.
(5)Existing law regulates the payment or deposit of money to secure a rental agreement for nonresidential property. Existing law, among other requirements, requires a landlord to use the payment or deposit only as reasonably necessary to remedy tenant defaults in paying rent, to repair damages caused by the tenant, or to clean the premises, if the deposit or money is made for these purposes. Existing law specifies that these requirements are declarative of existing law and therefore operative as to all tenancies, leases, or rental agreements for nonresidential property created or renewed on or after January 1, 1971.
This bill would prohibit a landlord from demanding or receiving payment or deposit from a qualified commercial tenant, as defined, greater than one months rent in addition to rent for the first month paid on or before initial occupancy. The bill would delete the provision specifying that these requirements are declarative of existing law.
(a)(1)Except as provided in subdivision (b), in all leases of lands or tenements, or of any interest therein, from week to week, month to month, or other period less than a month, the landlord may, upon giving notice in writing to the tenant, in the manner prescribed by Section 1162 of the Code of Civil Procedure, change the terms of the lease to take effect, as to tenancies for less than one month, upon the expiration of a period at least as long as the term of the hiring itself, and, as to tenancies from month to month, to take effect at the expiration of not less than 30 days, but if that change takes effect within a rental term, the rent accruing from the first day of the term to the date of that change shall be computed at the rental rate obtained immediately prior to that change; provided, however, that it shall be competent for the parties to provide by an agreement in writing that a notice changing the terms thereof may be given at any time not less than seven days before the expiration of a term, to be effective upon the expiration of the term.
(2)The notice, when served upon the tenant, shall in and of itself operate and be effectual to create and establish, as a part of the lease, the terms, rents, and conditions specified in the notice, if the tenant shall continue to hold the premises after the notice takes effect.
(b)(1)In all leases of a residential dwelling, commercial real property by a qualified commercial tenant, or of any interest therein, from week to week, month to month, or other period less than a month, the landlord may increase the rent provided in the lease or rental agreement, upon giving written notice to the tenant, as follows, by either of the following procedures:
(A)By delivering a copy to the tenant personally.
(B)By serving a copy by mail under the procedures prescribed in Section 1013 of the Code of Civil Procedure.
(2)If the proposed rent increase for that tenant is 10 percent or less of the rental amount charged to that tenant at any time during the 12 months before the effective date of the increase, either in and of itself or when combined with any other rent increases for the 12 months before the effective date of the increase, the notice shall be delivered at least 30 days before the effective date of the increase, and subject to Section 1013 of the Code of Civil Procedure if served by mail.
(3)(A)If the proposed rent increase for that tenant is greater than 10 percent of the rental amount charged to that tenant at any time during the 12 months before the effective date of the increase, either in and of itself or when combined with any other rent increases for the 12 months before the effective date of the increase, the notice shall be delivered at least 90 days before the effective date of the increase, and subject to Section 1013 of the Code of Civil Procedure if served by mail.
(B)If the proposed rent increase for that tenant is caused by a change in a tenants income or family composition as determined by a recertification required by statute or regulation, the notice shall be delivered at least 30 days before the effective date of the increase as described in paragraph (2), and subparagraph (A) of this paragraph shall not apply.
(4)A landlord of a commercial real property shall include in the notice information on the provisions of this subdivision.
(5)In all leases for commercial real property by a qualified commercial tenant, a rent increase shall not be effective until the notice period required by this subdivision has expired.
(6)Notwithstanding any other provision of law, a violation of this subdivision by a landlord of a commercial real property does not entitle a qualified commercial tenant to civil penalties.
(7)For the purposes of this subdivision, the following definitions apply:
(A)Commercial real property means all real property in this state, except dwelling units subject to Chapter 2 (commencing with Section 1940) of Title 5 of Part 4 of Division 3, mobilehomes as defined in Section 798.3, and recreational vehicles as defined in Section 799.29.
(B)Microenterprise has the same meaning as that term is defined in subdivision (a) of Section 18000 of the Business and Professions Code.
(C)Nonprofit organization means any private, nonprofit organization that qualifies under Section 501(c)(3) of the United States Internal Revenue Code of 1986.
(D)Qualified commercial tenant means a tenant of commercial real property that meets both of the following requirements:
(i)The tenant is a microenterprise, a restaurant with fewer than 10 employees, or a nonprofit organization with fewer than 20 employees.
(ii)(I)Subject to subclause (II), the tenant has provided the landlord, within the previous 12 months, a written notice that the tenant is a qualified commercial tenant and a self-attestation regarding the number of employees, at such time the protections under this subdivision come into place.
(II)Unless the tenancy is from week to week, month to month, or other period less than a month, the tenant provided the notice and self-attestation described in subclause (I) before or upon execution of the lease, and annually thereafter, at such time the protections under this subdivision come into place.
(c)If a state or federal statute, state or federal regulation, recorded regulatory agreement, or contract provides for a longer period of notice regarding a rent increase than that provided in subdivision (a) or (b), the personal service or mailing of the notice shall be in accordance with the longer period.
SEC. 2.Section 1632 of the Civil Code is amended to read:1632.(a)The Legislature hereby finds and declares all of the following:
(1)This section was enacted in 1976 to increase consumer information and protections for the states sizeable and growing Spanish-speaking population.
(2)Since 1976, the states population has become increasingly diverse and the number of Californians who speak languages other than English as their primary language at home has increased dramatically.
(3)According to data from the American Community Survey, which has replaced the decennial census for detailed socioeconomic information about United States residents, approximately 15.2 million Californians speak a language other than English at home, based on data from combined years 2009 through 2011. This compares to approximately 19.6 million people who speak only English at home. Among the Californians who speak a language other than English at home, approximately 8.4 million speak English very well, and another 3 million speak English well. The remaining 3.8 million Californians surveyed do not speak English well or do not speak English at all. Among this group, the five languages other than English that are most widely spoken at home are Spanish, Chinese, Tagalog, Vietnamese, and Korean. These five languages are spoken at home by approximately 3.5 million of the 3.8 million Californians with limited or no English proficiency, who speak a language other than English at home.
(b)A person engaged in a trade or business who negotiates primarily in Spanish, Chinese, Tagalog, Vietnamese, or Korean, orally or in writing, in the course of entering into any of the following, shall deliver to the other party to the contract or agreement, and any other person who will be signing the contract or agreement, and before the execution thereof, a translation of the contract or agreement in the language in which the contract or agreement was negotiated, that includes a translation of every term and condition in that contract or agreement:
(1)A contract or agreement subject to the provisions of Title 2 (commencing with Section 1801) of, and Chapter 2b (commencing with Section 2981) and Chapter 2d (commencing with Section 2985.7) of Title 14 of, Part 4 of Division 3.
(2)A loan or extension of credit secured other than by real property, or unsecured, for use primarily for personal, family, or household purposes.
(3)A lease, sublease, rental contract or agreement, or other term of tenancy contract or agreement, for a period of longer than one month, covering a dwelling, an apartment, or mobilehome, or other dwelling unit normally occupied as a residence.
(4)Notwithstanding paragraph (2), a loan or extension of credit for use primarily for personal, family, or household purposes in which the loan or extension of credit is subject to the provisions of Article 7 (commencing with Section 10240) of Chapter 3 of Part 1 of Division 4 of the Business and Professions Code, or Division 7 (commencing with Section 18000), or Division 9 (commencing with Section 22000) of the Financial Code.
(5)Notwithstanding paragraph (2), a reverse mortgage as described in Chapter 8 (commencing with Section 1923) of Title 4 of Part 4 of Division 3.
(6)A contract or agreement, containing a statement of fees or charges, entered into for the purpose of obtaining legal services, when the person who is engaged in business is currently licensed to practice law pursuant to Chapter 4 (commencing with Section 6000) of Division 3 of the Business and Professions Code.
(7)A foreclosure consulting contract subject to Article 1.5 (commencing with Section 2945) of Chapter 2 of Title 14 of Part 4 of Division 3.
(8)A lease, sublease, rental contract or agreement, or other term of tenancy contract or agreement covering a nonresidential-zoned commercial space entered into between a landlord and a qualified commercial tenant, on or after January 1, 2025.
(c)Notwithstanding subdivision (b), for a loan subject to this part and to Article 7 (commencing with Section 10240) of Chapter 3 of Part 1 of Division 4 of the Business and Professions Code, the delivery of a translation of the statement to the borrower required by Section 10240 of the Business and Professions Code in any of the languages specified in subdivision (b) in which the contract or agreement was negotiated, is in compliance with subdivision (b).
(d)At the time and place where a lease, sublease, or rental contract or agreement described in subdivision (b) is executed, notice in any of the languages specified in subdivision (b) in which the contract or agreement was negotiated shall be provided to the lessee or tenant.
(e)Provision by a supervised financial organization of a translation of the disclosures required by Regulation M or Regulation Z, and, if applicable, Division 7 (commencing with Section 18000) or Division 9 (commencing with Section 22000) of the Financial Code in any of the languages specified in subdivision (b) in which the contract or agreement was negotiated, prior to the execution of the contract or agreement, shall also be deemed in compliance with the requirements of subdivision (b) with regard to the original contract or agreement.
(1)Regulation M and Regulation Z mean any rule, regulation, or interpretation promulgated by the Board of Governors of the Federal Reserve System and any interpretation or approval issued by an official or employee duly authorized by the board to issue interpretations or approvals dealing with, respectively, consumer leasing or consumer lending, pursuant to the Federal Truth in Lending Act, as amended (15 U.S.C. Sec. 1601 et seq.).
(2)As used in this section, supervised financial organization means a bank, savings association as defined in Section 5102 of the Financial Code, credit union, or holding company, affiliate, or subsidiary thereof, or a person subject to Article 7 (commencing with Section 10240) of Chapter 3 of Part 1 of Division 4 of the Business and Professions Code, or Division 7 (commencing with Section 18000) or Division 9 (commencing with Section 22000) of the Financial Code.
(f)At the time and place where a contract or agreement described in paragraph (1) or (2) of subdivision (b) is executed, a notice in any of the languages specified in subdivision (b) in which the contract or agreement was negotiated shall be conspicuously displayed to the effect that the person described in subdivision (b) is required to provide a contract or agreement in the language in which the contract or agreement was negotiated, or a translation of the disclosures required by law in the language in which the contract or agreement was negotiated, as the case may be. If a person described in subdivision (b) does business at more than one location or branch, the requirements of this section shall apply only with respect to the location or branch at which the language in which the contract or agreement was negotiated is used.
(g)(1)The term contract or agreement, as used in this section, means the document creating the rights and obligations of the parties and includes any subsequent document making substantial changes in the rights and obligations of the parties. The term contract or agreement does not include any subsequent documents authorized or contemplated by the original document such as periodic statements, sales slips or invoices representing purchases made pursuant to a credit card agreement, a retail installment contract or account or other revolving sales or loan account, memoranda of purchases in an add-on sale, or refinancing of a purchase as provided by, or pursuant to, the original document.
(2)The term contract or agreement does not include a home improvement contract as defined in Sections 7151.2 and 7159 of the Business and Professions Code, nor does it include plans, specifications, description of work to be done and materials to be used, or collateral security taken or to be taken for the retail buyers obligation contained in a contract for the installation of goods by a contractor licensed pursuant to Chapter 9 (commencing with Section 7000) of Division 3 of the Business and Professions Code, if the home improvement contract or installation contract is otherwise a part of a contract described in subdivision (b).
(3)Matters ordinarily incorporated by reference in contracts or agreements as described in paragraph (3) of subdivision (b), including, but not limited to, rules and regulations governing a tenancy and inventories of furnishings to be provided by the person described in subdivision (b), are not included in the term contract or agreement.
(h)(1)This section does not apply to a person engaged in a trade or business who negotiates primarily in a language other than English, as described by subdivision (b), if the party with whom that person is negotiating is a buyer of goods or services, or receives a loan or extension of credit, or enters an agreement obligating that party as a tenant, lessee, or sublessee, or similarly obligates the party by contract or lease, and the party negotiates the terms of the contract, lease, or other obligation through the partys own interpreter.
(2)As used in this subdivision, the partys own interpreter means a person who is not a minor and who is able to speak fluently and read with full understanding both the English language and any of the languages specified in subdivision (b) in which the contract, lease, or other obligation was negotiated, and who is not employed by, or whose service is not made available through, the person engaged in the trade or business.
(3)This subdivision does not apply to a contract or agreement described in paragraph (8) of subdivision (b).
(i)Notwithstanding subdivision (b), a translation may retain the following elements of the executed English-language contract or agreement without translation: names and titles of individuals and other persons, addresses, brand names, trade names, trademarks, registered service marks, full or abbreviated designations of the make and model of goods or services, alphanumeric codes, numerals, dollar amounts expressed in numerals, dates, and individual words or expressions having no generally accepted non-English translation. It is permissible, but not required, that this translation be signed.
(j)The terms of the contract or agreement that is executed in the English language shall determine the rights and obligations of the parties. However, the translation of the contract or the disclosures required by subdivision (e) in any of the languages specified in subdivision (b) in which the contract or agreement was negotiated shall be admissible in evidence only to show that no contract was entered into because of a substantial difference in the material terms and conditions of the contract and the translation.
(k)(1)Upon a failure to comply with the provisions of this section, the person aggrieved may rescind the contract or agreement in the manner provided by this chapter. If the contract for a consumer credit sale or consumer lease that has been sold and assigned to a financial institution is rescinded pursuant to this subdivision, the consumer shall make restitution to and have restitution made by the person with whom the consumer made the contract and shall give notice of rescission to the assignee. Notwithstanding that the contract was assigned without recourse, the assignment shall be deemed rescinded, and the assignor shall promptly repurchase the contract from the assignee.
(2)Notwithstanding paragraph (1), only a qualified commercial tenant may rescind a contract described in paragraph (8) of subdivision (b) pursuant to this subdivision.
(l)For the purposes of this section, the following definitions apply:
(1)Commercial real property means all real property in this state, except dwelling units subject to Chapter 2 (commencing with Section 1940) of Title 5 of Part 4, mobilehomes, as defined in Section 798.3, and recreational vehicles, as defined in Section 799.29.
(2)Microenterprise has the same meaning as that term is defined in subdivision (a) of Section 18000 of the Business and Professions Code.
(3)Nonprofit organization means any private, nonprofit organization that qualifies under Section 501(c)(3) of the United States Internal Revenue Code of 1986.
(4)Qualified commercial tenant means a tenant of commercial real property that meets both of the following requirements:
(A)The tenant is a microenterprise, a restaurant with fewer than 10 employees, or a nonprofit organization with fewer than 20 employees.
(B)(i)Subject to clause (ii), the tenant has provided the landlord, within the prior 12 months, a written notice that the tenant is a qualified commercial tenant and a self-attestation regarding the number of employees, at such time the protections under this section come into place.
(ii)Unless the tenancy is from week to week, month to month, or other period less than a month, the tenant provided the notice and self-attestation described in clause (i) before or upon execution of the lease, and annually thereafter, at such time the protections under this section come into place.
SEC. 2.5.Section 1632 of the Civil Code is amended to read:1632.(a)The Legislature hereby finds and declares all of the following:
(1)This section was enacted in 1976 to increase consumer information and protections for the states sizeable and growing Spanish-speaking population.
(2)Since 1976, the states population has become increasingly diverse and the number of Californians who speak languages other than English as their primary language at home has increased dramatically.
(3)According to data from the American Community Survey, which has replaced the decennial census for detailed socioeconomic information about United States residents, approximately 15.2 million Californians speak a language other than English at home, based on data from combined years 2009 through 2011. This compares to approximately 19.6 million people who speak only English at home. Among the Californians who speak a language other than English at home, approximately 8.4 million speak English very well, and another 3 million speak English well. The remaining 3.8 million Californians surveyed do not speak English well or do not speak English at all. Among this group, the five languages other than English that are most widely spoken at home are Spanish, Chinese, Tagalog, Vietnamese, and Korean. These five languages are spoken at home by approximately 3.5 million of the 3.8 million Californians with limited or no English proficiency, who speak a language other than English at home.
(b)A person engaged in a trade or business who negotiates primarily in Spanish, Chinese, Tagalog, Vietnamese, or Korean, orally or in writing, in the course of entering into any of the following, shall deliver to the other party to the contract or agreement, and any other person who will be signing the contract or agreement, and before the execution thereof, a translation of the contract or agreement in the language in which the contract or agreement was negotiated, that includes a translation of every term and condition in that contract or agreement:
(1)A contract or agreement subject to the provisions of Title 2 (commencing with Section 1801) of, and Chapter 2b (commencing with Section 2981) and Chapter 2d (commencing with Section 2985.7) of Title 14 of, Part 4 of Division 3.
(2)A loan or extension of credit secured other than by real property, or unsecured, for use primarily for personal, family, or household purposes.
(3)A lease, sublease, rental contract or agreement, or other term of tenancy contract or agreement, for a period of longer than one month, covering a dwelling, an apartment, or mobilehome, or other dwelling unit normally occupied as a residence.
(4)Notwithstanding paragraph (2), a loan or extension of credit for use primarily for personal, family, or household purposes in which the loan or extension of credit is subject to the provisions of Article 7 (commencing with Section 10240) of Chapter 3 of Part 1 of Division 4 of the Business and Professions Code, or Division 7 (commencing with Section 18000), or Division 9 (commencing with Section 22000) of the Financial Code.
(5)Notwithstanding paragraph (2), a reverse mortgage as described in Chapter 8 (commencing with Section 1923) of Title 4 of Part 4 of Division 3.
(6)A contract or agreement, containing a statement of fees or charges, entered into for the purpose of obtaining legal services, when the person who is engaged in business is currently licensed to practice law pursuant to Chapter 4 (commencing with Section 6000) of Division 3 of the Business and Professions Code.
(7)A foreclosure consulting contract subject to Article 1.5 (commencing with Section 2945) of Chapter 2 of Title 14 of Part 4 of Division 3.
(8)A lease, sublease, rental contract or agreement, or other term of tenancy contract or agreement covering a nonresidential-zoned commercial space entered into between a landlord and a qualified commercial tenant, on or after January 1, 2025.
(c)Notwithstanding subdivision (b), for a loan subject to this part and to Article 7 (commencing with Section 10240) of Chapter 3 of Part 1 of Division 4 of the Business and Professions Code, the delivery of a translation of the statement to the borrower required by Section 10240 of the Business and Professions Code in any of the languages specified in subdivision (b) in which the contract or agreement was negotiated, is in compliance with subdivision (b).
(d)At the time and place where a lease, sublease, or rental contract or agreement described in subdivision (b) is executed, notice in any of the languages specified in subdivision (b) in which the contract or agreement was negotiated shall be provided to the lessee or tenant.
(e)Provision by a supervised financial organization of a translation of the disclosures required by Regulation M or Regulation Z, and, if applicable, Division 7 (commencing with Section 18000) or Division 9 (commencing with Section 22000) of the Financial Code in any of the languages specified in subdivision (b) in which the contract or agreement was negotiated, before the execution of the contract or agreement, shall also be deemed in compliance with the requirements of subdivision (b) with regard to the original contract or agreement.
(1)Regulation M and Regulation Z mean any rule, regulation, or interpretation promulgated by the Board of Governors of the Federal Reserve System and any interpretation or approval issued by an official or employee duly authorized by the board to issue interpretations or approvals dealing with, respectively, consumer leasing or consumer lending, pursuant to the Federal Truth in Lending Act, as amended (15 U.S.C. Sec. 1601 et seq.).
(2)As used in this section, supervised financial organization means a bank, savings association as defined in Section 5102 of the Financial Code, credit union, or holding company, affiliate, or subsidiary thereof, or a person subject to Article 7 (commencing with Section 10240) of Chapter 3 of Part 1 of Division 4 of the Business and Professions Code, or Division 7 (commencing with Section 18000) or Division 9 (commencing with Section 22000) of the Financial Code.
(f)At the time and place where a contract or agreement described in paragraph (1) or (2) of subdivision (b) is executed, a notice in any of the languages specified in subdivision (b) in which the contract or agreement was negotiated shall be conspicuously displayed to the effect that the person described in subdivision (b) is required to provide a contract or agreement in the language in which the contract or agreement was negotiated, or a translation of the disclosures required by law in the language in which the contract or agreement was negotiated, as the case may be. If a person described in subdivision (b) does business at more than one location or branch, the requirements of this section shall apply only with respect to the location or branch at which the language in which the contract or agreement was negotiated is used.
(g)(1)The term contract or agreement, as used in this section, means the document creating the rights and obligations of the parties and includes any subsequent document making substantial changes in the rights and obligations of the parties. The term contract or agreement does not include any subsequent documents authorized or contemplated by the original document such as periodic statements, sales slips or invoices representing purchases made pursuant to a credit card agreement, a retail installment contract or account or other revolving sales or loan account, memoranda of purchases in an add-on sale, or refinancing of a purchase as provided by, or pursuant to, the original document.
(2)The term contract or agreement does not include a home improvement contract as defined in Sections 7151.2 and 7159 of the Business and Professions Code, nor does it include plans, specifications, description of work to be done and materials to be used, or collateral security taken or to be taken for the retail buyers obligation contained in a contract for the installation of goods by a contractor licensed pursuant to Chapter 9 (commencing with Section 7000) of Division 3 of the Business and Professions Code, if the home improvement contract or installation contract is otherwise a part of a contract described in subdivision (b).
(3)Matters ordinarily incorporated by reference in contracts or agreements as described in paragraph (3) of subdivision (b), including, but not limited to, rules and regulations governing a tenancy and inventories of furnishings to be provided by the person described in subdivision (b), are not included in the term contract or agreement.
(h)(1) This section does not apply to a person engaged in a trade or business who negotiates primarily in a language other than English, as described by subdivision (b), if the party with whom that person is negotiating is a buyer of goods or services, or receives a loan or extension of credit, or enters an agreement obligating that party as a tenant, lessee, or sublessee, or similarly obligates the party by contract or lease, and the party negotiates the terms of the contract, lease, or other obligation through the partys own interpreter.
(2) As used in this subdivision, the partys own interpreter means a person who is not a minor and who is able to speak fluently and read with full understanding both the English language and any of the languages specified in subdivision (b) in which the contract, lease, or other obligation was negotiated, and who is not employed by, or whose service is not made available through, the person engaged in the trade or business.
(3)This subdivision does not apply to a contract or agreement described in paragraph (8) of subdivision (b).
(i)Notwithstanding subdivision (b), a translation may retain the following elements of the executed English-language contract or agreement without translation: names and titles of individuals and other persons, addresses, brand names, trade names, trademarks, registered service marks, full or abbreviated designations of the make and model of goods or services, alphanumeric codes, numerals, dollar amounts expressed in numerals, dates, and individual words or expressions having no generally accepted non-English translation. It is permissible, but not required, that this translation be signed.
(j)The terms of the contract or agreement that is executed in the English language shall determine the rights and obligations of the parties. However, the translation of the contract or the disclosures required by subdivision (e) in any of the languages specified in subdivision (b) in which the contract or agreement was negotiated shall be admissible in evidence only to show that no contract was entered into because of a substantial difference in the material terms and conditions of the contract and the translation.
(k)(1)Upon a failure to comply with the provisions of this section, the person aggrieved may rescind the contract or agreement in the manner provided by this chapter. If the contract for a consumer credit sale or consumer lease that has been sold and assigned to a financial institution is rescinded pursuant to this subdivision, the consumer shall make restitution to and have restitution made by the person with whom the consumer made the contract and shall give notice of rescission to the assignee. Notwithstanding that the contract was assigned without recourse, the assignment shall be deemed rescinded, and the assignor shall promptly repurchase the contract from the assignee.
(2)Notwithstanding paragraph (1), only a qualified commercial tenant may rescind a contract described in paragraph (8) of subdivision (b) pursuant to this subdivision.
(l)Any waiver of a provision of this section is contrary to public policy and is void and unenforceable.
(m)For the purposes of this section, the following definitions apply:
(1)Commercial real property means all real property in this state, except dwelling units subject to Chapter 2 (commencing with Section 1940) of Title 5 of Part 4, mobilehomes, as defined in Section 798.3, and recreational vehicles, as defined in Section 799.29.
(2)Microenterprise has the same meaning as that term is defined in subdivision (a) of Section 18000 of the Business and Professions Code.
(3)Nonprofit organization means any private, nonprofit organization that qualifies under Section 501(c)(3) of the United States Internal Revenue Code of 1986.
(4)Qualified commercial tenant means a tenant of commercial real property that meets both of the following requirements:
(A)The tenant is a microenterprise, a restaurant with fewer than 10 employees, or a nonprofit organization with fewer than 20 employees.
(B)(i)Subject to clause (ii), the tenant has provided the landlord, within the prior 12 months, a written notice that the tenant is a qualified commercial tenant and a self-attestation regarding the number of employees, at such time the protections under this section come into place.
(ii)Unless the tenancy is from week to week, month to month, or other period less than a month, the tenant provided the notice and self-attestation described in clause (i) before or upon execution of the lease, and annually thereafter, at such time the protections under this section come into place.
SEC. 3.Section 1946.1 of the Civil Code is amended to read:1946.1.(a)Notwithstanding Section 1946, a hiring of residential real property or commercial real property by a qualified commercial tenant for a term not specified by the parties, is deemed to be renewed as stated in Section 1945, at the end of the term implied by law unless one of the parties gives written notice to the other of the partys intention to terminate the tenancy, as provided in this section.
(b)An owner of a residential dwelling or commercial real property hired by a qualified commercial tenant giving notice pursuant to this section shall give notice at least 60 days prior to the proposed date of termination. A tenant giving notice pursuant to this section shall give notice for a period at least as long as the term of the periodic tenancy prior to the proposed date of termination.
(c)Notwithstanding subdivision (b), an owner of a residential dwelling or commercial real property hired by a qualified commercial tenant giving notice pursuant to this section shall give notice at least 30 days prior to the proposed date of termination if a tenant or resident has resided in the dwelling or occupied the property for less than one year.
(d)Notwithstanding subdivision (b), an owner of a residential dwelling giving notice pursuant to this section shall give notice at least 30 days prior to the proposed date of termination if all of the following apply:
(1)The dwelling or unit is alienable separate from the title to any other dwelling unit.
(2)The owner has contracted to sell the dwelling or unit to a bona fide purchaser for value, and has established an escrow with a title insurer or an underwritten title company, as defined in Sections 12340.4 and 12340.5 of the Insurance Code, respectively, a licensed escrow agent, as defined in Sections 17004 and 17200 of the Financial Code, or a licensed real estate broker, as defined in Section 10131 of the Business and Professions Code.
(3)The purchaser is a natural person or persons.
(4)The notice is given no more than 120 days after the escrow has been established.
(5)Notice was not previously given to the tenant pursuant to this section.
(6)The purchaser in good faith intends to reside in the property for at least one full year after the termination of the tenancy.
(e)After an owner has given notice of the owners intention to terminate the tenancy pursuant to this section, a tenant may also give notice of the tenants intention to terminate the tenancy pursuant to this section, provided that the tenants notice is for a period at least as long as the term of the periodic tenancy and the proposed date of termination occurs before the owners proposed date of termination.
(f)The notices required by this section shall be given in the manner prescribed in Section 1162 of the Code of Civil Procedure or by sending a copy by certified or registered mail.
(g)This section may not be construed to affect the authority of a public entity that otherwise exists to regulate or monitor the basis for eviction.
(h)A notice given by an owner pursuant to this section shall contain, in substantially the same form, the following:
State law permits former tenants to reclaim abandoned personal property left at the former address of the tenant, subject to certain conditions. You may or may not be able to reclaim property without incurring additional costs, depending on the cost of storing the property and the length of time before it is reclaimed. In general, these costs will be lower the sooner you contact your former landlord after being notified that property belonging to you was left behind after you moved out.
(i)A landlord of a commercial real property shall include in the notice required by this section information on the provisions of this section.
(j)For the purposes of this section, the following definitions apply:
(1)Commercial real property means all real property in this state, except dwelling units subject to this chapter, mobilehomes as defined in Section 798.3, and recreational vehicles as defined in Section 799.29.
(2)Microenterprise has the same meaning as that term is defined in subdivision (a) of Section 18000 of the Business and Professions Code.
(3)Nonprofit organization means any private, nonprofit organization that qualifies under Section 501(c)(3) of the United States Internal Revenue Code of 1986.
(4)Qualified commercial tenant means a tenant of commercial real property that meets both of the following requirements:
(A)The tenant is a microenterprise, a restaurant with fewer than 10 employees, or a nonprofit organization with fewer than 20 employees.
(B)(i)Subject to clause (ii), the tenant has provided the landlord, within the previous 12 months, a written notice that the tenant is a qualified commercial tenant and a self-attestation regarding the number of employees, at such time the protections under this section come into place.
(ii)Unless the tenancy is from week to week, month to month, or other period less than a month, the tenant provided the notice and self-attestation described in clause (i) before or upon execution of the lease, and annually thereafter, at such time the protections under this section come into place.
SEC. 3.5.Section 1946.1 of the Civil Code is amended to read:1946.1.(a)Notwithstanding Section 1946, a hiring of residential real property or commercial real property by a qualified commercial tenant for a term not specified by the parties, is deemed to be renewed as stated in Section 1945, at the end of the term implied by law unless one of the parties gives written notice to the other of the partys intention to terminate the tenancy, as provided in this section.
(b)An owner of a residential dwelling or commercial real property hired by a qualified commercial tenant giving notice pursuant to this section shall give notice at least 60 days prior to the proposed date of termination. A tenant giving notice pursuant to this section shall give notice for a period at least as long as the term of the periodic tenancy prior to the proposed date of termination.
(c)Notwithstanding subdivision (b), an owner of a residential dwelling or commercial real property hired by a qualified commercial tenant giving notice pursuant to this section shall give notice at least 30 days prior to the proposed date of termination if a tenant or resident has resided in the dwelling or occupied the property for less than one year.
(d)Notwithstanding subdivision (b), an owner of a residential dwelling giving notice pursuant to this section shall give notice at least 30 days prior to the proposed date of termination if all of the following apply:
(1)The dwelling or unit is alienable separate from the title to any other dwelling unit.
(2)The owner has contracted to sell the dwelling or unit to a bona fide purchaser for value, and has established an escrow with a title insurer or an underwritten title company, as defined in Sections 12340.4 and 12340.5 of the Insurance Code, respectively, a licensed escrow agent, as defined in Sections 17004 and 17200 of the Financial Code, or a licensed real estate broker, as defined in Section 10131 of the Business and Professions Code.
(3)The purchaser is a natural person or persons.
(4)The notice is given no more than 120 days after the escrow has been established.
(5)Notice was not previously given to the tenant pursuant to this section.
(6)The purchaser in good faith intends to reside in the property for at least one full year after the termination of the tenancy.
(e)After an owner has given notice of the owners intention to terminate the tenancy pursuant to this section, a tenant may also give notice of the tenants intention to terminate the tenancy pursuant to this section, provided that the tenants notice is for a period at least as long as the term of the periodic tenancy and the proposed date of termination occurs before the owners proposed date of termination.
(f)The notices required by this section shall be given in the manner prescribed in Section 1162 of the Code of Civil Procedure or by sending a copy by certified or registered mail.
(g)This section may not be construed to affect the authority of a public entity that otherwise exists to regulate or monitor the basis for eviction.
(h)A notice given by an owner pursuant to this section shall contain, in substantially the same form, the following:
State law permits former tenants to reclaim abandoned personal property left at the former address of the tenant, subject to certain conditions. You may or may not be able to reclaim property without incurring additional costs, depending on the cost of storing the property and the length of time before it is reclaimed. In general, these costs will be lower the sooner you contact your former landlord after being notified that property belonging to you was left behind after you moved out.
(i)A landlord or its agent shall not charge a tenant a fee for serving, posting, or otherwise delivering any notice, as described in this section.
(j)A landlord of a commercial real property shall include in the notice required by this section information on the provisions of this section.
(k)For the purposes of this section, the following definitions apply:
(1)Commercial real property means all real property in this state, except dwelling units subject to this chapter, mobilehomes as defined in Section 798.3, and recreational vehicles as defined in Section 799.29.
(2)Microenterprise has the same meaning as that term is defined in subdivision (a) of Section 18000 of the Business and Professions Code.
(3)Nonprofit organization means any private, nonprofit organization that qualifies under Section 501(c)(3) of the United States Internal Revenue Code of 1986.
(4)Qualified commercial tenant means a tenant of commercial real property that meets both of the following requirements:
(A)The tenant is a microenterprise, a restaurant with fewer than 10 employees, or a nonprofit organization with fewer than 20 employees.
(B)(i)Subject to clause (ii), the tenant has provided the landlord, within the previous 12 months, a written notice that the tenant is a qualified commercial tenant and a self-attestation regarding the number of employees, at such time the protections under this section come into place.
(ii)Unless the tenancy is from week to week, month to month, or other period less than a month, the tenant provided the notice and self-attestation described in clause (i) before or upon execution of the lease, and annually thereafter, at such time the protections under this section come into place.
SEC. 4.Section 1950.9 is added to the Civil Code, to read:1950.9.(a)A landlord of a commercial real property shall not charge a qualified commercial tenant a fee to recover building operating costs unless all of the following apply:
(1)The building operating costs are allocated proportionately per tenant, by square footage, or another method as substantiated through supporting documentation provided by the landlord to the qualified commercial tenant.
(2)The building operating costs have been incurred within the previous 18 months, or are reasonably expected to be incurred within the next 12 months based on reasonable estimates.
(3)Before the execution of the lease, the landlord provides the prospective qualified commercial tenant a paper or electronic notice stating that the tenant may inspect any supporting documentation of building operating costs upon written request pursuant to paragraph (4).
(4)Within 30 days of a written request, the landlord provides the qualified commercial tenant supporting documentation of the previously incurred or reasonably expected building operating costs.
(5)The costs do not include expenses paid by a tenant directly to a third party.
(6)The costs do not include expenses for which a third party, tenant, or insurance reimbursed the landlord.
(b)A landlord of a commercial real property shall not charge a fee to recover any building operating costs from the qualified commercial tenant until the landlord provides the qualified commercial tenant supporting documentation.
(c)During the course of a commercial tenancy, the landlord shall not alter the method or formula used to allocate building operating costs to the qualified commercial tenant in a way that increases the qualified commercial tenants share of those costs, unless the qualified commercial tenant is provided with written notice of the change in the method or formula with supporting documentation of the basis of the alteration.
(d)In an action for an unlawful detainer, ejectment, or other action to recover possession based on a failure to pay a fee to recover building operating costs, a qualified commercial tenant may raise, as an affirmative defense, that the landlord violated this section.
(e)A landlord of a commercial real property who violates this section shall be liable to a qualified commercial tenant in a civil action for all of the following:
(1)Actual damages.
(2)In the courts discretion, reasonable attorneys fees and costs.
(3)Upon showing that the landlord, lessor, or their agent has acted willfully or with oppression, fraud, or malice both of the following:
(A)Three times the amount of actual damages.
(B)Punitive damages.
(f)The district attorney, city attorney, or county counsel in the jurisdiction in which the commercial real property is located, in the name of the city or county, may seek injunctive relief based on a violation of this section.
(g)Any waiver of a right under this section by a qualified commercial tenant shall be void as a matter of public policy.
(h)For the purposes of this section, the following definitions apply:
(1)Building operating costs means costs that are incurred on behalf of a tenant for the operation, maintenance, or repair of the commercial real property, including, but not limited to, maintenance of common areas, utilities that are not separately metered, and taxes or assessments charged to the landlord pursuant to property ownership.
(2)Commercial real property means all real property in this state, except dwelling units subject to this chapter, mobilehomes, as defined in Section 798.3, and recreational vehicles, as defined in Section 799.29.
(3)Microenterprise has the same meaning as that term is defined in subdivision (a) of Section 18000 of the Business and Professions Code.
(4)Nonprofit organization means any private nonprofit organization that qualifies under Section 501(c)(3) of the United States Internal Revenue Code of 1986.
(5)Qualified commercial tenant means a tenant of commercial real property that meets both of the following requirements:
(A)The tenant is a microenterprise, a restaurant with fewer than 10 employees, or a nonprofit organization with fewer than 20 employees.
(B)(i)Subject to clause (ii), the tenant has provided the landlord, within the previous 12 months, a written notice that the tenant is a qualified commercial tenant and a self-attestation regarding the number of employees, at such time the protections under this section come into place.
(ii)Unless the tenancy is from week to week, month to month, or other period less than a month, the tenant provided the notice and self-attestation described in clause (i) before or upon execution of the lease, and annually thereafter, at such time the protections under this section come into place.
(6)Supporting documentation means a dated and itemized quote, contract, receipt, or invoice from a licensed contractor or a provider of services that includes, but is not limited to, both of the following:
(A)A tabulation showing how the costs are allocated among tenants in compliance with paragraph (1) of subdivision (a).
(B)A signed and dated attestation by the landlord that the documentation and costs are true and correct.
(i)This section shall only apply to the following:
(1)Leases executed or tenancies commenced or renewed on or after January 1, 2025.
(2)A tenancy that is from week to week, month to month, or other period less than a month.
(3)Leases executed or tenancies commenced before January 1, 2025, that do not contain a provision regarding building operating costs.
(j)This section does not apply to assessment levied pursuant to Part 7 (commencing with Section 36600) of Division 18 of the Streets and Highways Code.
SEC. 5.Section 2.5 of this bill incorporates amendments to Section 1632 of the Civil Code proposed by both this bill and Assembly Bill 3281. That section of this bill shall only become operative if (1) both bills are enacted and become effective on or before January 1, 2025, (2) each bill amends Section 1632 of the Civil Code, and (3) this bill is enacted after Assembly Bill 3281, in which case Section 2 of this bill shall not become operative.
SEC. 6.Section 3.5 of this bill incorporates amendments to Section 1946.1 of the Civil Code proposed by both this bill and Senate Bill 611. That section of this bill shall only become operative if (1) both bills are enacted and become effective on or before January 1, 2025, (2) each bill amends Section 1946.1 of the Civil Code, and (3) this bill is enacted after Senate Bill 611, in which case Section 3 of this bill shall not become operative.
(a)(1)Except as provided in subdivision (b), in all leases of lands or tenements, or of any interest therein, from week to week, month to month, or other period less than a month, the landlord may, upon giving notice in writing to the tenant, in the manner prescribed by Section 1162 of the Code of Civil Procedure, change the terms of the lease to take effect, as to tenancies for less than one month, upon the expiration of a period at least as long as the term of the hiring itself, and, as to tenancies from month to month, to take effect at the expiration of not less than 30 days, but if that change takes effect within a rental term, the rent accruing from the first day of the term to the date of that change shall be computed at the rental rate obtained immediately prior to that change; provided, however, that it shall be competent for the parties to provide by an agreement in writing that a notice changing the terms thereof may be given at any time not less than seven days before the expiration of a term, to be effective upon the expiration of the term.
(2)The notice, when served upon the tenant, shall in and of itself operate and be effectual to create and establish, as a part of the lease, the terms, rents, and conditions specified in the notice, if the tenant shall continue to hold the premises after the notice takes effect.
(b)(1)In all leases of a residential dwelling, commercial real property by a qualified commercial tenant, or of any interest therein, from week to week, month to month, or other period less than a month, the landlord may increase the rent provided in the lease or rental agreement, upon giving written notice to the tenant, as follows, by either of the following procedures:
(A)By delivering a copy to the tenant personally.
(B)By serving a copy by mail under the procedures prescribed in Section 1013 of the Code of Civil Procedure.
(2)If the proposed rent increase for that tenant is 10 percent or less of the rental amount charged to that tenant at any time during the 12 months before the effective date of the increase, either in and of itself or when combined with any other rent increases for the 12 months before the effective date of the increase, the notice shall be delivered at least 30 days before the effective date of the increase, and subject to Section 1013 of the Code of Civil Procedure if served by mail.
(3)(A)If the proposed rent increase for that tenant is greater than 10 percent of the rental amount charged to that tenant at any time during the 12 months before the effective date of the increase, either in and of itself or when combined with any other rent increases for the 12 months before the effective date of the increase, the notice shall be delivered at least 90 days before the effective date of the increase, and subject to Section 1013 of the Code of Civil Procedure if served by mail.
(B)If the proposed rent increase for that tenant is caused by a change in a tenants income or family composition as determined by a recertification required by statute or regulation, the notice shall be delivered at least 30 days before the effective date of the increase as described in paragraph (2), and subparagraph (A) of this paragraph shall not apply.
(4)A landlord of a commercial real property shall include in the notice information on the provisions of this subdivision.
(5)In all leases for commercial real property by a qualified commercial tenant, a rent increase shall not be effective until the notice period required by this subdivision has expired.
(6)Notwithstanding any other provision of law, a violation of this subdivision by a landlord of a commercial real property does not entitle a qualified commercial tenant to civil penalties.
(7)For the purposes of this subdivision, the following definitions apply:
(A)Commercial real property means all real property in this state, except dwelling units subject to Chapter 2 (commencing with Section 1940) of Title 5 of Part 4 of Division 3, mobilehomes as defined in Section 798.3, and recreational vehicles as defined in Section 799.29.
(B)Microenterprise has the same meaning as that term is defined in subdivision (a) of Section 18000 of the Business and Professions Code.
(C)Nonprofit organization means any private, nonprofit organization that qualifies under Section 501(c)(3) of the United States Internal Revenue Code of 1986.
(D)Qualified commercial tenant means a tenant of commercial real property that meets both of the following requirements:
(i)The tenant is a microenterprise, a restaurant with fewer than 10 employees, or a nonprofit organization with fewer than 20 employees.
(ii)(I)Subject to subclause (II), the tenant has provided the landlord, within the previous 12 months, a written notice that the tenant is a qualified commercial tenant and a self-attestation regarding the number of employees, at such time the protections under this subdivision come into place.
(II)Unless the tenancy is from week to week, month to month, or other period less than a month, the tenant provided the notice and self-attestation described in subclause (I) before or upon execution of the lease, and annually thereafter, at such time the protections under this subdivision come into place.
(c)If a state or federal statute, state or federal regulation, recorded regulatory agreement, or contract provides for a longer period of notice regarding a rent increase than that provided in subdivision (a) or (b), the personal service or mailing of the notice shall be in accordance with the longer period.
SEC. 2.Section 1632 of the Civil Code is amended to read:1632.(a)The Legislature hereby finds and declares all of the following:
(1)This section was enacted in 1976 to increase consumer information and protections for the states sizeable and growing Spanish-speaking population.
(2)Since 1976, the states population has become increasingly diverse and the number of Californians who speak languages other than English as their primary language at home has increased dramatically.
(3)According to data from the American Community Survey, which has replaced the decennial census for detailed socioeconomic information about United States residents, approximately 15.2 million Californians speak a language other than English at home, based on data from combined years 2009 through 2011. This compares to approximately 19.6 million people who speak only English at home. Among the Californians who speak a language other than English at home, approximately 8.4 million speak English very well, and another 3 million speak English well. The remaining 3.8 million Californians surveyed do not speak English well or do not speak English at all. Among this group, the five languages other than English that are most widely spoken at home are Spanish, Chinese, Tagalog, Vietnamese, and Korean. These five languages are spoken at home by approximately 3.5 million of the 3.8 million Californians with limited or no English proficiency, who speak a language other than English at home.
(b)A person engaged in a trade or business who negotiates primarily in Spanish, Chinese, Tagalog, Vietnamese, or Korean, orally or in writing, in the course of entering into any of the following, shall deliver to the other party to the contract or agreement, and any other person who will be signing the contract or agreement, and before the execution thereof, a translation of the contract or agreement in the language in which the contract or agreement was negotiated, that includes a translation of every term and condition in that contract or agreement:
(1)A contract or agreement subject to the provisions of Title 2 (commencing with Section 1801) of, and Chapter 2b (commencing with Section 2981) and Chapter 2d (commencing with Section 2985.7) of Title 14 of, Part 4 of Division 3.
(2)A loan or extension of credit secured other than by real property, or unsecured, for use primarily for personal, family, or household purposes.
(3)A lease, sublease, rental contract or agreement, or other term of tenancy contract or agreement, for a period of longer than one month, covering a dwelling, an apartment, or mobilehome, or other dwelling unit normally occupied as a residence.
(4)Notwithstanding paragraph (2), a loan or extension of credit for use primarily for personal, family, or household purposes in which the loan or extension of credit is subject to the provisions of Article 7 (commencing with Section 10240) of Chapter 3 of Part 1 of Division 4 of the Business and Professions Code, or Division 7 (commencing with Section 18000), or Division 9 (commencing with Section 22000) of the Financial Code.
(5)Notwithstanding paragraph (2), a reverse mortgage as described in Chapter 8 (commencing with Section 1923) of Title 4 of Part 4 of Division 3.
(6)A contract or agreement, containing a statement of fees or charges, entered into for the purpose of obtaining legal services, when the person who is engaged in business is currently licensed to practice law pursuant to Chapter 4 (commencing with Section 6000) of Division 3 of the Business and Professions Code.
(7)A foreclosure consulting contract subject to Article 1.5 (commencing with Section 2945) of Chapter 2 of Title 14 of Part 4 of Division 3.
(8)A lease, sublease, rental contract or agreement, or other term of tenancy contract or agreement covering a nonresidential-zoned commercial space entered into between a landlord and a qualified commercial tenant, on or after January 1, 2025.
(c)Notwithstanding subdivision (b), for a loan subject to this part and to Article 7 (commencing with Section 10240) of Chapter 3 of Part 1 of Division 4 of the Business and Professions Code, the delivery of a translation of the statement to the borrower required by Section 10240 of the Business and Professions Code in any of the languages specified in subdivision (b) in which the contract or agreement was negotiated, is in compliance with subdivision (b).
(d)At the time and place where a lease, sublease, or rental contract or agreement described in subdivision (b) is executed, notice in any of the languages specified in subdivision (b) in which the contract or agreement was negotiated shall be provided to the lessee or tenant.
(e)Provision by a supervised financial organization of a translation of the disclosures required by Regulation M or Regulation Z, and, if applicable, Division 7 (commencing with Section 18000) or Division 9 (commencing with Section 22000) of the Financial Code in any of the languages specified in subdivision (b) in which the contract or agreement was negotiated, prior to the execution of the contract or agreement, shall also be deemed in compliance with the requirements of subdivision (b) with regard to the original contract or agreement.
(1)Regulation M and Regulation Z mean any rule, regulation, or interpretation promulgated by the Board of Governors of the Federal Reserve System and any interpretation or approval issued by an official or employee duly authorized by the board to issue interpretations or approvals dealing with, respectively, consumer leasing or consumer lending, pursuant to the Federal Truth in Lending Act, as amended (15 U.S.C. Sec. 1601 et seq.).
(2)As used in this section, supervised financial organization means a bank, savings association as defined in Section 5102 of the Financial Code, credit union, or holding company, affiliate, or subsidiary thereof, or a person subject to Article 7 (commencing with Section 10240) of Chapter 3 of Part 1 of Division 4 of the Business and Professions Code, or Division 7 (commencing with Section 18000) or Division 9 (commencing with Section 22000) of the Financial Code.
(f)At the time and place where a contract or agreement described in paragraph (1) or (2) of subdivision (b) is executed, a notice in any of the languages specified in subdivision (b) in which the contract or agreement was negotiated shall be conspicuously displayed to the effect that the person described in subdivision (b) is required to provide a contract or agreement in the language in which the contract or agreement was negotiated, or a translation of the disclosures required by law in the language in which the contract or agreement was negotiated, as the case may be. If a person described in subdivision (b) does business at more than one location or branch, the requirements of this section shall apply only with respect to the location or branch at which the language in which the contract or agreement was negotiated is used.
(g)(1)The term contract or agreement, as used in this section, means the document creating the rights and obligations of the parties and includes any subsequent document making substantial changes in the rights and obligations of the parties. The term contract or agreement does not include any subsequent documents authorized or contemplated by the original document such as periodic statements, sales slips or invoices representing purchases made pursuant to a credit card agreement, a retail installment contract or account or other revolving sales or loan account, memoranda of purchases in an add-on sale, or refinancing of a purchase as provided by, or pursuant to, the original document.
(2)The term contract or agreement does not include a home improvement contract as defined in Sections 7151.2 and 7159 of the Business and Professions Code, nor does it include plans, specifications, description of work to be done and materials to be used, or collateral security taken or to be taken for the retail buyers obligation contained in a contract for the installation of goods by a contractor licensed pursuant to Chapter 9 (commencing with Section 7000) of Division 3 of the Business and Professions Code, if the home improvement contract or installation contract is otherwise a part of a contract described in subdivision (b).
(3)Matters ordinarily incorporated by reference in contracts or agreements as described in paragraph (3) of subdivision (b), including, but not limited to, rules and regulations governing a tenancy and inventories of furnishings to be provided by the person described in subdivision (b), are not included in the term contract or agreement.
(h)(1)This section does not apply to a person engaged in a trade or business who negotiates primarily in a language other than English, as described by subdivision (b), if the party with whom that person is negotiating is a buyer of goods or services, or receives a loan or extension of credit, or enters an agreement obligating that party as a tenant, lessee, or sublessee, or similarly obligates the party by contract or lease, and the party negotiates the terms of the contract, lease, or other obligation through the partys own interpreter.
(2)As used in this subdivision, the partys own interpreter means a person who is not a minor and who is able to speak fluently and read with full understanding both the English language and any of the languages specified in subdivision (b) in which the contract, lease, or other obligation was negotiated, and who is not employed by, or whose service is not made available through, the person engaged in the trade or business.
(3)This subdivision does not apply to a contract or agreement described in paragraph (8) of subdivision (b).
(i)Notwithstanding subdivision (b), a translation may retain the following elements of the executed English-language contract or agreement without translation: names and titles of individuals and other persons, addresses, brand names, trade names, trademarks, registered service marks, full or abbreviated designations of the make and model of goods or services, alphanumeric codes, numerals, dollar amounts expressed in numerals, dates, and individual words or expressions having no generally accepted non-English translation. It is permissible, but not required, that this translation be signed.
(j)The terms of the contract or agreement that is executed in the English language shall determine the rights and obligations of the parties. However, the translation of the contract or the disclosures required by subdivision (e) in any of the languages specified in subdivision (b) in which the contract or agreement was negotiated shall be admissible in evidence only to show that no contract was entered into because of a substantial difference in the material terms and conditions of the contract and the translation.
(k)(1)Upon a failure to comply with the provisions of this section, the person aggrieved may rescind the contract or agreement in the manner provided by this chapter. If the contract for a consumer credit sale or consumer lease that has been sold and assigned to a financial institution is rescinded pursuant to this subdivision, the consumer shall make restitution to and have restitution made by the person with whom the consumer made the contract and shall give notice of rescission to the assignee. Notwithstanding that the contract was assigned without recourse, the assignment shall be deemed rescinded, and the assignor shall promptly repurchase the contract from the assignee.
(2)Notwithstanding paragraph (1), only a qualified commercial tenant may rescind a contract described in paragraph (8) of subdivision (b) pursuant to this subdivision.
(l)For the purposes of this section, the following definitions apply:
(1)Commercial real property means all real property in this state, except dwelling units subject to Chapter 2 (commencing with Section 1940) of Title 5 of Part 4, mobilehomes, as defined in Section 798.3, and recreational vehicles, as defined in Section 799.29.
(2)Microenterprise has the same meaning as that term is defined in subdivision (a) of Section 18000 of the Business and Professions Code.
(3)Nonprofit organization means any private, nonprofit organization that qualifies under Section 501(c)(3) of the United States Internal Revenue Code of 1986.
(4)Qualified commercial tenant means a tenant of commercial real property that meets both of the following requirements:
(A)The tenant is a microenterprise, a restaurant with fewer than 10 employees, or a nonprofit organization with fewer than 20 employees.
(B)(i)Subject to clause (ii), the tenant has provided the landlord, within the prior 12 months, a written notice that the tenant is a qualified commercial tenant and a self-attestation regarding the number of employees, at such time the protections under this section come into place.
(ii)Unless the tenancy is from week to week, month to month, or other period less than a month, the tenant provided the notice and self-attestation described in clause (i) before or upon execution of the lease, and annually thereafter, at such time the protections under this section come into place.
SEC. 2.5.Section 1632 of the Civil Code is amended to read:1632.(a)The Legislature hereby finds and declares all of the following:
(1)This section was enacted in 1976 to increase consumer information and protections for the states sizeable and growing Spanish-speaking population.
(2)Since 1976, the states population has become increasingly diverse and the number of Californians who speak languages other than English as their primary language at home has increased dramatically.
(3)According to data from the American Community Survey, which has replaced the decennial census for detailed socioeconomic information about United States residents, approximately 15.2 million Californians speak a language other than English at home, based on data from combined years 2009 through 2011. This compares to approximately 19.6 million people who speak only English at home. Among the Californians who speak a language other than English at home, approximately 8.4 million speak English very well, and another 3 million speak English well. The remaining 3.8 million Californians surveyed do not speak English well or do not speak English at all. Among this group, the five languages other than English that are most widely spoken at home are Spanish, Chinese, Tagalog, Vietnamese, and Korean. These five languages are spoken at home by approximately 3.5 million of the 3.8 million Californians with limited or no English proficiency, who speak a language other than English at home.
(b)A person engaged in a trade or business who negotiates primarily in Spanish, Chinese, Tagalog, Vietnamese, or Korean, orally or in writing, in the course of entering into any of the following, shall deliver to the other party to the contract or agreement, and any other person who will be signing the contract or agreement, and before the execution thereof, a translation of the contract or agreement in the language in which the contract or agreement was negotiated, that includes a translation of every term and condition in that contract or agreement:
(1)A contract or agreement subject to the provisions of Title 2 (commencing with Section 1801) of, and Chapter 2b (commencing with Section 2981) and Chapter 2d (commencing with Section 2985.7) of Title 14 of, Part 4 of Division 3.
(2)A loan or extension of credit secured other than by real property, or unsecured, for use primarily for personal, family, or household purposes.
(3)A lease, sublease, rental contract or agreement, or other term of tenancy contract or agreement, for a period of longer than one month, covering a dwelling, an apartment, or mobilehome, or other dwelling unit normally occupied as a residence.
(4)Notwithstanding paragraph (2), a loan or extension of credit for use primarily for personal, family, or household purposes in which the loan or extension of credit is subject to the provisions of Article 7 (commencing with Section 10240) of Chapter 3 of Part 1 of Division 4 of the Business and Professions Code, or Division 7 (commencing with Section 18000), or Division 9 (commencing with Section 22000) of the Financial Code.
(5)Notwithstanding paragraph (2), a reverse mortgage as described in Chapter 8 (commencing with Section 1923) of Title 4 of Part 4 of Division 3.
(6)A contract or agreement, containing a statement of fees or charges, entered into for the purpose of obtaining legal services, when the person who is engaged in business is currently licensed to practice law pursuant to Chapter 4 (commencing with Section 6000) of Division 3 of the Business and Professions Code.
(7)A foreclosure consulting contract subject to Article 1.5 (commencing with Section 2945) of Chapter 2 of Title 14 of Part 4 of Division 3.
(8)A lease, sublease, rental contract or agreement, or other term of tenancy contract or agreement covering a nonresidential-zoned commercial space entered into between a landlord and a qualified commercial tenant, on or after January 1, 2025.
(c)Notwithstanding subdivision (b), for a loan subject to this part and to Article 7 (commencing with Section 10240) of Chapter 3 of Part 1 of Division 4 of the Business and Professions Code, the delivery of a translation of the statement to the borrower required by Section 10240 of the Business and Professions Code in any of the languages specified in subdivision (b) in which the contract or agreement was negotiated, is in compliance with subdivision (b).
(d)At the time and place where a lease, sublease, or rental contract or agreement described in subdivision (b) is executed, notice in any of the languages specified in subdivision (b) in which the contract or agreement was negotiated shall be provided to the lessee or tenant.
(e)Provision by a supervised financial organization of a translation of the disclosures required by Regulation M or Regulation Z, and, if applicable, Division 7 (commencing with Section 18000) or Division 9 (commencing with Section 22000) of the Financial Code in any of the languages specified in subdivision (b) in which the contract or agreement was negotiated, before the execution of the contract or agreement, shall also be deemed in compliance with the requirements of subdivision (b) with regard to the original contract or agreement.
(1)Regulation M and Regulation Z mean any rule, regulation, or interpretation promulgated by the Board of Governors of the Federal Reserve System and any interpretation or approval issued by an official or employee duly authorized by the board to issue interpretations or approvals dealing with, respectively, consumer leasing or consumer lending, pursuant to the Federal Truth in Lending Act, as amended (15 U.S.C. Sec. 1601 et seq.).
(2)As used in this section, supervised financial organization means a bank, savings association as defined in Section 5102 of the Financial Code, credit union, or holding company, affiliate, or subsidiary thereof, or a person subject to Article 7 (commencing with Section 10240) of Chapter 3 of Part 1 of Division 4 of the Business and Professions Code, or Division 7 (commencing with Section 18000) or Division 9 (commencing with Section 22000) of the Financial Code.
(f)At the time and place where a contract or agreement described in paragraph (1) or (2) of subdivision (b) is executed, a notice in any of the languages specified in subdivision (b) in which the contract or agreement was negotiated shall be conspicuously displayed to the effect that the person described in subdivision (b) is required to provide a contract or agreement in the language in which the contract or agreement was negotiated, or a translation of the disclosures required by law in the language in which the contract or agreement was negotiated, as the case may be. If a person described in subdivision (b) does business at more than one location or branch, the requirements of this section shall apply only with respect to the location or branch at which the language in which the contract or agreement was negotiated is used.
(g)(1)The term contract or agreement, as used in this section, means the document creating the rights and obligations of the parties and includes any subsequent document making substantial changes in the rights and obligations of the parties. The term contract or agreement does not include any subsequent documents authorized or contemplated by the original document such as periodic statements, sales slips or invoices representing purchases made pursuant to a credit card agreement, a retail installment contract or account or other revolving sales or loan account, memoranda of purchases in an add-on sale, or refinancing of a purchase as provided by, or pursuant to, the original document.
(2)The term contract or agreement does not include a home improvement contract as defined in Sections 7151.2 and 7159 of the Business and Professions Code, nor does it include plans, specifications, description of work to be done and materials to be used, or collateral security taken or to be taken for the retail buyers obligation contained in a contract for the installation of goods by a contractor licensed pursuant to Chapter 9 (commencing with Section 7000) of Division 3 of the Business and Professions Code, if the home improvement contract or installation contract is otherwise a part of a contract described in subdivision (b).
(3)Matters ordinarily incorporated by reference in contracts or agreements as described in paragraph (3) of subdivision (b), including, but not limited to, rules and regulations governing a tenancy and inventories of furnishings to be provided by the person described in subdivision (b), are not included in the term contract or agreement.
(h)(1) This section does not apply to a person engaged in a trade or business who negotiates primarily in a language other than English, as described by subdivision (b), if the party with whom that person is negotiating is a buyer of goods or services, or receives a loan or extension of credit, or enters an agreement obligating that party as a tenant, lessee, or sublessee, or similarly obligates the party by contract or lease, and the party negotiates the terms of the contract, lease, or other obligation through the partys own interpreter.
(2) As used in this subdivision, the partys own interpreter means a person who is not a minor and who is able to speak fluently and read with full understanding both the English language and any of the languages specified in subdivision (b) in which the contract, lease, or other obligation was negotiated, and who is not employed by, or whose service is not made available through, the person engaged in the trade or business.
(3)This subdivision does not apply to a contract or agreement described in paragraph (8) of subdivision (b).
(i)Notwithstanding subdivision (b), a translation may retain the following elements of the executed English-language contract or agreement without translation: names and titles of individuals and other persons, addresses, brand names, trade names, trademarks, registered service marks, full or abbreviated designations of the make and model of goods or services, alphanumeric codes, numerals, dollar amounts expressed in numerals, dates, and individual words or expressions having no generally accepted non-English translation. It is permissible, but not required, that this translation be signed.
(j)The terms of the contract or agreement that is executed in the English language shall determine the rights and obligations of the parties. However, the translation of the contract or the disclosures required by subdivision (e) in any of the languages specified in subdivision (b) in which the contract or agreement was negotiated shall be admissible in evidence only to show that no contract was entered into because of a substantial difference in the material terms and conditions of the contract and the translation.
(k)(1)Upon a failure to comply with the provisions of this section, the person aggrieved may rescind the contract or agreement in the manner provided by this chapter. If the contract for a consumer credit sale or consumer lease that has been sold and assigned to a financial institution is rescinded pursuant to this subdivision, the consumer shall make restitution to and have restitution made by the person with whom the consumer made the contract and shall give notice of rescission to the assignee. Notwithstanding that the contract was assigned without recourse, the assignment shall be deemed rescinded, and the assignor shall promptly repurchase the contract from the assignee.
(2)Notwithstanding paragraph (1), only a qualified commercial tenant may rescind a contract described in paragraph (8) of subdivision (b) pursuant to this subdivision.
(l)Any waiver of a provision of this section is contrary to public policy and is void and unenforceable.
(m)For the purposes of this section, the following definitions apply:
(1)Commercial real property means all real property in this state, except dwelling units subject to Chapter 2 (commencing with Section 1940) of Title 5 of Part 4, mobilehomes, as defined in Section 798.3, and recreational vehicles, as defined in Section 799.29.
(2)Microenterprise has the same meaning as that term is defined in subdivision (a) of Section 18000 of the Business and Professions Code.
(3)Nonprofit organization means any private, nonprofit organization that qualifies under Section 501(c)(3) of the United States Internal Revenue Code of 1986.
(4)Qualified commercial tenant means a tenant of commercial real property that meets both of the following requirements:
(A)The tenant is a microenterprise, a restaurant with fewer than 10 employees, or a nonprofit organization with fewer than 20 employees.
(B)(i)Subject to clause (ii), the tenant has provided the landlord, within the prior 12 months, a written notice that the tenant is a qualified commercial tenant and a self-attestation regarding the number of employees, at such time the protections under this section come into place.
(ii)Unless the tenancy is from week to week, month to month, or other period less than a month, the tenant provided the notice and self-attestation described in clause (i) before or upon execution of the lease, and annually thereafter, at such time the protections under this section come into place.
SEC. 3.Section 1946.1 of the Civil Code is amended to read:1946.1.(a)Notwithstanding Section 1946, a hiring of residential real property or commercial real property by a qualified commercial tenant for a term not specified by the parties, is deemed to be renewed as stated in Section 1945, at the end of the term implied by law unless one of the parties gives written notice to the other of the partys intention to terminate the tenancy, as provided in this section.
(b)An owner of a residential dwelling or commercial real property hired by a qualified commercial tenant giving notice pursuant to this section shall give notice at least 60 days prior to the proposed date of termination. A tenant giving notice pursuant to this section shall give notice for a period at least as long as the term of the periodic tenancy prior to the proposed date of termination.
(c)Notwithstanding subdivision (b), an owner of a residential dwelling or commercial real property hired by a qualified commercial tenant giving notice pursuant to this section shall give notice at least 30 days prior to the proposed date of termination if a tenant or resident has resided in the dwelling or occupied the property for less than one year.
(d)Notwithstanding subdivision (b), an owner of a residential dwelling giving notice pursuant to this section shall give notice at least 30 days prior to the proposed date of termination if all of the following apply:
(1)The dwelling or unit is alienable separate from the title to any other dwelling unit.
(2)The owner has contracted to sell the dwelling or unit to a bona fide purchaser for value, and has established an escrow with a title insurer or an underwritten title company, as defined in Sections 12340.4 and 12340.5 of the Insurance Code, respectively, a licensed escrow agent, as defined in Sections 17004 and 17200 of the Financial Code, or a licensed real estate broker, as defined in Section 10131 of the Business and Professions Code.
(3)The purchaser is a natural person or persons.
(4)The notice is given no more than 120 days after the escrow has been established.
(5)Notice was not previously given to the tenant pursuant to this section.
(6)The purchaser in good faith intends to reside in the property for at least one full year after the termination of the tenancy.
(e)After an owner has given notice of the owners intention to terminate the tenancy pursuant to this section, a tenant may also give notice of the tenants intention to terminate the tenancy pursuant to this section, provided that the tenants notice is for a period at least as long as the term of the periodic tenancy and the proposed date of termination occurs before the owners proposed date of termination.
(f)The notices required by this section shall be given in the manner prescribed in Section 1162 of the Code of Civil Procedure or by sending a copy by certified or registered mail.
(g)This section may not be construed to affect the authority of a public entity that otherwise exists to regulate or monitor the basis for eviction.
(h)A notice given by an owner pursuant to this section shall contain, in substantially the same form, the following:
State law permits former tenants to reclaim abandoned personal property left at the former address of the tenant, subject to certain conditions. You may or may not be able to reclaim property without incurring additional costs, depending on the cost of storing the property and the length of time before it is reclaimed. In general, these costs will be lower the sooner you contact your former landlord after being notified that property belonging to you was left behind after you moved out.
(i)A landlord of a commercial real property shall include in the notice required by this section information on the provisions of this section.
(j)For the purposes of this section, the following definitions apply:
(1)Commercial real property means all real property in this state, except dwelling units subject to this chapter, mobilehomes as defined in Section 798.3, and recreational vehicles as defined in Section 799.29.
(2)Microenterprise has the same meaning as that term is defined in subdivision (a) of Section 18000 of the Business and Professions Code.
(3)Nonprofit organization means any private, nonprofit organization that qualifies under Section 501(c)(3) of the United States Internal Revenue Code of 1986.
(4)Qualified commercial tenant means a tenant of commercial real property that meets both of the following requirements:
(A)The tenant is a microenterprise, a restaurant with fewer than 10 employees, or a nonprofit organization with fewer than 20 employees.
(B)(i)Subject to clause (ii), the tenant has provided the landlord, within the previous 12 months, a written notice that the tenant is a qualified commercial tenant and a self-attestation regarding the number of employees, at such time the protections under this section come into place.
(ii)Unless the tenancy is from week to week, month to month, or other period less than a month, the tenant provided the notice and self-attestation described in clause (i) before or upon execution of the lease, and annually thereafter, at such time the protections under this section come into place.
SEC. 3.5.Section 1946.1 of the Civil Code is amended to read:1946.1.(a)Notwithstanding Section 1946, a hiring of residential real property or commercial real property by a qualified commercial tenant for a term not specified by the parties, is deemed to be renewed as stated in Section 1945, at the end of the term implied by law unless one of the parties gives written notice to the other of the partys intention to terminate the tenancy, as provided in this section.
(b)An owner of a residential dwelling or commercial real property hired by a qualified commercial tenant giving notice pursuant to this section shall give notice at least 60 days prior to the proposed date of termination. A tenant giving notice pursuant to this section shall give notice for a period at least as long as the term of the periodic tenancy prior to the proposed date of termination.
(c)Notwithstanding subdivision (b), an owner of a residential dwelling or commercial real property hired by a qualified commercial tenant giving notice pursuant to this section shall give notice at least 30 days prior to the proposed date of termination if a tenant or resident has resided in the dwelling or occupied the property for less than one year.
(d)Notwithstanding subdivision (b), an owner of a residential dwelling giving notice pursuant to this section shall give notice at least 30 days prior to the proposed date of termination if all of the following apply:
(1)The dwelling or unit is alienable separate from the title to any other dwelling unit.
(2)The owner has contracted to sell the dwelling or unit to a bona fide purchaser for value, and has established an escrow with a title insurer or an underwritten title company, as defined in Sections 12340.4 and 12340.5 of the Insurance Code, respectively, a licensed escrow agent, as defined in Sections 17004 and 17200 of the Financial Code, or a licensed real estate broker, as defined in Section 10131 of the Business and Professions Code.
(3)The purchaser is a natural person or persons.
(4)The notice is given no more than 120 days after the escrow has been established.
(5)Notice was not previously given to the tenant pursuant to this section.
(6)The purchaser in good faith intends to reside in the property for at least one full year after the termination of the tenancy.
(e)After an owner has given notice of the owners intention to terminate the tenancy pursuant to this section, a tenant may also give notice of the tenants intention to terminate the tenancy pursuant to this section, provided that the tenants notice is for a period at least as long as the term of the periodic tenancy and the proposed date of termination occurs before the owners proposed date of termination.
(f)The notices required by this section shall be given in the manner prescribed in Section 1162 of the Code of Civil Procedure or by sending a copy by certified or registered mail.
(g)This section may not be construed to affect the authority of a public entity that otherwise exists to regulate or monitor the basis for eviction.
(h)A notice given by an owner pursuant to this section shall contain, in substantially the same form, the following:
State law permits former tenants to reclaim abandoned personal property left at the former address of the tenant, subject to certain conditions. You may or may not be able to reclaim property without incurring additional costs, depending on the cost of storing the property and the length of time before it is reclaimed. In general, these costs will be lower the sooner you contact your former landlord after being notified that property belonging to you was left behind after you moved out.
(i)A landlord or its agent shall not charge a tenant a fee for serving, posting, or otherwise delivering any notice, as described in this section.
(j)A landlord of a commercial real property shall include in the notice required by this section information on the provisions of this section.
(k)For the purposes of this section, the following definitions apply:
(1)Commercial real property means all real property in this state, except dwelling units subject to this chapter, mobilehomes as defined in Section 798.3, and recreational vehicles as defined in Section 799.29.
(2)Microenterprise has the same meaning as that term is defined in subdivision (a) of Section 18000 of the Business and Professions Code.
(3)Nonprofit organization means any private, nonprofit organization that qualifies under Section 501(c)(3) of the United States Internal Revenue Code of 1986.
(4)Qualified commercial tenant means a tenant of commercial real property that meets both of the following requirements:
(A)The tenant is a microenterprise, a restaurant with fewer than 10 employees, or a nonprofit organization with fewer than 20 employees.
(B)(i)Subject to clause (ii), the tenant has provided the landlord, within the previous 12 months, a written notice that the tenant is a qualified commercial tenant and a self-attestation regarding the number of employees, at such time the protections under this section come into place.
(ii)Unless the tenancy is from week to week, month to month, or other period less than a month, the tenant provided the notice and self-attestation described in clause (i) before or upon execution of the lease, and annually thereafter, at such time the protections under this section come into place.
SEC. 4.Section 1950.9 is added to the Civil Code, to read:1950.9.(a)A landlord of a commercial real property shall not charge a qualified commercial tenant a fee to recover building operating costs unless all of the following apply:
(1)The building operating costs are allocated proportionately per tenant, by square footage, or another method as substantiated through supporting documentation provided by the landlord to the qualified commercial tenant.
(2)The building operating costs have been incurred within the previous 18 months, or are reasonably expected to be incurred within the next 12 months based on reasonable estimates.
(3)Before the execution of the lease, the landlord provides the prospective qualified commercial tenant a paper or electronic notice stating that the tenant may inspect any supporting documentation of building operating costs upon written request pursuant to paragraph (4).
(4)Within 30 days of a written request, the landlord provides the qualified commercial tenant supporting documentation of the previously incurred or reasonably expected building operating costs.
(5)The costs do not include expenses paid by a tenant directly to a third party.
(6)The costs do not include expenses for which a third party, tenant, or insurance reimbursed the landlord.
(b)A landlord of a commercial real property shall not charge a fee to recover any building operating costs from the qualified commercial tenant until the landlord provides the qualified commercial tenant supporting documentation.
(c)During the course of a commercial tenancy, the landlord shall not alter the method or formula used to allocate building operating costs to the qualified commercial tenant in a way that increases the qualified commercial tenants share of those costs, unless the qualified commercial tenant is provided with written notice of the change in the method or formula with supporting documentation of the basis of the alteration.
(d)In an action for an unlawful detainer, ejectment, or other action to recover possession based on a failure to pay a fee to recover building operating costs, a qualified commercial tenant may raise, as an affirmative defense, that the landlord violated this section.
(e)A landlord of a commercial real property who violates this section shall be liable to a qualified commercial tenant in a civil action for all of the following:
(1)Actual damages.
(2)In the courts discretion, reasonable attorneys fees and costs.
(3)Upon showing that the landlord, lessor, or their agent has acted willfully or with oppression, fraud, or malice both of the following:
(A)Three times the amount of actual damages.
(B)Punitive damages.
(f)The district attorney, city attorney, or county counsel in the jurisdiction in which the commercial real property is located, in the name of the city or county, may seek injunctive relief based on a violation of this section.
(g)Any waiver of a right under this section by a qualified commercial tenant shall be void as a matter of public policy.
(h)For the purposes of this section, the following definitions apply:
(1)Building operating costs means costs that are incurred on behalf of a tenant for the operation, maintenance, or repair of the commercial real property, including, but not limited to, maintenance of common areas, utilities that are not separately metered, and taxes or assessments charged to the landlord pursuant to property ownership.
(2)Commercial real property means all real property in this state, except dwelling units subject to this chapter, mobilehomes, as defined in Section 798.3, and recreational vehicles, as defined in Section 799.29.
(3)Microenterprise has the same meaning as that term is defined in subdivision (a) of Section 18000 of the Business and Professions Code.
(4)Nonprofit organization means any private nonprofit organization that qualifies under Section 501(c)(3) of the United States Internal Revenue Code of 1986.
(5)Qualified commercial tenant means a tenant of commercial real property that meets both of the following requirements:
(A)The tenant is a microenterprise, a restaurant with fewer than 10 employees, or a nonprofit organization with fewer than 20 employees.
(B)(i)Subject to clause (ii), the tenant has provided the landlord, within the previous 12 months, a written notice that the tenant is a qualified commercial tenant and a self-attestation regarding the number of employees, at such time the protections under this section come into place.
(ii)Unless the tenancy is from week to week, month to month, or other period less than a month, the tenant provided the notice and self-attestation described in clause (i) before or upon execution of the lease, and annually thereafter, at such time the protections under this section come into place.
(6)Supporting documentation means a dated and itemized quote, contract, receipt, or invoice from a licensed contractor or a provider of services that includes, but is not limited to, both of the following:
(A)A tabulation showing how the costs are allocated among tenants in compliance with paragraph (1) of subdivision (a).
(B)A signed and dated attestation by the landlord that the documentation and costs are true and correct.
(i)This section shall only apply to the following:
(1)Leases executed or tenancies commenced or renewed on or after January 1, 2025.
(2)A tenancy that is from week to week, month to month, or other period less than a month.
(3)Leases executed or tenancies commenced before January 1, 2025, that do not contain a provision regarding building operating costs.
(j)This section does not apply to assessment levied pursuant to Part 7 (commencing with Section 36600) of Division 18 of the Streets and Highways Code.
SEC. 5.Section 2.5 of this bill incorporates amendments to Section 1632 of the Civil Code proposed by both this bill and Assembly Bill 3281. That section of this bill shall only become operative if (1) both bills are enacted and become effective on or before January 1, 2025, (2) each bill amends Section 1632 of the Civil Code, and (3) this bill is enacted after Assembly Bill 3281, in which case Section 2 of this bill shall not become operative.
SEC. 6.Section 3.5 of this bill incorporates amendments to Section 1946.1 of the Civil Code proposed by both this bill and Senate Bill 611. That section of this bill shall only become operative if (1) both bills are enacted and become effective on or before January 1, 2025, (2) each bill amends Section 1946.1 of the Civil Code, and (3) this bill is enacted after Senate Bill 611, in which case Section 3 of this bill shall not become operative.
(a)(1)Except as provided in subdivision (b), in all leases of lands or tenements, or of any interest therein, from week to week, month to month, or other period less than a month, the landlord may, upon giving notice in writing to the tenant, in the manner prescribed by Section 1162 of the Code of Civil Procedure, change the terms of the lease to take effect, as to tenancies for less than one month, upon the expiration of a period at least as long as the term of the hiring itself, and, as to tenancies from month to month, to take effect at the expiration of not less than 30 days, but if that change takes effect within a rental term, the rent accruing from the first day of the term to the date of that change shall be computed at the rental rate obtained immediately prior to that change; provided, however, that it shall be competent for the parties to provide by an agreement in writing that a notice changing the terms thereof may be given at any time not less than seven days before the expiration of a term, to be effective upon the expiration of the term.
(2)The notice, when served upon the tenant, shall in and of itself operate and be effectual to create and establish, as a part of the lease, the terms, rents, and conditions specified in the notice, if the tenant shall continue to hold the premises after the notice takes effect.
(b)(1)In all leases of a residential dwelling, commercial real property by a qualified commercial tenant, or of any interest therein, from week to week, month to month, or other period less than a month, the landlord may increase the rent provided in the lease or rental agreement, upon giving written notice to the tenant, as follows, by either of the following procedures:
(A)By delivering a copy to the tenant personally.
(B)By serving a copy by mail under the procedures prescribed in Section 1013 of the Code of Civil Procedure.
(2)If the proposed rent increase for that tenant is 10 percent or less of the rental amount charged to that tenant at any time during the 12 months before the effective date of the increase, either in and of itself or when combined with any other rent increases for the 12 months before the effective date of the increase, the notice shall be delivered at least 30 days before the effective date of the increase, and subject to Section 1013 of the Code of Civil Procedure if served by mail.
(3)(A)If the proposed rent increase for that tenant is greater than 10 percent of the rental amount charged to that tenant at any time during the 12 months before the effective date of the increase, either in and of itself or when combined with any other rent increases for the 12 months before the effective date of the increase, the notice shall be delivered at least 90 days before the effective date of the increase, and subject to Section 1013 of the Code of Civil Procedure if served by mail.
(B)If the proposed rent increase for that tenant is caused by a change in a tenants income or family composition as determined by a recertification required by statute or regulation, the notice shall be delivered at least 30 days before the effective date of the increase as described in paragraph (2), and subparagraph (A) of this paragraph shall not apply.
(4)A landlord of a commercial real property shall include in the notice information on the provisions of this subdivision.
(5)In all leases for commercial real property by a qualified commercial tenant, a rent increase shall not be effective until the notice period required by this subdivision has expired.
(6)Notwithstanding any other provision of law, a violation of this subdivision by a landlord of a commercial real property does not entitle a qualified commercial tenant to civil penalties.
(7)For the purposes of this subdivision, the following definitions apply:
(A)Commercial real property means all real property in this state, except dwelling units subject to Chapter 2 (commencing with Section 1940) of Title 5 of Part 4 of Division 3, mobilehomes as defined in Section 798.3, and recreational vehicles as defined in Section 799.29.
(B)Microenterprise has the same meaning as that term is defined in subdivision (a) of Section 18000 of the Business and Professions Code.
(C)Nonprofit organization means any private, nonprofit organization that qualifies under Section 501(c)(3) of the United States Internal Revenue Code of 1986.
(D)Qualified commercial tenant means a tenant of commercial real property that meets both of the following requirements:
(i)The tenant is a microenterprise, a restaurant with fewer than 10 employees, or a nonprofit organization with fewer than 20 employees.
(ii)(I)Subject to subclause (II), the tenant has provided the landlord, within the previous 12 months, a written notice that the tenant is a qualified commercial tenant and a self-attestation regarding the number of employees, at such time the protections under this subdivision come into place.
(II)Unless the tenancy is from week to week, month to month, or other period less than a month, the tenant provided the notice and self-attestation described in subclause (I) before or upon execution of the lease, and annually thereafter, at such time the protections under this subdivision come into place.
(c)If a state or federal statute, state or federal regulation, recorded regulatory agreement, or contract provides for a longer period of notice regarding a rent increase than that provided in subdivision (a) or (b), the personal service or mailing of the notice shall be in accordance with the longer period.
SEC. 2.Section 1632 of the Civil Code is amended to read:1632.(a)The Legislature hereby finds and declares all of the following:
(1)This section was enacted in 1976 to increase consumer information and protections for the states sizeable and growing Spanish-speaking population.
(2)Since 1976, the states population has become increasingly diverse and the number of Californians who speak languages other than English as their primary language at home has increased dramatically.
(3)According to data from the American Community Survey, which has replaced the decennial census for detailed socioeconomic information about United States residents, approximately 15.2 million Californians speak a language other than English at home, based on data from combined years 2009 through 2011. This compares to approximately 19.6 million people who speak only English at home. Among the Californians who speak a language other than English at home, approximately 8.4 million speak English very well, and another 3 million speak English well. The remaining 3.8 million Californians surveyed do not speak English well or do not speak English at all. Among this group, the five languages other than English that are most widely spoken at home are Spanish, Chinese, Tagalog, Vietnamese, and Korean. These five languages are spoken at home by approximately 3.5 million of the 3.8 million Californians with limited or no English proficiency, who speak a language other than English at home.
(b)A person engaged in a trade or business who negotiates primarily in Spanish, Chinese, Tagalog, Vietnamese, or Korean, orally or in writing, in the course of entering into any of the following, shall deliver to the other party to the contract or agreement, and any other person who will be signing the contract or agreement, and before the execution thereof, a translation of the contract or agreement in the language in which the contract or agreement was negotiated, that includes a translation of every term and condition in that contract or agreement:
(1)A contract or agreement subject to the provisions of Title 2 (commencing with Section 1801) of, and Chapter 2b (commencing with Section 2981) and Chapter 2d (commencing with Section 2985.7) of Title 14 of, Part 4 of Division 3.
(2)A loan or extension of credit secured other than by real property, or unsecured, for use primarily for personal, family, or household purposes.
(3)A lease, sublease, rental contract or agreement, or other term of tenancy contract or agreement, for a period of longer than one month, covering a dwelling, an apartment, or mobilehome, or other dwelling unit normally occupied as a residence.
(4)Notwithstanding paragraph (2), a loan or extension of credit for use primarily for personal, family, or household purposes in which the loan or extension of credit is subject to the provisions of Article 7 (commencing with Section 10240) of Chapter 3 of Part 1 of Division 4 of the Business and Professions Code, or Division 7 (commencing with Section 18000), or Division 9 (commencing with Section 22000) of the Financial Code.
(5)Notwithstanding paragraph (2), a reverse mortgage as described in Chapter 8 (commencing with Section 1923) of Title 4 of Part 4 of Division 3.
(6)A contract or agreement, containing a statement of fees or charges, entered into for the purpose of obtaining legal services, when the person who is engaged in business is currently licensed to practice law pursuant to Chapter 4 (commencing with Section 6000) of Division 3 of the Business and Professions Code.
(7)A foreclosure consulting contract subject to Article 1.5 (commencing with Section 2945) of Chapter 2 of Title 14 of Part 4 of Division 3.
(8)A lease, sublease, rental contract or agreement, or other term of tenancy contract or agreement covering a nonresidential-zoned commercial space entered into between a landlord and a qualified commercial tenant, on or after January 1, 2025.
(c)Notwithstanding subdivision (b), for a loan subject to this part and to Article 7 (commencing with Section 10240) of Chapter 3 of Part 1 of Division 4 of the Business and Professions Code, the delivery of a translation of the statement to the borrower required by Section 10240 of the Business and Professions Code in any of the languages specified in subdivision (b) in which the contract or agreement was negotiated, is in compliance with subdivision (b).
(d)At the time and place where a lease, sublease, or rental contract or agreement described in subdivision (b) is executed, notice in any of the languages specified in subdivision (b) in which the contract or agreement was negotiated shall be provided to the lessee or tenant.
(e)Provision by a supervised financial organization of a translation of the disclosures required by Regulation M or Regulation Z, and, if applicable, Division 7 (commencing with Section 18000) or Division 9 (commencing with Section 22000) of the Financial Code in any of the languages specified in subdivision (b) in which the contract or agreement was negotiated, prior to the execution of the contract or agreement, shall also be deemed in compliance with the requirements of subdivision (b) with regard to the original contract or agreement.
(1)Regulation M and Regulation Z mean any rule, regulation, or interpretation promulgated by the Board of Governors of the Federal Reserve System and any interpretation or approval issued by an official or employee duly authorized by the board to issue interpretations or approvals dealing with, respectively, consumer leasing or consumer lending, pursuant to the Federal Truth in Lending Act, as amended (15 U.S.C. Sec. 1601 et seq.).
(2)As used in this section, supervised financial organization means a bank, savings association as defined in Section 5102 of the Financial Code, credit union, or holding company, affiliate, or subsidiary thereof, or a person subject to Article 7 (commencing with Section 10240) of Chapter 3 of Part 1 of Division 4 of the Business and Professions Code, or Division 7 (commencing with Section 18000) or Division 9 (commencing with Section 22000) of the Financial Code.
(f)At the time and place where a contract or agreement described in paragraph (1) or (2) of subdivision (b) is executed, a notice in any of the languages specified in subdivision (b) in which the contract or agreement was negotiated shall be conspicuously displayed to the effect that the person described in subdivision (b) is required to provide a contract or agreement in the language in which the contract or agreement was negotiated, or a translation of the disclosures required by law in the language in which the contract or agreement was negotiated, as the case may be. If a person described in subdivision (b) does business at more than one location or branch, the requirements of this section shall apply only with respect to the location or branch at which the language in which the contract or agreement was negotiated is used.
(g)(1)The term contract or agreement, as used in this section, means the document creating the rights and obligations of the parties and includes any subsequent document making substantial changes in the rights and obligations of the parties. The term contract or agreement does not include any subsequent documents authorized or contemplated by the original document such as periodic statements, sales slips or invoices representing purchases made pursuant to a credit card agreement, a retail installment contract or account or other revolving sales or loan account, memoranda of purchases in an add-on sale, or refinancing of a purchase as provided by, or pursuant to, the original document.
(2)The term contract or agreement does not include a home improvement contract as defined in Sections 7151.2 and 7159 of the Business and Professions Code, nor does it include plans, specifications, description of work to be done and materials to be used, or collateral security taken or to be taken for the retail buyers obligation contained in a contract for the installation of goods by a contractor licensed pursuant to Chapter 9 (commencing with Section 7000) of Division 3 of the Business and Professions Code, if the home improvement contract or installation contract is otherwise a part of a contract described in subdivision (b).
(3)Matters ordinarily incorporated by reference in contracts or agreements as described in paragraph (3) of subdivision (b), including, but not limited to, rules and regulations governing a tenancy and inventories of furnishings to be provided by the person described in subdivision (b), are not included in the term contract or agreement.
(h)(1)This section does not apply to a person engaged in a trade or business who negotiates primarily in a language other than English, as described by subdivision (b), if the party with whom that person is negotiating is a buyer of goods or services, or receives a loan or extension of credit, or enters an agreement obligating that party as a tenant, lessee, or sublessee, or similarly obligates the party by contract or lease, and the party negotiates the terms of the contract, lease, or other obligation through the partys own interpreter.
(2)As used in this subdivision, the partys own interpreter means a person who is not a minor and who is able to speak fluently and read with full understanding both the English language and any of the languages specified in subdivision (b) in which the contract, lease, or other obligation was negotiated, and who is not employed by, or whose service is not made available through, the person engaged in the trade or business.
(3)This subdivision does not apply to a contract or agreement described in paragraph (8) of subdivision (b).
(i)Notwithstanding subdivision (b), a translation may retain the following elements of the executed English-language contract or agreement without translation: names and titles of individuals and other persons, addresses, brand names, trade names, trademarks, registered service marks, full or abbreviated designations of the make and model of goods or services, alphanumeric codes, numerals, dollar amounts expressed in numerals, dates, and individual words or expressions having no generally accepted non-English translation. It is permissible, but not required, that this translation be signed.
(j)The terms of the contract or agreement that is executed in the English language shall determine the rights and obligations of the parties. However, the translation of the contract or the disclosures required by subdivision (e) in any of the languages specified in subdivision (b) in which the contract or agreement was negotiated shall be admissible in evidence only to show that no contract was entered into because of a substantial difference in the material terms and conditions of the contract and the translation.
(k)(1)Upon a failure to comply with the provisions of this section, the person aggrieved may rescind the contract or agreement in the manner provided by this chapter. If the contract for a consumer credit sale or consumer lease that has been sold and assigned to a financial institution is rescinded pursuant to this subdivision, the consumer shall make restitution to and have restitution made by the person with whom the consumer made the contract and shall give notice of rescission to the assignee. Notwithstanding that the contract was assigned without recourse, the assignment shall be deemed rescinded, and the assignor shall promptly repurchase the contract from the assignee.
(2)Notwithstanding paragraph (1), only a qualified commercial tenant may rescind a contract described in paragraph (8) of subdivision (b) pursuant to this subdivision.
(l)For the purposes of this section, the following definitions apply:
(1)Commercial real property means all real property in this state, except dwelling units subject to Chapter 2 (commencing with Section 1940) of Title 5 of Part 4, mobilehomes, as defined in Section 798.3, and recreational vehicles, as defined in Section 799.29.
(2)Microenterprise has the same meaning as that term is defined in subdivision (a) of Section 18000 of the Business and Professions Code.
(3)Nonprofit organization means any private, nonprofit organization that qualifies under Section 501(c)(3) of the United States Internal Revenue Code of 1986.
(4)Qualified commercial tenant means a tenant of commercial real property that meets both of the following requirements:
(A)The tenant is a microenterprise, a restaurant with fewer than 10 employees, or a nonprofit organization with fewer than 20 employees.
(B)(i)Subject to clause (ii), the tenant has provided the landlord, within the prior 12 months, a written notice that the tenant is a qualified commercial tenant and a self-attestation regarding the number of employees, at such time the protections under this section come into place.
(ii)Unless the tenancy is from week to week, month to month, or other period less than a month, the tenant provided the notice and self-attestation described in clause (i) before or upon execution of the lease, and annually thereafter, at such time the protections under this section come into place.
SEC. 2.5.Section 1632 of the Civil Code is amended to read:1632.(a)The Legislature hereby finds and declares all of the following:
(1)This section was enacted in 1976 to increase consumer information and protections for the states sizeable and growing Spanish-speaking population.
(2)Since 1976, the states population has become increasingly diverse and the number of Californians who speak languages other than English as their primary language at home has increased dramatically.
(3)According to data from the American Community Survey, which has replaced the decennial census for detailed socioeconomic information about United States residents, approximately 15.2 million Californians speak a language other than English at home, based on data from combined years 2009 through 2011. This compares to approximately 19.6 million people who speak only English at home. Among the Californians who speak a language other than English at home, approximately 8.4 million speak English very well, and another 3 million speak English well. The remaining 3.8 million Californians surveyed do not speak English well or do not speak English at all. Among this group, the five languages other than English that are most widely spoken at home are Spanish, Chinese, Tagalog, Vietnamese, and Korean. These five languages are spoken at home by approximately 3.5 million of the 3.8 million Californians with limited or no English proficiency, who speak a language other than English at home.
(b)Any A person engaged in a trade or business who negotiates primarily in Spanish, Chinese, Tagalog, Vietnamese, or Korean, orally or in writing, in the course of entering into any of the following, shall deliver to the other party to the contract or agreement, and any other person who will be signing the contract or agreement, and before the execution thereof, a translation of the contract or agreement in the language in which the contract or agreement was negotiated, that includes a translation of every term and condition in that contract or agreement:
(1)A contract or agreement subject to the provisions of Title 2 (commencing with Section 1801) of, and Chapter 2b (commencing with Section 2981) and Chapter 2d (commencing with Section 2985.7) of Title 14 of, Part 4 of Division 3.
(2)A loan or extension of credit secured other than by real property, or unsecured, for use primarily for personal, family, or household purposes.
(3)A lease, sublease, rental contract or agreement, or other term of tenancy contract or agreement, for a period of longer than one month, covering a dwelling, an apartment, or mobilehome, or other dwelling unit normally occupied as a residence.
(4)Notwithstanding paragraph (2), a loan or extension of credit for use primarily for personal, family, or household purposes in which the loan or extension of credit is subject to the provisions of Article 7 (commencing with Section 10240) of Chapter 3 of Part 1 of Division 4 of the Business and Professions Code, or Division 7 (commencing with Section 18000), or Division 9 (commencing with Section 22000) of the Financial Code.
(5)Notwithstanding paragraph (2), a reverse mortgage as described in Chapter 8 (commencing with Section 1923) of Title 4 of Part 4 of Division 3.
(6)A contract or agreement, containing a statement of fees or charges, entered into for the purpose of obtaining legal services, when the person who is engaged in business is currently licensed to practice law pursuant to Chapter 4 (commencing with Section 6000) of Division 3 of the Business and Professions Code.
(7)A foreclosure consulting contract subject to Article 1.5 (commencing with Section 2945) of Chapter 2 of Title 14 of Part 4 of Division 3.
(8)A lease, sublease, rental contract or agreement, or other term of tenancy contract or agreement covering a nonresidential-zoned commercial space entered into between a landlord and a qualified commercial tenant, on or after January 1, 2025.
(c)Notwithstanding subdivision (b), for a loan subject to this part and to Article 7 (commencing with Section 10240) of Chapter 3 of Part 1 of Division 4 of the Business and Professions Code, the delivery of a translation of the statement to the borrower required by Section 10240 of the Business and Professions Code in any of the languages specified in subdivision (b) in which the contract or agreement was negotiated, is in compliance with subdivision (b).
(d)At the time and place where a lease, sublease, or rental contract or agreement described in subdivision (b) is executed, notice in any of the languages specified in subdivision (b) in which the contract or agreement was negotiated shall be provided to the lessee or tenant.
(e)Provision by a supervised financial organization of a translation of the disclosures required by Regulation M or Regulation Z, and, if applicable, Division 7 (commencing with Section 18000) or Division 9 (commencing with Section 22000) of the Financial Code in any of the languages specified in subdivision (b) in which the contract or agreement was negotiated, prior to before the execution of the contract or agreement, shall also be deemed in compliance with the requirements of subdivision (b) with regard to the original contract or agreement.
(1)Regulation M and Regulation Z mean any rule, regulation, or interpretation promulgated by the Board of Governors of the Federal Reserve System and any interpretation or approval issued by an official or employee duly authorized by the board to issue interpretations or approvals dealing with, respectively, consumer leasing or consumer lending, pursuant to the Federal Truth in Lending Act, as amended (15 U.S.C. Sec. 1601 et seq.).
(2)As used in this section, supervised financial organization means a bank, savings association as defined in Section 5102 of the Financial Code, credit union, or holding company, affiliate, or subsidiary thereof, or any a person subject to Article 7 (commencing with Section 10240) of Chapter 3 of Part 1 of Division 4 of the Business and Professions Code, or Division 7 (commencing with Section 18000) or Division 9 (commencing with Section 22000) of the Financial Code.
(f)At the time and place where a contract or agreement described in paragraph (1) or (2) of subdivision (b) is executed, a notice in any of the languages specified in subdivision (b) in which the contract or agreement was negotiated shall be conspicuously displayed to the effect that the person described in subdivision (b) is required to provide a contract or agreement in the language in which the contract or agreement was negotiated, or a translation of the disclosures required by law in the language in which the contract or agreement was negotiated, as the case may be. If a person described in subdivision (b) does business at more than one location or branch, the requirements of this section shall apply only with respect to the location or branch at which the language in which the contract or agreement was negotiated is used.
(g)(1)The term contract or agreement, as used in this section, means the document creating the rights and obligations of the parties and includes any subsequent document making substantial changes in the rights and obligations of the parties. The term contract or agreement does not include any subsequent documents authorized or contemplated by the original document such as periodic statements, sales slips or invoices representing purchases made pursuant to a credit card agreement, a retail installment contract or account or other revolving sales or loan account, memoranda of purchases in an add-on sale, or refinancing of a purchase as provided by, or pursuant to, the original document.
The(2)The term contract or agreement does not include a home improvement contract as defined in Sections 7151.2 and 7159 of the Business and Professions Code, nor does it include plans, specifications, description of work to be done and materials to be used, or collateral security taken or to be taken for the retail buyers obligation contained in a contract for the installation of goods by a contractor licensed pursuant to Chapter 9 (commencing with Section 7000) of Division 3 of the Business and Professions Code, if the home improvement contract or installation contract is otherwise a part of a contract described in subdivision (b).
Matters(3)Matters ordinarily incorporated by reference in contracts or agreements as described in paragraph (3) of subdivision (b), including, but not limited to, rules and regulations governing a tenancy and inventories of furnishings to be provided by the person described in subdivision (b), are not included in the term contract or agreement.
(h)(1) This section does not apply to any a person engaged in a trade or business who negotiates primarily in a language other than English, as described by subdivision (b), if the party with whom that person is negotiating is a buyer of goods or services, or receives a loan or extension of credit, or enters an agreement obligating that party as a tenant, lessee, or sublessee, or similarly obligates the party by contract or lease, and the party negotiates the terms of the contract, lease, or other obligation through the partys own interpreter.
(2) As used in this subdivision, the partys own interpreter means a person who is not a minor and who is able to speak fluently and read with full understanding both the English language and any of the languages specified in subdivision (b) in which the contract, lease, or other obligation was negotiated, and who is not employed by, or whose service is not made available through, the person engaged in the trade or business.
(3)This subdivision does not apply to a contract or agreement described in paragraph (8) of subdivision (b).
(i)Notwithstanding subdivision (b), a translation may retain the following elements of the executed English-language contract or agreement without translation: names and titles of individuals and other persons, addresses, brand names, trade names, trademarks, registered service marks, full or abbreviated designations of the make and model of goods or services, alphanumeric codes, numerals, dollar amounts expressed in numerals, dates, and individual words or expressions having no generally accepted non-English translation. It is permissible, but not required, that this translation be signed.
(j)The terms of the contract or agreement that is executed in the English language shall determine the rights and obligations of the parties. However, the translation of the contract or the disclosures required by subdivision (e) in any of the languages specified in subdivision (b) in which the contract or agreement was negotiated shall be admissible in evidence only to show that no contract was entered into because of a substantial difference in the material terms and conditions of the contract and the translation.
(k)(1)Upon a failure to comply with the provisions of this section, the person aggrieved may rescind the contract or agreement in the manner provided by this chapter. If the contract for a consumer credit sale or consumer lease that has been sold and assigned to a financial institution is rescinded pursuant to this subdivision, the consumer shall make restitution to and have restitution made by the person with whom the consumer made the contract and shall give notice of rescission to the assignee. Notwithstanding that the contract was assigned without recourse, the assignment shall be deemed rescinded, and the assignor shall promptly repurchase the contract from the assignee.
(2)Notwithstanding paragraph (1), only a qualified commercial tenant may rescind a contract described in paragraph (8) of subdivision (b) pursuant to this subdivision.
(l)Any waiver of a provision of this section is contrary to public policy and is void and unenforceable.
(m)For the purposes of this section, the following definitions apply:
(1)Commercial real property means all real property in this state, except dwelling units subject to Chapter 2 (commencing with Section 1940) of Title 5 of Part 4, mobilehomes, as defined in Section 798.3, and recreational vehicles, as defined in Section 799.29.
(2)Microenterprise has the same meaning as that term is defined in subdivision (a) of Section 18000 of the Business and Professions Code.
(3)Nonprofit organization means any private, nonprofit organization that qualifies under Section 501(c)(3) of the United States Internal Revenue Code of 1986.
(4)Qualified commercial tenant means a tenant of commercial real property that meets both of the following requirements:
(A)The tenant is a microenterprise, a restaurant with fewer than 10 employees, or a nonprofit organization with fewer than 20 employees.
(B)(i)Subject to clause (ii), the tenant has provided the landlord, within the prior 12 months, a written notice that the tenant is a qualified commercial tenant and a self-attestation regarding the number of employees, at such time the protections under this section come into place.
(ii)Unless the tenancy is from week to week, month to month, or other period less than a month, the tenant provided the notice and self-attestation described in clause (i) before or upon execution of the lease, and annually thereafter, at such time the protections under this section come into place.
SEC. 3.Section 1946.1 of the Civil Code is amended to read:1946.1.(a)Notwithstanding Section 1946, a hiring of residential real property or commercial real property by a qualified commercial tenant for a term not specified by the parties, is deemed to be renewed as stated in Section 1945, at the end of the term implied by law unless one of the parties gives written notice to the other of the partys intention to terminate the tenancy, as provided in this section.
(b)An owner of a residential dwelling or commercial real property hired by a qualified commercial tenant giving notice pursuant to this section shall give notice at least 60 days prior to the proposed date of termination. A tenant giving notice pursuant to this section shall give notice for a period at least as long as the term of the periodic tenancy prior to the proposed date of termination.
(c)Notwithstanding subdivision (b), an owner of a residential dwelling or commercial real property hired by a qualified commercial tenant giving notice pursuant to this section shall give notice at least 30 days prior to the proposed date of termination if a tenant or resident has resided in the dwelling or occupied the property for less than one year.
(d)Notwithstanding subdivision (b), an owner of a residential dwelling giving notice pursuant to this section shall give notice at least 30 days prior to the proposed date of termination if all of the following apply:
(1)The dwelling or unit is alienable separate from the title to any other dwelling unit.
(2)The owner has contracted to sell the dwelling or unit to a bona fide purchaser for value, and has established an escrow with a title insurer or an underwritten title company, as defined in Sections 12340.4 and 12340.5 of the Insurance Code, respectively, a licensed escrow agent, as defined in Sections 17004 and 17200 of the Financial Code, or a licensed real estate broker, as defined in Section 10131 of the Business and Professions Code.
(3)The purchaser is a natural person or persons.
(4)The notice is given no more than 120 days after the escrow has been established.
(5)Notice was not previously given to the tenant pursuant to this section.
(6)The purchaser in good faith intends to reside in the property for at least one full year after the termination of the tenancy.
(e)After an owner has given notice of the owners intention to terminate the tenancy pursuant to this section, a tenant may also give notice of the tenants intention to terminate the tenancy pursuant to this section, provided that the tenants notice is for a period at least as long as the term of the periodic tenancy and the proposed date of termination occurs before the owners proposed date of termination.
(f)The notices required by this section shall be given in the manner prescribed in Section 1162 of the Code of Civil Procedure or by sending a copy by certified or registered mail.
(g)This section may not be construed to affect the authority of a public entity that otherwise exists to regulate or monitor the basis for eviction.
(h)A notice given by an owner pursuant to this section shall contain, in substantially the same form, the following:
State law permits former tenants to reclaim abandoned personal property left at the former address of the tenant, subject to certain conditions. You may or may not be able to reclaim property without incurring additional costs, depending on the cost of storing the property and the length of time before it is reclaimed. In general, these costs will be lower the sooner you contact your former landlord after being notified that property belonging to you was left behind after you moved out.
(i)A landlord of a commercial real property shall include in the notice required by this section information on the provisions of this section.
(j)For the purposes of this section, the following definitions apply:
(1)Commercial real property means all real property in this state, except dwelling units subject to this chapter, mobilehomes as defined in Section 798.3, and recreational vehicles as defined in Section 799.29.
(2)Microenterprise has the same meaning as that term is defined in subdivision (a) of Section 18000 of the Business and Professions Code.
(3)Nonprofit organization means any private, nonprofit organization that qualifies under Section 501(c)(3) of the United States Internal Revenue Code of 1986.
(4)Qualified commercial tenant means a tenant of commercial real property that meets both of the following requirements:
(A)The tenant is a microenterprise, a restaurant with fewer than 10 employees, or a nonprofit organization with fewer than 20 employees.
(B)(i)Subject to clause (ii), the tenant has provided the landlord, within the previous 12 months, a written notice that the tenant is a qualified commercial tenant and a self-attestation regarding the number of employees, at such time the protections under this section come into place.
(ii)Unless the tenancy is from week to week, month to month, or other period less than a month, the tenant provided the notice and self-attestation described in clause (i) before or upon execution of the lease, and annually thereafter, at such time the protections under this section come into place.
SEC. 3.5.Section 1946.1 of the Civil Code is amended to read:1946.1.(a)Notwithstanding Section 1946, a hiring of residential real property or commercial real property by a qualified commercial tenant for a term not specified by the parties, is deemed to be renewed as stated in Section 1945, at the end of the term implied by law unless one of the parties gives written notice to the other of his or her the partys intention to terminate the tenancy, as provided in this section.
(b)An owner of a residential dwelling or commercial real property hired by a qualified commercial tenant giving notice pursuant to this section shall give notice at least 60 days prior to the proposed date of termination. A tenant giving notice pursuant to this section shall give notice for a period at least as long as the term of the periodic tenancy prior to the proposed date of termination.
(c)Notwithstanding subdivision (b), an owner of a residential dwelling or commercial real property hired by a qualified commercial tenant giving notice pursuant to this section shall give notice at least 30 days prior to the proposed date of termination if any a tenant or resident has resided in the dwelling or occupied the property for less than one year.
(d)Notwithstanding subdivision (b), an owner of a residential dwelling giving notice pursuant to this section shall give notice at least 30 days prior to the proposed date of termination if all of the following apply:
(1)The dwelling or unit is alienable separate from the title to any other dwelling unit.
(2)The owner has contracted to sell the dwelling or unit to a bona fide purchaser for value, and has established an escrow with a title insurer or an underwritten title company, as defined in Sections 12340.4 and 12340.5 of the Insurance Code, respectively, a licensed escrow agent, as defined in Sections 17004 and 17200 of the Financial Code, or a licensed real estate broker, as defined in Section 10131 of the Business and Professions Code.
(3)The purchaser is a natural person or persons.
(4)The notice is given no more than 120 days after the escrow has been established.
(5)Notice was not previously given to the tenant pursuant to this section.
(6)The purchaser in good faith intends to reside in the property for at least one full year after the termination of the tenancy.
(e)After an owner has given notice of his or her the owners intention to terminate the tenancy pursuant to this section, a tenant may also give notice of his or her the tenants intention to terminate the tenancy pursuant to this section, provided that the tenants notice is for a period at least as long as the term of the periodic tenancy and the proposed date of termination occurs before the owners proposed date of termination.
(f)The notices required by this section shall be given in the manner prescribed in Section 1162 of the Code of Civil Procedure or by sending a copy by certified or registered mail.
(g)This section may not be construed to affect the authority of a public entity that otherwise exists to regulate or monitor the basis for eviction.
(h)Any A notice given by an owner pursuant to this section shall contain, in substantially the same form, the following:
State law permits former tenants to reclaim abandoned personal property left at the former address of the tenant, subject to certain conditions. You may or may not be able to reclaim property without incurring additional costs, depending on the cost of storing the property and the length of time before it is reclaimed. In general, these costs will be lower the sooner you contact your former landlord after being notified that property belonging to you was left behind after you moved out.
(i)A landlord or its agent shall not charge a tenant a fee for serving, posting, or otherwise delivering any notice, as described in this section.
(j)A landlord of a commercial real property shall include in the notice required by this section information on the provisions of this section.
(k)For the purposes of this section, the following definitions apply:
(1)Commercial real property means all real property in this state, except dwelling units subject to this chapter, mobilehomes as defined in Section 798.3, and recreational vehicles as defined in Section 799.29.
(2)Microenterprise has the same meaning as that term is defined in subdivision (a) of Section 18000 of the Business and Professions Code.
(3)Nonprofit organization means any private, nonprofit organization that qualifies under Section 501(c)(3) of the United States Internal Revenue Code of 1986.
(4)Qualified commercial tenant means a tenant of commercial real property that meets both of the following requirements:
(A)The tenant is a microenterprise, a restaurant with fewer than 10 employees, or a nonprofit organization with fewer than 20 employees.
(B)(i)Subject to clause (ii), the tenant has provided the landlord, within the previous 12 months, a written notice that the tenant is a qualified commercial tenant and a self-attestation regarding the number of employees, at such time the protections under this section come into place.
(ii)Unless the tenancy is from week to week, month to month, or other period less than a month, the tenant provided the notice and self-attestation described in clause (i) before or upon execution of the lease, and annually thereafter, at such time the protections under this section come into place.
SEC. 4.Section 1950.9 is added to the Civil Code, to read:1950.9.(a)A landlord of a commercial real property shall not charge a qualified commercial tenant a fee to recover building operating costs unless all of the following apply:
(1)The building operating costs are allocated proportionately per tenant, by square footage, or another method as substantiated through supporting documentation provided by the landlord to the qualified commercial tenant.
(2)The building operating costs have been incurred within the previous 18 months, or are reasonably expected to be incurred within the next 12 months. months based on reasonable estimates.
(3)Before the execution of the lease, the landlord provides the prospective qualified commercial tenant a paper or electronic notice stating that the tenant may inspect any supporting documentation of building operating costs upon written request pursuant to paragraph (4).
(4)Within 30 days of a written request, the landlord provides the qualified commercial tenant supporting documentation of the previously incurred or reasonably expected building operating costs.
(5)The costs do not include expenses paid by a tenant directly to a third party.
(6)The costs do not include expenses for which a third party, tenant, or insurance reimbursed the landlord.
(b)A landlord of a commercial real property shall not charge a fee to recover any building operating costs from the qualified commercial tenant until the landlord provides the qualified commercial tenant supporting documentation pursuant to paragraph (4) of subdivision (a). documentation.
(c)During the course of a commercial tenancy, the landlord shall not alter the method or formula used to allocate building operating costs to the qualified commercial tenant in a way that increases the qualified commercial tenants share of those costs. costs, unless the qualified commercial tenant is provided with written notice of the change in the method or formula with supporting documentation of the basis of the alteration.
(d)In an action for an unlawful detainer, ejectment, or other action to recover possession based on a failure to pay a fee to recover building operating costs, a qualified commercial tenant may raise, as an affirmative defense, that the landlord violated this section.
(e)A landlord of a commercial real property who violates this section shall be liable to a qualified commercial tenant in a civil action for all of the following:
(1)Actual damages.
(2)In the courts discretion, reasonable attorneys fees and costs.
(3)Upon showing that the landlord, lessor, or their agent has acted willfully or with oppression, fraud, or malice both of the following:
(A)Three times the amount of actual damages.
(B)Punitive damages.
(f)The district attorney, city attorney, or county counsel in the jurisdiction in which the commercial real property is located, in the name of the city or county, may seek injunctive relief based on a violation of this section.
(g)Any waiver of a right under this section by a qualified commercial tenant shall be void as a matter of public policy.
(h)For the purposes of this section, the following definitions apply:
(1)Building operating costs means costs that are incurred on behalf of a tenant for the operation, maintenance, or repair of the commercial real property, including, but not limited to, maintenance of common areas, utilities that are not separately metered, and taxes or assessments charged to the landlord pursuant to property ownership.
(2)Commercial real property means all real property in this state, except dwelling units subject to this chapter, mobilehomes, as defined in Section 798.3, and recreational vehicles, as defined in Section 799.29.
(3)Microenterprise has the same meaning as that term is defined in subdivision (a) of Section 18000 of the Business and Professions Code.
(4)Nonprofit organization means any private nonprofit organization that qualifies under Section 501(c)(3) of the United States Internal Revenue Code of 1986.
(5)Qualified commercial tenant means a tenant of commercial real property that meets both of the following requirements:
(A)The tenant is a microenterprise, a restaurant with fewer than 10 employees, or a nonprofit organization with fewer than 20 employees.
(B)(i)Subject to clause (ii), the tenant has provided the landlord, within the previous 12 months, a written notice that the tenant is a qualified commercial tenant and a self-attestation regarding the number of employees, at such time the protections under this section come into place.
(ii)Unless the tenancy is from week to week, month to month, or other period less than a month, the tenant provided the notice and self-attestation described in clause (i) before or upon execution of the lease, and annually thereafter, at such time the protections under this section come into place.
(6)Supporting documentation means a dated and itemized quote, contract, receipt, or invoice from a licensed contractor or a provider of services that includes, but is not limited to, both of the following:
(A)A tabulation showing how the costs are allocated among tenants in compliance with paragraph (1) of subdivision (a).
(B)A signed and dated attestation by the landlord that the documentation and costs are true and correct.
(i)This section shall only apply to the following:
(1)Leases executed or tenancies commenced or renewed on or after January 1, 2025.
(2)A tenancy that is from week to week, month to month, or other period less than a month.
(3)A lease Leases executed or tenancies commenced before January 1, 2025, that does do not contain a provision regarding building operating costs.
(j)This section does not apply to assessment levied pursuant to Part 7 (commencing with Section 36600) of Division 18 of the Streets and Highways Code.
SEC. 5.Section 2.5 of this bill incorporates amendments to Section 1632 of the Civil Code proposed by both this bill and Assembly Bill 3281. That section of this bill shall only become operative if (1) both bills are enacted and become effective on or before January 1, 2025, (2) each bill amends Section 1632 of the Civil Code, and (3) this bill is enacted after Assembly Bill 3281, in which case Section 2 of this bill shall not become operative.
SEC. 6.Section 3.5 of this bill incorporates amendments to Section 1946.1 of the Civil Code proposed by both this bill and Senate Bill 611. That section of this bill shall only become operative if (1) both bills are enacted and become effective on or before January 1, 2025, (2) each bill amends Section 1946.1 of the Civil Code, and (3) this bill is enacted after Senate Bill 611, in which case Section 3 of this bill shall not become operative.
(a)(1)Except as provided in subdivision (b), in all leases of lands or tenements, or of any interest therein, from week to week, month to month, or other period less than a month, the landlord may, upon giving notice in writing to the tenant, in the manner prescribed by Section 1162 of the Code of Civil Procedure, change the terms of the lease to take effect, as to tenancies for less than one month, upon the expiration of a period at least as long as the term of the hiring itself, and, as to tenancies from month to month, to take effect at the expiration of not less than 30 days, but if that change takes effect within a rental term, the rent accruing from the first day of the term to the date of that change shall be computed at the rental rate obtained immediately prior to that change; provided, however, that it shall be competent for the parties to provide by an agreement in writing that a notice changing the terms thereof may be given at any time not less than seven days before the expiration of a term, to be effective upon the expiration of the term.
(2)The notice, when served upon the tenant, shall in and of itself operate and be effectual to create and establish, as a part of the lease, the terms, rents, and conditions specified in the notice, if the tenant shall continue to hold the premises after the notice takes effect.
(b)(1)In all leases of a residential dwelling, commercial real property by a qualified commercial tenant, or of any interest therein, from week to week, month to month, or other period less than a month, the landlord may increase the rent provided in the lease or rental agreement, upon giving written notice to the tenant, as follows, by either of the following procedures:
(A)By delivering a copy to the tenant personally.
(B)By serving a copy by mail under the procedures prescribed in Section 1013 of the Code of Civil Procedure.
(2)If the proposed rent increase for that tenant is 10 percent or less of the rental amount charged to that tenant at any time during the 12 months before the effective date of the increase, either in and of itself or when combined with any other rent increases for the 12 months before the effective date of the increase, the notice shall be delivered at least 30 days before the effective date of the increase, and subject to Section 1013 of the Code of Civil Procedure if served by mail.
(3)(A)If the proposed rent increase for that tenant is greater than 10 percent of the rental amount charged to that tenant at any time during the 12 months before the effective date of the increase, either in and of itself or when combined with any other rent increases for the 12 months before the effective date of the increase, the notice shall be delivered at least 90 days before the effective date of the increase, and subject to Section 1013 of the Code of Civil Procedure if served by mail.
(B)If the proposed rent increase for that tenant is caused by a change in a tenants income or family composition as determined by a recertification required by statute or regulation, the notice shall be delivered at least 30 days before the effective date of the increase as described in paragraph (2), and subparagraph (A) of this paragraph shall not apply.
(4)A landlord of a commercial real property shall include in the notice information on the provisions of this subdivision.
(5)In all leases for commercial real property by a qualified commercial tenant, a rent increase shall not be effective until the notice period required by this subdivision has expired.
(6)Notwithstanding any other provision of law, a violation of this subdivision by a landlord of a commercial real property does not entitle a qualified commercial tenant to civil penalties.
(7)For the purposes of this subdivision, the following definitions apply:
(A)Commercial real property means all real property in this state, except dwelling units subject to Chapter 2 (commencing with Section 1940) of Title 5 of Part 4 of Division 3, mobilehomes as defined in Section 798.3, and recreational vehicles as defined in Section 799.29.
(B)Microenterprise has the same meaning as that term is defined in subdivision (a) of Section 18000 of the Business and Professions Code.
(C)Nonprofit organization means any private, nonprofit organization that qualifies under Section 501(c)(3) of the United States Internal Revenue Code of 1986.
(D)Qualified commercial tenant means a tenant of commercial real property that meets both of the following requirements:
(i)The tenant is a microenterprise, a restaurant with fewer than 10 employees, or a nonprofit organization with fewer than 20 employees.
(ii)(I)Subject to subclause (II), the tenant has provided a landlord with the landlord, within the previous 12 months, a written notice that the tenant is a qualified commercial tenant and a self-attestation regarding the number of employees, at such time the protections under this subdivision come into place.
(II)Unless the tenancy is from week to week, month to month, or other period less than a month, the tenant provided the notice and self-attestation described in subclause (I) before or upon execution of the lease, and annually thereafter, at such time the protections under this subdivision come into place.
(c)If a state or federal statute, state or federal regulation, recorded regulatory agreement, or contract provides for a longer period of notice regarding a rent increase than that provided in subdivision (a) or (b), the personal service or mailing of the notice shall be in accordance with the longer period.
SEC. 2.Section 1632 of the Civil Code is amended to read:1632.(a)The Legislature hereby finds and declares all of the following:
(1)This section was enacted in 1976 to increase consumer information and protections for the states sizeable and growing Spanish-speaking population.
(2)Since 1976, the states population has become increasingly diverse and the number of Californians who speak languages other than English as their primary language at home has increased dramatically.
(3)According to data from the American Community Survey, which has replaced the decennial census for detailed socioeconomic information about United States residents, approximately 15.2 million Californians speak a language other than English at home, based on data from combined years 2009 through 2011. This compares to approximately 19.6 million people who speak only English at home. Among the Californians who speak a language other than English at home, approximately 8.4 million speak English very well, and another 3 million speak English well. The remaining 3.8 million Californians surveyed do not speak English well or do not speak English at all. Among this group, the five languages other than English that are most widely spoken at home are Spanish, Chinese, Tagalog, Vietnamese, and Korean. These five languages are spoken at home by approximately 3.5 million of the 3.8 million Californians with limited or no English proficiency, who speak a language other than English at home.
(b)A person engaged in a trade or business who negotiates primarily in Spanish, Chinese, Tagalog, Vietnamese, or Korean, orally or in writing, in the course of entering into any of the following, shall deliver to the other party to the contract or agreement, and any other person who will be signing the contract or agreement, and before the execution thereof, a translation of the contract or agreement in the language in which the contract or agreement was negotiated, that includes a translation of every term and condition in that contract or agreement:
(1)A contract or agreement subject to the provisions of Title 2 (commencing with Section 1801) of, and Chapter 2b (commencing with Section 2981) and Chapter 2d (commencing with Section 2985.7) of Title 14 of, Part 4 of Division 3.
(2)A loan or extension of credit secured other than by real property, or unsecured, for use primarily for personal, family, or household purposes.
(3)A lease, sublease, rental contract or agreement, or other term of tenancy contract or agreement, for a period of longer than one month, covering a dwelling, an apartment, or mobilehome, or other dwelling unit normally occupied as a residence.
(4)Notwithstanding paragraph (2), a loan or extension of credit for use primarily for personal, family, or household purposes in which the loan or extension of credit is subject to the provisions of Article 7 (commencing with Section 10240) of Chapter 3 of Part 1 of Division 4 of the Business and Professions Code, or Division 7 (commencing with Section 18000), or Division 9 (commencing with Section 22000) of the Financial Code.
(5)Notwithstanding paragraph (2), a reverse mortgage as described in Chapter 8 (commencing with Section 1923) of Title 4 of Part 4 of Division 3.
(6)A contract or agreement, containing a statement of fees or charges, entered into for the purpose of obtaining legal services, when the person who is engaged in business is currently licensed to practice law pursuant to Chapter 4 (commencing with Section 6000) of Division 3 of the Business and Professions Code.
(7)A foreclosure consulting contract subject to Article 1.5 (commencing with Section 2945) of Chapter 2 of Title 14 of Part 4 of Division 3.
(8)A lease, sublease, rental contract or agreement, or other term of tenancy contract or agreement covering a nonresidential-zoned commercial space. space entered into between a landlord and a qualified commercial tenant, on or after January 1, 2025.
(c)Notwithstanding subdivision (b), for a loan subject to this part and to Article 7 (commencing with Section 10240) of Chapter 3 of Part 1 of Division 4 of the Business and Professions Code, the delivery of a translation of the statement to the borrower required by Section 10240 of the Business and Professions Code in any of the languages specified in subdivision (b) in which the contract or agreement was negotiated, is in compliance with subdivision (b).
(d)At the time and place where a lease, sublease, or rental contract or agreement described in subdivision (b) is executed, notice in any of the languages specified in subdivision (b) in which the contract or agreement was negotiated shall be provided to the lessee or tenant.
(e)Provision by a supervised financial organization of a translation of the disclosures required by Regulation M or Regulation Z, and, if applicable, Division 7 (commencing with Section 18000) or Division 9 (commencing with Section 22000) of the Financial Code in any of the languages specified in subdivision (b) in which the contract or agreement was negotiated, prior to the execution of the contract or agreement, shall also be deemed in compliance with the requirements of subdivision (b) with regard to the original contract or agreement.
(1)Regulation M and Regulation Z mean any rule, regulation, or interpretation promulgated by the Board of Governors of the Federal Reserve System and any interpretation or approval issued by an official or employee duly authorized by the board to issue interpretations or approvals dealing with, respectively, consumer leasing or consumer lending, pursuant to the Federal Truth in Lending Act, as amended (15 U.S.C. Sec. 1601 et seq.).
(2)As used in this section, supervised financial organization means a bank, savings association as defined in Section 5102 of the Financial Code, credit union, or holding company, affiliate, or subsidiary thereof, or a person subject to Article 7 (commencing with Section 10240) of Chapter 3 of Part 1 of Division 4 of the Business and Professions Code, or Division 7 (commencing with Section 18000) or Division 9 (commencing with Section 22000) of the Financial Code.
(f)At the time and place where a contract or agreement described in paragraph (1) or (2) of subdivision (b) is executed, a notice in any of the languages specified in subdivision (b) in which the contract or agreement was negotiated shall be conspicuously displayed to the effect that the person described in subdivision (b) is required to provide a contract or agreement in the language in which the contract or agreement was negotiated, or a translation of the disclosures required by law in the language in which the contract or agreement was negotiated, as the case may be. If a person described in subdivision (b) does business at more than one location or branch, the requirements of this section shall apply only with respect to the location or branch at which the language in which the contract or agreement was negotiated is used.
(g)(1)The term contract or agreement, as used in this section, means the document creating the rights and obligations of the parties and includes any subsequent document making substantial changes in the rights and obligations of the parties. The term contract or agreement does not include any subsequent documents authorized or contemplated by the original document such as periodic statements, sales slips or invoices representing purchases made pursuant to a credit card agreement, a retail installment contract or account or other revolving sales or loan account, memoranda of purchases in an add-on sale, or refinancing of a purchase as provided by, or pursuant to, the original document.
(2)The term contract or agreement does not include a home improvement contract as defined in Sections 7151.2 and 7159 of the Business and Professions Code, nor does it include plans, specifications, description of work to be done and materials to be used, or collateral security taken or to be taken for the retail buyers obligation contained in a contract for the installation of goods by a contractor licensed pursuant to Chapter 9 (commencing with Section 7000) of Division 3 of the Business and Professions Code, if the home improvement contract or installation contract is otherwise a part of a contract described in subdivision (b).
(3)Matters ordinarily incorporated by reference in contracts or agreements as described in paragraph (3) of subdivision (b), including, but not limited to, rules and regulations governing a tenancy and inventories of furnishings to be provided by the person described in subdivision (b), are not included in the term contract or agreement.
(h)(1)This section does not apply to a person engaged in a trade or business who negotiates primarily in a language other than English, as described by subdivision (b), if the party with whom that person is negotiating is a buyer of goods or services, or receives a loan or extension of credit, or enters an agreement obligating that party as a tenant, lessee, or sublessee, or similarly obligates the party by contract or lease, and the party negotiates the terms of the contract, lease, or other obligation through the partys own interpreter.
(2)As used in this subdivision, the partys own interpreter means a person who is not a minor and who is able to speak fluently and read with full understanding both the English language and any of the languages specified in subdivision (b) in which the contract, lease, or other obligation was negotiated, and who is not employed by, or whose service is not made available through, the person engaged in the trade or business.
(3)This subdivision does not apply to a contract or agreement described in paragraph (8) of subdivision (b).
(i)Notwithstanding subdivision (b), a translation may retain the following elements of the executed English-language contract or agreement without translation: names and titles of individuals and other persons, addresses, brand names, trade names, trademarks, registered service marks, full or abbreviated designations of the make and model of goods or services, alphanumeric codes, numerals, dollar amounts expressed in numerals, dates, and individual words or expressions having no generally accepted non-English translation. It is permissible, but not required, that this translation be signed.
(j)The terms of the contract or agreement that is executed in the English language shall determine the rights and obligations of the parties. However, the translation of the contract or the disclosures required by subdivision (e) in any of the languages specified in subdivision (b) in which the contract or agreement was negotiated shall be admissible in evidence only to show that no contract was entered into because of a substantial difference in the material terms and conditions of the contract and the translation.
(k)(1)Upon a failure to comply with the provisions of this section, the person aggrieved may rescind the contract or agreement in the manner provided by this chapter. If the contract for a consumer credit sale or consumer lease that has been sold and assigned to a financial institution is rescinded pursuant to this subdivision, the consumer shall make restitution to and have restitution made by the person with whom the consumer made the contract and shall give notice of rescission to the assignee. Notwithstanding that the contract was assigned without recourse, the assignment shall be deemed rescinded, and the assignor shall promptly repurchase the contract from the assignee.
(2)Notwithstanding paragraph (1), only a qualified commercial tenant may rescind a contract described in paragraph (8) of subdivision (b) pursuant to this subdivision.
(l)For the purposes of this section, the following definitions apply:
(1)Commercial real property means all real property in this state, except dwelling units subject to Chapter 2 (commencing with Section 1940) of Title 5 of Part 4, mobilehomes, as defined in Section 798.3, and recreational vehicles, as defined in Section 799.29.
(2)Microenterprise has the same meaning as that term is defined in subdivision (a) of Section 18000 of the Business and Professions Code.
(3)Nonprofit organization means any private, nonprofit organization that qualifies under Section 501(c)(3) of the United States Internal Revenue Code of 1986.
(4)Qualified commercial tenant means a tenant of commercial real property that meets both of the following requirements:
(A)The tenant is a microenterprise, a restaurant with fewer than 10 employees, or a nonprofit organization with fewer than 20 employees.
(B)(i)Subject to clause (ii), the tenant has provided the landlord, within the prior 12 months, a written notice that the tenant is a qualified commercial tenant and a self-attestation regarding the number of employees, at such time the protections under this section come into place.
(ii)Unless the tenancy is from week to week, month to month, or other period less than a month, the tenant provided the notice and self-attestation described in clause (i) before or upon execution of the lease, and annually thereafter, at such time the protections under this section come into place.
SEC. 3.Section 1946.1 of the Civil Code is amended to read:1946.1.(a)Notwithstanding Section 1946, a hiring of residential real property or commercial real property by a qualified commercial tenant for a term not specified by the parties, is deemed to be renewed as stated in Section 1945, at the end of the term implied by law unless one of the parties gives written notice to the other of the partys intention to terminate the tenancy, as provided in this section.
(b)An owner of a residential dwelling or commercial real property hired by a qualified commercial tenant giving notice pursuant to this section shall give notice at least 60 days prior to the proposed date of termination. A tenant giving notice pursuant to this section shall give notice for a period at least as long as the term of the periodic tenancy prior to the proposed date of termination.
(c)Notwithstanding subdivision (b), an owner of a residential dwelling or commercial real property hired by a qualified commercial tenant giving notice pursuant to this section shall give notice at least 30 days prior to the proposed date of termination if a tenant or resident has resided in the dwelling or occupied the property for less than one year.
(d)Notwithstanding subdivision (b), an owner of a residential dwelling giving notice pursuant to this section shall give notice at least 30 days prior to the proposed date of termination if all of the following apply:
(1)The dwelling or unit is alienable separate from the title to any other dwelling unit.
(2)The owner has contracted to sell the dwelling or unit to a bona fide purchaser for value, and has established an escrow with a title insurer or an underwritten title company, as defined in Sections 12340.4 and 12340.5 of the Insurance Code, respectively, a licensed escrow agent, as defined in Sections 17004 and 17200 of the Financial Code, or a licensed real estate broker, as defined in Section 10131 of the Business and Professions Code.
(3)The purchaser is a natural person or persons.
(4)The notice is given no more than 120 days after the escrow has been established.
(5)Notice was not previously given to the tenant pursuant to this section.
(6)The purchaser in good faith intends to reside in the property for at least one full year after the termination of the tenancy.
(e)After an owner has given notice of the owners intention to terminate the tenancy pursuant to this section, a tenant may also give notice of the tenants intention to terminate the tenancy pursuant to this section, provided that the tenants notice is for a period at least as long as the term of the periodic tenancy and the proposed date of termination occurs before the owners proposed date of termination.
(f)The notices required by this section shall be given in the manner prescribed in Section 1162 of the Code of Civil Procedure or by sending a copy by certified or registered mail.
(g)This section may not be construed to affect the authority of a public entity that otherwise exists to regulate or monitor the basis for eviction.
(h)A notice given by an owner pursuant to this section shall contain, in substantially the same form, the following:
State law permits former tenants to reclaim abandoned personal property left at the former address of the tenant, subject to certain conditions. You may or may not be able to reclaim property without incurring additional costs, depending on the cost of storing the property and the length of time before it is reclaimed. In general, these costs will be lower the sooner you contact your former landlord after being notified that property belonging to you was left behind after you moved out.
(i)A landlord of a commercial real property shall include in the notice required by this section information on the provisions of this section.
(j)For the purposes of this section, the following definitions apply:
(1)Commercial real property means all real property in this state, except dwelling units subject to this chapter, mobilehomes as defined in Section 798.3, and recreational vehicles as defined in Section 799.29.
(2)Microenterprise has the same meaning as that term is defined in subdivision (a) of Section 18000 of the Business and Professions Code.
(3)Nonprofit organization means any private, nonprofit organization that qualifies under Section 501(c)(3) of the United States Internal Revenue Code of 1986.
(4)Qualified commercial tenant means a tenant of commercial real property that meets both of the following requirements:
(A)The tenant is a microenterprise, a restaurant with fewer than 10 employees, or a nonprofit organization with fewer than 20 employees.
(B)(i)Subject to clause (ii), the tenant has provided a landlord with the landlord, within the previous 12 months, a written notice that the tenant is a qualified commercial tenant and a self-attestation regarding the number of employees, at such time the protections under this section come into place.
(ii)Unless the tenancy is from week to week, month to month, or other period less than a month, the tenant provided the notice and self-attestation described in clause (i) before or upon execution of the lease, and annually thereafter, at such time the protections under this section come into place.
SEC. 4.Section 1950.9 is added to the Civil Code, to read:1950.9.(a)A landlord of a commercial real property may shall not charge a qualified commercial tenant a fee to recover building operating costs, also known as common area maintenance fees, only if costs unless all of the following apply:
(1)The costs are limited to maintenance or a repair by the landlord that is not required by the lease, landscaping, security, trash, disposal, or insurance.(2)The costs do not include expenses paid by the tenant directly to a third party.(3)The costs do not include expenses for which a third party, tenant, or insurance reimbursed the landlord.(4)(1)The building operating costs are allocated proportionately per tenant, by square footage, or another method as substantiated through supporting documentation provided by the landlord to the qualified commercial tenant.
(5)(2)The landlord provides the tenant supporting documentation proving that building operating costs have been incurred within the previous 18 months, or are reasonably expected to be incurred within the next 12 months, if requested by the tenant, as follows: months.
(A)Thirty days before the tenant is required to pay for the costs, unless the condition in subparagraph (B) is met.(B)Ninety days before the tenant is required to pay for the costs if the cost increase is 10 percent or more of the amount charged to the tenant for the operating costs at any time during the 12-month period before the effective date of the increase.(6)The landlord notifies the tenant of the right to receive supporting documentation pursuant to paragraph (5).(3)Before the execution of the lease, the landlord provides the prospective qualified commercial tenant a paper or electronic notice stating that the tenant may inspect any supporting documentation of building operating costs upon written request pursuant to paragraph (4).
(4)Within 30 days of a written request, the landlord provides the qualified commercial tenant supporting documentation of the previously incurred or reasonably expected building operating costs.
(5)The costs do not include expenses paid by a tenant directly to a third party.
(6)The costs do not include expenses for which a third party, tenant, or insurance reimbursed the landlord.
(b)A landlord of a commercial real property shall not charge a fee to recover any building operating costs from the qualified commercial tenant until the landlord provides the qualified commercial tenant supporting documentation pursuant to paragraph (4) of subdivision (a).
(c)During the course of a commercial tenancy, the landlord shall not alter the method or formula used to allocate building operating costs to the qualified commercial tenant in a way that increases the qualified commercial tenants share of those costs.
(b)(d)In an action for an unlawful detainer, ejectment, or other action to recover possession based on a failure to pay a fee to recover building operating costs, a qualified commercial tenant may raise, as an affirmative defense, that the landlord violated this section.
(c)(e)A landlord of a commercial real property who violates this section shall be subject to a civil penalty of three times the amount of actual damages proximately suffered by the qualified commercial tenant, and the qualified commercial tenant shall be entitled to an award of costs, including reasonable attorneys fees, reasonably incurred in connection with obtaining the civil penalty. liable to a qualified commercial tenant in a civil action for all of the following:
(1)Actual damages.
(2)In the courts discretion, reasonable attorneys fees and costs.
(3)Upon showing that the landlord, lessor, or their agent has acted willfully or with oppression, fraud, or malice both of the following:
(A)Three times the amount of actual damages.
(B)Punitive damages.
(f)The district attorney, city attorney, or county counsel in the jurisdiction in which the commercial real property is located, in the name of the city or county, may seek injunctive relief based on a violation of this section.
(d)(g)Any waiver of a right under this section by a qualified commercial tenant shall be void as a matter of public policy.
(e)(h)For the purposes of this section, the following definitions apply:
(1)Building operating costs means costs that are incurred on behalf of a tenant for the operation, maintenance, or repair of the commercial real property, including, but not limited to, maintenance of common areas, utilities that are not separately metered, and taxes or assessments charged to the landlord pursuant to property ownership.
(1)(2)Commercial real property means all real property in this state, except dwelling units subject to this chapter, mobilehomes mobilehomes, as defined in Section 798.3, and recreational vehicles vehicles, as defined in Section 799.29.
(2)(3)Microenterprise has the same meaning as that term is defined in subdivision (a) of Section 18000 of the Business and Professions Code.
(3)(4)Nonprofit organization means any private nonprofit organization that qualifies under Section 501(c)(3) of the United States Internal Revenue Code of 1986.
(4)(5)Qualified commercial tenant means a tenant of commercial real property that meets both of the following requirements:
(A)The tenant is a microenterprise, a restaurant with fewer than 10 employees, or a nonprofit organization with fewer than 20 employees.
(B)(i)Subject to clause (ii), the tenant has provided a landlord with the landlord, within the previous 12 months, a written notice that the tenant is a qualified commercial tenant and a self-attestation regarding the number of employees, at such time the protections under this section come into place.
(ii)Unless the tenancy is from week to week, month to month, or other period less than a month, the tenant provided the notice and self-attestation described in clause (i) before or upon execution of the lease, and annually thereafter, at such time the protections under this subdivision section come into place.
(5)(6)Supporting documentation means a dated and itemized quote, contract, receipt, or invoice from a licensed contractor or a provider of services that includes, but is not limited to, both of the following:
(A)A tabulation showing how the costs are allocated among tenants in compliance with paragraph (4) (1) of subdivision (a).
(B)A signed and dated attestation by the landlord that the documentation and costs are true and correct.
(i)This section shall only apply to the following:
(1)Leases executed or tenancies commenced or renewed on or after January 1, 2025.
(2)A tenancy that is from week to week, month to month, or other period less than a month.
(3)A lease that does not contain a provision regarding building operating costs.
(a)(1)Except as provided in subdivision (b), in all leases of lands or tenements, or of any interest therein, from week to week, month to month, or other period less than a month, the landlord may, upon giving notice in writing to the tenant, in the manner prescribed by Section 1162 of the Code of Civil Procedure, change the terms of the lease to take effect, as to tenancies for less than one month, upon the expiration of a period at least as long as the term of the hiring itself, and, as to tenancies from month to month, to take effect at the expiration of not less than 30 days, but if that change takes effect within a rental term, the rent accruing from the first day of the term to the date of that change shall be computed at the rental rate obtained immediately prior to that change; provided, however, that it shall be competent for the parties to provide by an agreement in writing that a notice changing the terms thereof may be given at any time not less than seven days before the expiration of a term, to be effective upon the expiration of the term.
(2)The notice, when served upon the tenant, shall in and of itself operate and be effectual to create and establish, as a part of the lease, the terms, rents, and conditions specified in the notice, if the tenant shall continue to hold the premises after the notice takes effect.
(b)(1)In all leases of a residential dwelling, commercial real property by a qualified commercial tenant, or of any interest therein, from week to week, month to month, or other period less than a month, the landlord may increase the rent provided in the lease or rental agreement, upon giving written notice to the tenant, as follows, by either of the following procedures:
(A)By delivering a copy to the tenant personally.
(B)By serving a copy by mail under the procedures prescribed in Section 1013 of the Code of Civil Procedure.
(2)If the proposed rent increase for that tenant is 10 percent or less of the rental amount charged to that tenant at any time during the 12 months before the effective date of the increase, either in and of itself or when combined with any other rent increases for the 12 months before the effective date of the increase, the notice shall be delivered at least 30 days before the effective date of the increase, and subject to Section 1013 of the Code of Civil Procedure if served by mail.
(3)(A)If the proposed rent increase for that tenant is greater than 10 percent of the rental amount charged to that tenant at any time during the 12 months before the effective date of the increase, either in and of itself or when combined with any other rent increases for the 12 months before the effective date of the increase, the notice shall be delivered at least 90 days before the effective date of the increase, and subject to Section 1013 of the Code of Civil Procedure if served by mail.
(B)If the proposed rent increase for that tenant is caused by a change in a tenants income or family composition as determined by a recertification required by statute or regulation, the notice shall be delivered at least 30 days before the effective date of the increase as described in paragraph (2), and subparagraph (A) of this paragraph shall not apply.
(4)A landlord of a commercial real property shall include in the notice information on the provisions of this subdivision.
(5)In all leases for commercial real property by a qualified commercial tenant, a rent increase shall not be effective until the notice period required by this subdivision has expired.
(6)Notwithstanding any other provision of law, a violation of this subdivision by a landlord of a commercial real property does not entitle a qualified commercial tenant to civil penalties.
(4)(7)For the purposes of this subdivision, the following definitions apply:
(A)Commercial real property means all real property in this state, except dwelling units subject to Chapter 2 (commencing with Section 1940) of Title 5 of Part 4 of Division 3, mobilehomes as defined in Section 798.3, and recreational vehicles as defined in Section 799.29.
(B)Microenterprise has the same meaning as that term is defined in subdivision (a) of Section 18000 of the Business and Professions Code.
(C)Nonprofit organization means any private, nonprofit organization that qualifies under Section 501(c)(3) of the United States Internal Revenue Code of 1986.
(D)Qualified commercial tenant means a tenant of commercial real property that is meets both of the following requirements:
(i)The tenant is a microenterprise, a restaurant with fewer than 25 10 employees, or a nonprofit organization with fewer than 50 20 employees. A qualified commercial
(ii)(I)Subject to subclause (II), the tenant shall provide has provided a landlord with a written notice that the tenant is a qualified commercial tenant and a self-attestation regarding the number of employees. employees, at such time the protections under this subdivision come into place.
(II)Unless the tenancy is from week to week, month to month, or other period less than a month, the tenant provided the notice and self-attestation described in subclause (I) before or upon execution of the lease, at such time the protections under this subdivision come into place.
(c)If a state or federal statute, state or federal regulation, recorded regulatory agreement, or contract provides for a longer period of notice regarding a rent increase than that provided in subdivision (a) or (b), the personal service or mailing of the notice shall be in accordance with the longer period.
SEC. 2.Section 1632 of the Civil Code is amended to read:1632.(a)The Legislature hereby finds and declares all of the following:
(1)This section was enacted in 1976 to increase consumer information and protections for the states sizeable and growing Spanish-speaking population.
(2)Since 1976, the states population has become increasingly diverse and the number of Californians who speak languages other than English as their primary language at home has increased dramatically.
(3)According to data from the American Community Survey, which has replaced the decennial census for detailed socioeconomic information about United States residents, approximately 15.2 million Californians speak a language other than English at home, based on data from combined years 2009 through 2011. This compares to approximately 19.6 million people who speak only English at home. Among the Californians who speak a language other than English at home, approximately 8.4 million speak English very well, and another 3 million speak English well. The remaining 3.8 million Californians surveyed do not speak English well or do not speak English at all. Among this group, the five languages other than English that are most widely spoken at home are Spanish, Chinese, Tagalog, Vietnamese, and Korean. These five languages are spoken at home by approximately 3.5 million of the 3.8 million Californians with limited or no English proficiency, who speak a language other than English at home.
(b)A person engaged in a trade or business who negotiates primarily in Spanish, Chinese, Tagalog, Vietnamese, or Korean, orally or in writing, in the course of entering into any of the following, shall deliver to the other party to the contract or agreement, and any other person who will be signing the contract or agreement, and before the execution thereof, a translation of the contract or agreement in the language in which the contract or agreement was negotiated, that includes a translation of every term and condition in that contract or agreement:
(1)A contract or agreement subject to the provisions of Title 2 (commencing with Section 1801) of, and Chapter 2b (commencing with Section 2981) and Chapter 2d (commencing with Section 2985.7) of Title 14 of, Part 4 of Division 3.
(2)A loan or extension of credit secured other than by real property, or unsecured, for use primarily for personal, family, or household purposes.
(3)A lease, sublease, rental contract or agreement, or other term of tenancy contract or agreement, for a period of longer than one month, covering a dwelling, an apartment, or mobilehome, or other dwelling unit normally occupied as a residence.
(4)Notwithstanding paragraph (2), a loan or extension of credit for use primarily for personal, family, or household purposes in which the loan or extension of credit is subject to the provisions of Article 7 (commencing with Section 10240) of Chapter 3 of Part 1 of Division 4 of the Business and Professions Code, or Division 7 (commencing with Section 18000), or Division 9 (commencing with Section 22000) of the Financial Code.
(5)Notwithstanding paragraph (2), a reverse mortgage as described in Chapter 8 (commencing with Section 1923) of Title 4 of Part 4 of Division 3.
(6)A contract or agreement, containing a statement of fees or charges, entered into for the purpose of obtaining legal services, when the person who is engaged in business is currently licensed to practice law pursuant to Chapter 4 (commencing with Section 6000) of Division 3 of the Business and Professions Code.
(7)A foreclosure consulting contract subject to Article 1.5 (commencing with Section 2945) of Chapter 2 of Title 14 of Part 4 of Division 3.
(8)A lease, sublease, rental contract or agreement, or other term of tenancy contract or agreement covering a nonresidential-zoned commercial space.
(c)Notwithstanding subdivision (b), for a loan subject to this part and to Article 7 (commencing with Section 10240) of Chapter 3 of Part 1 of Division 4 of the Business and Professions Code, the delivery of a translation of the statement to the borrower required by Section 10240 of the Business and Professions Code in any of the languages specified in subdivision (b) in which the contract or agreement was negotiated, is in compliance with subdivision (b).
(d)At the time and place where a lease, sublease, or rental contract or agreement described in subdivision (b) is executed, notice in any of the languages specified in subdivision (b) in which the contract or agreement was negotiated shall be provided to the lessee or tenant.
(e)Provision by a supervised financial organization of a translation of the disclosures required by Regulation M or Regulation Z, and, if applicable, Division 7 (commencing with Section 18000) or Division 9 (commencing with Section 22000) of the Financial Code in any of the languages specified in subdivision (b) in which the contract or agreement was negotiated, prior to the execution of the contract or agreement, shall also be deemed in compliance with the requirements of subdivision (b) with regard to the original contract or agreement.
(1)Regulation M and Regulation Z mean any rule, regulation, or interpretation promulgated by the Board of Governors of the Federal Reserve System and any interpretation or approval issued by an official or employee duly authorized by the board to issue interpretations or approvals dealing with, respectively, consumer leasing or consumer lending, pursuant to the Federal Truth in Lending Act, as amended (15 U.S.C. Sec. 1601 et seq.).
(2)As used in this section, supervised financial organization means a bank, savings association as defined in Section 5102 of the Financial Code, credit union, or holding company, affiliate, or subsidiary thereof, or a person subject to Article 7 (commencing with Section 10240) of Chapter 3 of Part 1 of Division 4 of the Business and Professions Code, or Division 7 (commencing with Section 18000) or Division 9 (commencing with Section 22000) of the Financial Code.
(f)At the time and place where a contract or agreement described in paragraph (1) or (2) of subdivision (b) is executed, a notice in any of the languages specified in subdivision (b) in which the contract or agreement was negotiated shall be conspicuously displayed to the effect that the person described in subdivision (b) is required to provide a contract or agreement in the language in which the contract or agreement was negotiated, or a translation of the disclosures required by law in the language in which the contract or agreement was negotiated, as the case may be. If a person described in subdivision (b) does business at more than one location or branch, the requirements of this section shall apply only with respect to the location or branch at which the language in which the contract or agreement was negotiated is used.
(g)(1)The term contract or agreement, as used in this section, means the document creating the rights and obligations of the parties and includes any subsequent document making substantial changes in the rights and obligations of the parties. The term contract or agreement does not include any subsequent documents authorized or contemplated by the original document such as periodic statements, sales slips or invoices representing purchases made pursuant to a credit card agreement, a retail installment contract or account or other revolving sales or loan account, memoranda of purchases in an add-on sale, or refinancing of a purchase as provided by, or pursuant to, the original document.
(2)The term contract or agreement does not include a home improvement contract as defined in Sections 7151.2 and 7159 of the Business and Professions Code, nor does it include plans, specifications, description of work to be done and materials to be used, or collateral security taken or to be taken for the retail buyers obligation contained in a contract for the installation of goods by a contractor licensed pursuant to Chapter 9 (commencing with Section 7000) of Division 3 of the Business and Professions Code, if the home improvement contract or installation contract is otherwise a part of a contract described in subdivision (b).
(3)Matters ordinarily incorporated by reference in contracts or agreements as described in paragraph (3) of subdivision (b), including, but not limited to, rules and regulations governing a tenancy and inventories of furnishings to be provided by the person described in subdivision (b), are not included in the term contract or agreement.
(h)(1)This section does not apply to a person engaged in a trade or business who negotiates primarily in a language other than English, as described by subdivision (b), if the party with whom that person is negotiating is a buyer of goods or services, or receives a loan or extension of credit, or enters an agreement obligating that party as a tenant, lessee, or sublessee, or similarly obligates the party by contract or lease, and the party negotiates the terms of the contract, lease, or other obligation through the partys own interpreter.
(2)As used in this subdivision, the partys own interpreter means a person who is not a minor and who is able to speak fluently and read with full understanding both the English language and any of the languages specified in subdivision (b) in which the contract, lease, or other obligation was negotiated, and who is not employed by, or whose service is not made available through, the person engaged in the trade or business.
(3)This subdivision does not apply to a contract or agreement described in paragraph (8) of subdivision (b).
(i)Notwithstanding subdivision (b), a translation may retain the following elements of the executed English-language contract or agreement without translation: names and titles of individuals and other persons, addresses, brand names, trade names, trademarks, registered service marks, full or abbreviated designations of the make and model of goods or services, alphanumeric codes, numerals, dollar amounts expressed in numerals, dates, and individual words or expressions having no generally accepted non-English translation. It is permissible, but not required, that this translation be signed.
(j)The terms of the contract or agreement that is executed in the English language shall determine the rights and obligations of the parties. However, the translation of the contract or the disclosures required by subdivision (e) in any of the languages specified in subdivision (b) in which the contract or agreement was negotiated shall be admissible in evidence only to show that no contract was entered into because of a substantial difference in the material terms and conditions of the contract and the translation.
(k)(1)Upon a failure to comply with the provisions of this section, the person aggrieved may rescind the contract or agreement in the manner provided by this chapter. If the contract for a consumer credit sale or consumer lease that has been sold and assigned to a financial institution is rescinded pursuant to this subdivision, the consumer shall make restitution to and have restitution made by the person with whom the consumer made the contract and shall give notice of rescission to the assignee. Notwithstanding that the contract was assigned without recourse, the assignment shall be deemed rescinded, and the assignor shall promptly repurchase the contract from the assignee.
(2)Notwithstanding paragraph (1), only a tenant may rescind a contract described in paragraph (8) of subdivision (b) pursuant to this subdivision.
SEC. 3.Section 1946.1 of the Civil Code is amended to read:1946.1.(a)Notwithstanding Section 1946, a hiring of residential real property or commercial real property by a qualified commercial tenant for a term not specified by the parties, is deemed to be renewed as stated in Section 1945, at the end of the term implied by law unless one of the parties gives written notice to the other of the partys intention to terminate the tenancy, as provided in this section.
(b)An owner of a residential dwelling or commercial real property hired by a qualified commercial tenant giving notice pursuant to this section shall give notice at least 60 days prior to the proposed date of termination. A tenant giving notice pursuant to this section shall give notice for a period at least as long as the term of the periodic tenancy prior to the proposed date of termination.
(c)Notwithstanding subdivision (b), an owner of a residential dwelling or commercial real property hired by a qualified commercial tenant giving notice pursuant to this section shall give notice at least 30 days prior to the proposed date of termination if a tenant or resident has resided in the dwelling or occupied the property for less than one year.
(d)Notwithstanding subdivision (b), an owner of commercial real property hired by a qualified commercial tenant giving notice pursuant to this section shall give notice at least 90 days prior to the proposed date of termination if a tenant has occupied the property for three or more years.(e)(d)Notwithstanding subdivision (b), an owner of a residential dwelling giving notice pursuant to this section shall give notice at least 30 days prior to the proposed date of termination if all of the following apply:
(1)The dwelling or unit is alienable separate from the title to any other dwelling unit.
(2)The owner has contracted to sell the dwelling or unit to a bona fide purchaser for value, and has established an escrow with a title insurer or an underwritten title company, as defined in Sections 12340.4 and 12340.5 of the Insurance Code, respectively, a licensed escrow agent, as defined in Sections 17004 and 17200 of the Financial Code, or a licensed real estate broker, as defined in Section 10131 of the Business and Professions Code.
(3)The purchaser is a natural person or persons.
(4)The notice is given no more than 120 days after the escrow has been established.
(5)Notice was not previously given to the tenant pursuant to this section.
(6)The purchaser in good faith intends to reside in the property for at least one full year after the termination of the tenancy.
(f)(e)After an owner has given notice of the owners intention to terminate the tenancy pursuant to this section, a tenant may also give notice of the owners tenants intention to terminate the tenancy pursuant to this section, provided that the tenants notice is for a period at least as long as the term of the periodic tenancy and the proposed date of termination occurs before the owners proposed date of termination.
(g)(f)The notices required by this section shall be given in the manner prescribed in Section 1162 of the Code of Civil Procedure or by sending a copy by certified or registered mail.
(h)(g)This section may not be construed to affect the authority of a public entity that otherwise exists to regulate or monitor the basis for eviction.
(i)(h)A notice given by an owner pursuant to this section shall contain, in substantially the same form, the following:
State law permits former tenants to reclaim abandoned personal property left at the former address of the tenant, subject to certain conditions. You may or may not be able to reclaim property without incurring additional costs, depending on the cost of storing the property and the length of time before it is reclaimed. In general, these costs will be lower the sooner you contact your former landlord after being notified that property belonging to you was left behind after you moved out.
(i)A landlord of a commercial real property shall include in the notice required by this section information on the provisions of this section.
(j)For the purposes of this section, the following definitions apply:(1)Commercial real property means all real property in this state, except dwelling units subject to this chapter, mobilehomes as defined in Section 798.3, and recreational vehicles as defined in Section 799.29.
(2)Microenterprise has the same meaning as that term is defined in subdivision (a) of Section 18000 of the Business and Professions Code.
(3)Nonprofit organization means any private, nonprofit organization that qualifies under Section 501(c)(3) of the United States Internal Revenue Code of 1986.
(4)Qualified commercial tenant means a tenant of commercial real property that is meets both of the following requirements:
(A)The tenant is a microenterprise, a restaurant with fewer than 25 10 employees, or a nonprofit organization with fewer than 50 20 employees. A qualified commercial
(B)(i)Subject to clause (ii), the tenant shall provide has provided a landlord with a written notice that the tenant is a qualified commercial tenant and a self-attestation regarding the number of employees. employees, at such time the protections under this section come into place.
(ii)Unless the tenancy is from week to week, month to month, or other period less than a month, the tenant provided the notice and self-attestation described in clause (i) before or upon execution of the lease, at such time the protections under this section come into place.
SEC. 4.Section 1950.7 of the Civil Code is amended to read:1950.7.(a)A payment or deposit of money the primary function of which is to secure the performance of a rental agreement for other than residential property or any part of the agreement, other than a payment or deposit, including an advance payment of rent, made to secure the execution of a rental agreement, shall be governed by the provisions of this section. With respect to residential property, the provisions of Section 1950.5 shall prevail.(b)(1)A landlord shall not demand or receive a payment or deposit of money from a qualified commercial tenant, however denominated, in an amount or value in excess of an amount equal to one months rent, in addition to rent for the first month paid on or before initial occupancy.(2)This subdivision does not apply to a payment or deposit of money requested by a landlord before January 1, 2025.(3)For the purposes of this subdivision, the following definitions apply:(A)Commercial real property means all real property in this state, except dwelling units subject to this chapter, mobilehomes as defined in Section 798.3, and recreational vehicles as defined in Section 799.29.(B)Microenterprise has the same meaning as that term is defined in subdivision (a) of Section 18000 of the Business and Professions Code.(C)Nonprofit organization means any private, nonprofit organization that qualifies under Section 501(c)(3) of the United States Internal Revenue Code of 1986.(D)Qualified commercial tenant means a tenant of commercial real property that is a microenterprise, a restaurant with fewer than 25 employees, or a nonprofit organization with fewer than 50 employees. A qualified commercial tenant shall provide a landlord with a self-attestation regarding the number of employees.(c)The payment or deposit of money shall be held by the landlord for the tenant who is party to the agreement. The claim of a tenant to the payment or deposit shall be prior to the claim of any creditor of the landlord, except a trustee in bankruptcy.(d)The landlord may claim of the payment or deposit only those amounts as are reasonably necessary to remedy tenant defaults in the payment of rent, to repair damages to the premises caused by the tenant, or to clean the premises upon termination of the tenancy, if the payment or deposit is made for any or all of those specific purposes.(1)If the claim of the landlord upon the payment or deposit is only for defaults in the payment of rent and the security deposit equals no more than one months rent plus a deposit amount clearly described as the payment of the last months rent, then any remaining portion of the payment or deposit shall be returned to the tenant at a time as may be mutually agreed upon by landlord and tenant, but in no event later than 30 days from the date the landlord receives possession of the premises.(2)If the claim of the landlord upon the payment or deposit is only for defaults in the payment of rent and the security deposit exceeds the amount of one months rent plus a deposit amount clearly described as the payment of the last months rent, then any remaining portion of the payment or deposit in excess of an amount equal to one months rent shall be returned to the tenant no later than two weeks after the date the landlord receives possession of the premises, with the remainder to be returned or accounted for within 30 days from the date the landlord receives possession of the premises.(3)If the claim of the landlord upon the payment or deposit includes amounts reasonably necessary to repair damages to the premises caused by the tenant or to clean the premises, then any remaining portion of the payment or deposit shall be returned to the tenant at a time as may be mutually agreed upon by landlord and tenant, but in no event later than 30 days from the date the landlord receives possession of the premises.(e)Upon termination of the landlords interest in the unit in question, whether by sale, assignment, death, appointment of receiver or otherwise, the landlord or the landlords agent shall, within a reasonable time, do one of the following acts, either of which shall relieve the landlord of further liability with respect to the payment or deposit:(1)Transfer the portion of the payment or deposit remaining after any lawful deductions made under subdivision (d) to the landlords successor in interest, and thereafter notify the tenant by personal delivery or certified mail of the transfer, of any claims made against the payment or deposit, and of the transferees name and address. If the notice to the tenant is made by personal delivery, the tenant shall acknowledge receipt of the notice and sign the tenants name on the landlords copy of the notice.(2)Return the portion of the payment or deposit remaining after any lawful deductions made under subdivision (d) to the tenant.(f)Upon receipt of any portion of the payment or deposit under paragraph (1) of subdivision (e), the transferee shall have all of the rights and obligations of a landlord holding the payment or deposit with respect to the payment or deposit.(g)The bad faith retention by a landlord or transferee of a payment or deposit or any portion thereof, in violation of this section, may subject the landlord or the transferee to damages not to exceed two hundred dollars ($200), in addition to any actual damages.SEC. 5.SEC. 4.Section 1950.9 is added to the Civil Code, to read:1950.9.(a)A landlord of a commercial real property may increase charge a qualified commercial tenants rent tenant a fee to recover building operating costs costs, also known as common area maintenance fees, only if all of the following apply:
(1)The costs are limited to maintenance, maintenance or a repair by the landlord that is not required by the lease, landscaping, security, trash, disposal, or insurance.
(2)The costs were do not include expenses paid by the tenant directly to a third party.
(3)A The costs do not include expenses for which a third party, a tenant, or insurance did not reimburse reimbursed the landlord for the costs. landlord.
(4)The costs are allocated proportionately per tenant, by square footage, or another method as substantiated through supporting documentation provided by the landlord to the tenant.
(5)The landlord notifies the tenant of the costs, and the costs were incurred within 18 months of the notification.(6)(5)The landlord provides the tenant supporting documentation proving that operating costs have been incurred, incurred within the previous 18 months, or are reasonably expected to be incurred within the next 12 months, if requested by the tenant, as follows:
(A)Thirty days before the rent increase if the rent increase is less than 10 percent of the rent charged within the 12-month period before the increase. tenant is required to pay for the costs, unless the condition in subparagraph (B) is met.
(B)Ninety days before the rent increase tenant is required to pay for the costs if the rent cost increase is 10 percent or more of the rent amount charged within to the tenant for the operating costs at any time during the 12-month period before the effective date of the increase.
(6)The landlord notifies the tenant of the right to receive supporting documentation pursuant to paragraph (5).
(b)In an action for an unlawful detainer, ejectment, or other action to recover possession, possession based on a failure to pay a fee to recover operating costs, a qualified commercial tenant may raise, as an affirmative defense, that the landlord violated this section.
(c)A landlord of a commercial real property who violates this section shall be subject to a civil penalty of three times the amount of actual damages proximately suffered by the qualified commercial tenant, and the qualified commercial tenant shall be entitled to an award of costs, including reasonable attorneys fees, reasonably incurred in connection with obtaining the civil penalty.
(d)Any waiver of a right under this section by a qualified commercial tenant shall be void as a matter of public policy.
(e)For the purposes of this section, the following definitions apply:(1)Commercial real property means all real property in this state, except dwelling units subject to this chapter, mobilehomes as defined in Section 798.3, and recreational vehicles as defined in Section 799.29.
(1)(2)Microenterprise has the same meaning as that term is defined in subdivision (a) of Section 18000 of the Business and Professions Code.
(2)(3)Nonprofit organization means any private nonprofit organization that qualifies under Section 501(c)(3) of the United States Internal Revenue Code of 1986.
(3)(4)Qualified commercial tenant means a tenant of commercial real property that is meets both of the following requirements:
(A)The tenant is a microenterprise, a restaurant with fewer than 25 10 employees, or a nonprofit organization with fewer than 50 20 employees. A qualified commercial
(B)(i)Subject to clause (ii), the tenant shall provide has provided a landlord with a written notice that the tenant is a qualified commercial tenant and a self-attestation regarding the number of employees. employees, at such time the protections under this section come into place.
(ii)Unless the tenancy is from week to week, month to month, or other period less than a month, the tenant provided the notice and self-attestation described in clause (i) before or upon execution of the lease, at such time the protections under this subdivision come into place.
(4)(5)Supporting documentation means a dated and itemized quote, contract, receipt, or invoice from a licensed contractor or a provider of services that includes, but is not limited to, both of the following:
(A)A tabulation showing how the costs are allocated among tenants in compliance with paragraph (4) of subdivision (a).
(B)A signed and dated attestation by the landlord that the documentation and costs are true and correct.
(a)(1)Except as provided in subdivision (b), in all leases of lands or tenements, or of any interest therein, from week to week, month to month, or other period less than a month, the landlord may, upon giving notice in writing to the tenant, in the manner prescribed by Section 1162 of the Code of Civil Procedure, change the terms of the lease to take effect, as to tenancies for less than one month, upon the expiration of a period at least as long as the term of the hiring itself, and, as to tenancies from month to month, to take effect at the expiration of not less than 30 days, but if that change takes effect within a rental term, the rent accruing from the first day of the term to the date of that change shall be computed at the rental rate obtained immediately prior to that change; provided, however, that it shall be competent for the parties to provide by an agreement in writing that a notice changing the terms thereof may be given at any time not less than seven days before the expiration of a term, to be effective upon the expiration of the term.
(2)The notice, when served upon the tenant, shall in and of itself operate and be effectual to create and establish, as a part of the lease, the terms, rents, and conditions specified in the notice, if the tenant shall continue to hold the premises after the notice takes effect.
(b)(1)In all leases of a residential dwelling, commercial real property by a qualified commercial tenant, or of any interest therein, from week to week, month to month, or other period less than a month, the landlord may increase the rent provided in the lease or rental agreement, upon giving written notice to the tenant, as follows, by either of the following procedures:
(A)By delivering a copy to the tenant personally.
(B)By serving a copy by mail under the procedures prescribed in Section 1013 of the Code of Civil Procedure.
(2)If the proposed rent increase for that tenant is 10 percent or less of the rental amount charged to that tenant at any time during the 12 months before the effective date of the increase, either in and of itself or when combined with any other rent increases for the 12 months before the effective date of the increase, the notice shall be delivered at least 30 days before the effective date of the increase, and subject to Section 1013 of the Code of Civil Procedure if served by mail.
(3)(A)If the proposed rent increase for that tenant is greater than 10 percent of the rental amount charged to that tenant at any time during the 12 months before the effective date of the increase, either in and of itself or when combined with any other rent increases for the 12 months before the effective date of the increase, the notice shall be delivered at least 90 days before the effective date of the increase, and subject to Section 1013 of the Code of Civil Procedure if served by mail.
(B)If the proposed rent increase for that tenant is caused by a change in a tenants income or family composition as determined by a recertification required by statute or regulation, the notice shall be delivered at least 30 days before the effective date of the increase as described in paragraph (2), and subparagraph (A) of this paragraph shall not apply.
(4)For the purposes of this subdivision, the following definitions apply:
(A)Commercial real property means all real property in this state, except dwelling units subject to Chapter 2 (commencing with Section 1940) of Title 5 of Part 4 of Division 3, mobilehomes as defined in Section 798.3, and recreational vehicles as defined in Section 799.29.
(B)Microenterprise has the same meaning as that term is defined in subdivision (a) of Section 18000 of the Business and Professions Code.
(B)(C)Nonprofit organization means any private, nonprofit organization that qualifies under Section 501(c)(3) of the United States Internal Revenue Code of 1986.
(C)(D)Qualified commercial tenant means a tenant of commercial real property that is either a business with fewer than 25 employees a microenterprise, a restaurant with fewer than 25 employees, or a nonprofit organization with fewer than 50 employees. A qualified commercial tenant shall provide a landlord with a self-attestation regarding the number of employees.
(c)If a state or federal statute, state or federal regulation, recorded regulatory agreement, or contract provides for a longer period of notice regarding a rent increase than that provided in subdivision (a) or (b), the personal service or mailing of the notice shall be in accordance with the longer period.
SEC. 3.SEC. 2.Section 1632 of the Civil Code is amended to read:1632.(a)The Legislature hereby finds and declares all of the following:
(1)This section was enacted in 1976 to increase consumer information and protections for the states sizeable and growing Spanish-speaking population.
(2)Since 1976, the states population has become increasingly diverse and the number of Californians who speak languages other than English as their primary language at home has increased dramatically.
(3)According to data from the American Community Survey, which has replaced the decennial census for detailed socioeconomic information about United States residents, approximately 15.2 million Californians speak a language other than English at home, based on data from combined years 2009 through 2011. This compares to approximately 19.6 million people who speak only English at home. Among the Californians who speak a language other than English at home, approximately 8.4 million speak English very well, and another 3 million speak English well. The remaining 3.8 million Californians surveyed do not speak English well or do not speak English at all. Among this group, the five languages other than English that are most widely spoken at home are Spanish, Chinese, Tagalog, Vietnamese, and Korean. These five languages are spoken at home by approximately 3.5 million of the 3.8 million Californians with limited or no English proficiency, who speak a language other than English at home.
(b)A person engaged in a trade or business who negotiates primarily in a language other than English, including, but not limited to, Spanish, Chinese, Tagalog, Vietnamese, or Korean, orally or in writing, in the course of entering into any of the following, shall deliver to the other party to the contract or agreement, and any other person who will be signing the contract or agreement, and before the execution thereof, a translation of the contract or agreement in the language in which the contract or agreement was negotiated, that includes a translation of every term and condition in that contract or agreement:
(1)A contract or agreement subject to the provisions of Title 2 (commencing with Section 1801) of, and Chapter 2b (commencing with Section 2981) and Chapter 2d (commencing with Section 2985.7) of Title 14 of, Part 4 of Division 3.
(2)A loan or extension of credit secured other than by real property, or unsecured, for use primarily for personal, family, or household purposes.
(3)A lease, sublease, rental contract or agreement, or other term of tenancy contract or agreement, for a period of longer than one month, covering a dwelling, an apartment, or mobilehome, or other dwelling unit normally occupied as a residence.
(4)Notwithstanding paragraph (2), a loan or extension of credit for use primarily for personal, family, or household purposes in which the loan or extension of credit is subject to the provisions of Article 7 (commencing with Section 10240) of Chapter 3 of Part 1 of Division 4 of the Business and Professions Code, or Division 7 (commencing with Section 18000), or Division 9 (commencing with Section 22000) of the Financial Code.
(5)Notwithstanding paragraph (2), a reverse mortgage as described in Chapter 8 (commencing with Section 1923) of Title 4 of Part 4 of Division 3.
(6)A contract or agreement, containing a statement of fees or charges, entered into for the purpose of obtaining legal services, when the person who is engaged in business is currently licensed to practice law pursuant to Chapter 4 (commencing with Section 6000) of Division 3 of the Business and Professions Code.
(7)A foreclosure consulting contract subject to Article 1.5 (commencing with Section 2945) of Chapter 2 of Title 14 of Part 4 of Division 3.
(8)A lease, sublease, rental contract or agreement, or other term of tenancy contract or agreement covering a nonresidential-zoned commercial space.
(c)Notwithstanding subdivision (b), for a loan subject to this part and to Article 7 (commencing with Section 10240) of Chapter 3 of Part 1 of Division 4 of the Business and Professions Code, the delivery of a translation of the statement to the borrower required by Section 10240 of the Business and Professions Code in any of the languages specified in subdivision (b) in which the contract or agreement was negotiated, is in compliance with subdivision (b).
(d)At the time and place where a lease, sublease, or rental contract or agreement described in subdivision (b) is executed, notice in any of the languages specified in subdivision (b) in which the contract or agreement was negotiated shall be provided to the lessee or tenant.
(e)Provision by a supervised financial organization of a translation of the disclosures required by Regulation M or Regulation Z, and, if applicable, Division 7 (commencing with Section 18000) or Division 9 (commencing with Section 22000) of the Financial Code in any of the languages specified in subdivision (b) in which the contract or agreement was negotiated, prior to the execution of the contract or agreement, shall also be deemed in compliance with the requirements of subdivision (b) with regard to the original contract or agreement.
(1)Regulation M and Regulation Z mean any rule, regulation, or interpretation promulgated by the Board of Governors of the Federal Reserve System and any interpretation or approval issued by an official or employee duly authorized by the board to issue interpretations or approvals dealing with, respectively, consumer leasing or consumer lending, pursuant to the Federal Truth in Lending Act, as amended (15 U.S.C. Sec. 1601 et seq.).
(2)As used in this section, supervised financial organization means a bank, savings association as defined in Section 5102 of the Financial Code, credit union, or holding company, affiliate, or subsidiary thereof, or a person subject to Article 7 (commencing with Section 10240) of Chapter 3 of Part 1 of Division 4 of the Business and Professions Code, or Division 7 (commencing with Section 18000) or Division 9 (commencing with Section 22000) of the Financial Code.
(f)At the time and place where a contract or agreement described in paragraph (1) or (2) of subdivision (b) is executed, a notice in any of the languages specified in subdivision (b) in which the contract or agreement was negotiated shall be conspicuously displayed to the effect that the person described in subdivision (b) is required to provide a contract or agreement in the language in which the contract or agreement was negotiated, or a translation of the disclosures required by law in the language in which the contract or agreement was negotiated, as the case may be. If a person described in subdivision (b) does business at more than one location or branch, the requirements of this section shall apply only with respect to the location or branch at which the language in which the contract or agreement was negotiated is used.
(g)(1)The term contract or agreement, as used in this section, means the document creating the rights and obligations of the parties and includes any subsequent document making substantial changes in the rights and obligations of the parties. The term contract or agreement does not include any subsequent documents authorized or contemplated by the original document such as periodic statements, sales slips or invoices representing purchases made pursuant to a credit card agreement, a retail installment contract or account or other revolving sales or loan account, memoranda of purchases in an add-on sale, or refinancing of a purchase as provided by, or pursuant to, the original document.
(2)The term contract or agreement does not include a home improvement contract as defined in Sections 7151.2 and 7159 of the Business and Professions Code, nor does it include plans, specifications, description of work to be done and materials to be used, or collateral security taken or to be taken for the retail buyers obligation contained in a contract for the installation of goods by a contractor licensed pursuant to Chapter 9 (commencing with Section 7000) of Division 3 of the Business and Professions Code, if the home improvement contract or installation contract is otherwise a part of a contract described in subdivision (b).
(3)Matters ordinarily incorporated by reference in contracts or agreements as described in paragraph (3) of subdivision (b), including, but not limited to, rules and regulations governing a tenancy and inventories of furnishings to be provided by the person described in subdivision (b), are not included in the term contract or agreement.
(h)(1) This section does not apply to a person engaged in a trade or business who negotiates primarily in a language other than English, as described by subdivision (b), if the party with whom that person is negotiating is a buyer of goods or services, or receives a loan or extension of credit, or enters an agreement obligating that party as a tenant, lessee, or sublessee, or similarly obligates the party by contract or lease, and the party negotiates the terms of the contract, lease, or other obligation through the partys own interpreter.
(2) As used in this subdivision, the partys own interpreter means a person who is not a minor and who is able to speak fluently and read with full understanding both the English language and any of the languages specified in subdivision (b) in which the contract, lease, or other obligation was negotiated, and who is not employed by, or whose service is not made available through, the person engaged in the trade or business.
(3)This subdivision does not apply to a contract or agreement described in paragraph (8) of subdivision (b).
(i)Notwithstanding subdivision (b), a translation may retain the following elements of the executed English-language contract or agreement without translation: names and titles of individuals and other persons, addresses, brand names, trade names, trademarks, registered service marks, full or abbreviated designations of the make and model of goods or services, alphanumeric codes, numerals, dollar amounts expressed in numerals, dates, and individual words or expressions having no generally accepted non-English translation. It is permissible, but not required, that this translation be signed.
(j)The terms of the contract or agreement that is executed in the English language shall determine the rights and obligations of the parties. However, the translation of the contract or the disclosures required by subdivision (e) in any of the languages specified in subdivision (b) in which the contract or agreement was negotiated shall be admissible in evidence only to show that no contract was entered into because of a substantial difference in the material terms and conditions of the contract and the translation.
(k)(1)Upon a failure to comply with the provisions of this section, the person aggrieved may rescind the contract or agreement in the manner provided by this chapter. If the contract for a consumer credit sale or consumer lease that has been sold and assigned to a financial institution is rescinded pursuant to this subdivision, the consumer shall make restitution to and have restitution made by the person with whom the consumer made the contract and shall give notice of rescission to the assignee. Notwithstanding that the contract was assigned without recourse, the assignment shall be deemed rescinded, and the assignor shall promptly repurchase the contract from the assignee.
(2)Notwithstanding paragraph (1), only a tenant may rescind a contract described in paragraph (8) of subdivision (b) pursuant to this subdivision.
SEC. 4.SEC. 3.Section 1946.1 of the Civil Code is amended to read:1946.1.(a)Notwithstanding Section 1946, a hiring of residential real property or commercial real property by a qualified commercial tenant for a term not specified by the parties, is deemed to be renewed as stated in Section 1945, at the end of the term implied by law unless one of the parties gives written notice to the other of the partys intention to terminate the tenancy, as provided in this section.
(b)An owner of a residential dwelling or commercial real property hired by a qualified commercial tenant giving notice pursuant to this section shall give notice at least 60 days prior to the proposed date of termination. A tenant giving notice pursuant to this section shall give notice for a period at least as long as the term of the periodic tenancy prior to the proposed date of termination.
(c)Notwithstanding subdivision (b), an owner of a residential dwelling or commercial real property hired by a qualified commercial tenant giving notice pursuant to this section shall give notice at least 30 days prior to the proposed date of termination if a tenant or resident has resided in the dwelling or occupied the property for less than one year.
(d)Notwithstanding subdivision (b), an owner of commercial real property hired by a qualified commercial tenant giving notice pursuant to this section shall give notice at least 90 days prior to the proposed date of termination if a tenant has occupied the property for three or more years.
(e)Notwithstanding subdivision (b), an owner of a residential dwelling giving notice pursuant to this section shall give notice at least 30 days prior to the proposed date of termination if all of the following apply:
(1)The dwelling or unit is alienable separate from the title to any other dwelling unit.
(2)The owner has contracted to sell the dwelling or unit to a bona fide purchaser for value, and has established an escrow with a title insurer or an underwritten title company, as defined in Sections 12340.4 and 12340.5 of the Insurance Code, respectively, a licensed escrow agent, as defined in Sections 17004 and 17200 of the Financial Code, or a licensed real estate broker, as defined in Section 10131 of the Business and Professions Code.
(3)The purchaser is a natural person or persons.
(4)The notice is given no more than 120 days after the escrow has been established.
(5)Notice was not previously given to the tenant pursuant to this section.
(6)The purchaser in good faith intends to reside in the property for at least one full year after the termination of the tenancy.
(f)After an owner has given notice of the owners intention to terminate the tenancy pursuant to this section, a tenant may also give notice of the owners intention to terminate the tenancy pursuant to this section, provided that the tenants notice is for a period at least as long as the term of the periodic tenancy and the proposed date of termination occurs before the owners proposed date of termination.
(g)The notices required by this section shall be given in the manner prescribed in Section 1162 of the Code of Civil Procedure or by sending a copy by certified or registered mail.
(h)This section may not be construed to affect the authority of a public entity that otherwise exists to regulate or monitor the basis for eviction.
(i)A notice given by an owner pursuant to this section shall contain, in substantially the same form, the following:
State law permits former tenants to reclaim abandoned personal property left at the former address of the tenant, subject to certain conditions. You may or may not be able to reclaim property without incurring additional costs, depending on the cost of storing the property and the length of time before it is reclaimed. In general, these costs will be lower the sooner you contact your former landlord after being notified that property belonging to you was left behind after you moved out.
(j)For the purposes of this section, the following definitions apply:
(1)Commercial real property means all real property in this state, except dwelling units subject to this chapter, mobilehomes as defined in Section 798.3, and recreational vehicles as defined in Section 799.29.
(2)Microenterprise has the same meaning as that term is defined in subdivision (a) of Section 18000 of the Business and Professions Code.
(2)(3)Nonprofit organization means any private, nonprofit organization that qualifies under Section 501(c)(3) of the United States Internal Revenue Code of 1986.
(3)(4)Qualified commercial tenant means a tenant of commercial real property that is either a business a microenterprise, a restaurant with fewer than 25 employees employees, or a nonprofit organization with fewer than 50 employees. A qualified commercial tenant shall provide a landlord with a self-attestation regarding the number of employees.
SEC. 5.SEC. 4.Section 1950.7 of the Civil Code is amended to read:1950.7.(a)A payment or deposit of money the primary function of which is to secure the performance of a rental agreement for other than residential property or any part of the agreement, other than a payment or deposit, including an advance payment of rent, made to secure the execution of a rental agreement, shall be governed by the provisions of this section. With respect to residential property, the provisions of Section 1950.5 shall prevail.
(b)(1)A landlord shall not demand or receive a payment or deposit of money from a qualified commercial tenant, however denominated, in an amount or value in excess of an amount equal to one months rent, in addition to rent for the first month paid on or before initial occupancy.
(2)This subdivision does not apply to a payment or deposit of money requested by a landlord before January 1, 2025.
(3)For the purposes of this subdivision, the following definitions apply:
(A)Commercial real property means all real property in this state, except dwelling units subject to this chapter, mobilehomes as defined in Section 798.3, and recreational vehicles as defined in Section 799.29.
(B)Microenterprise has the same meaning as that term is defined in subdivision (a) of Section 18000 of the Business and Professions Code.
(B)(C)Nonprofit organization means any private, nonprofit organization that qualifies under Section 501(c)(3) of the United States Internal Revenue Code of 1986.
(C)(D)Qualified commercial tenant means a tenant of commercial real property that is either a business a microenterprise, a restaurant with fewer than 25 employees employees, or a nonprofit organization with fewer than 50 employees. A qualified commercial tenant shall provide a landlord with a self-attestation regarding the number of employees.
(c)The payment or deposit of money shall be held by the landlord for the tenant who is party to the agreement. The claim of a tenant to the payment or deposit shall be prior to the claim of any creditor of the landlord, except a trustee in bankruptcy.
(d)The landlord may claim of the payment or deposit only those amounts as are reasonably necessary to remedy tenant defaults in the payment of rent, to repair damages to the premises caused by the tenant, or to clean the premises upon termination of the tenancy, if the payment or deposit is made for any or all of those specific purposes.
(1)If the claim of the landlord upon the payment or deposit is only for defaults in the payment of rent and the security deposit equals no more than one months rent plus a deposit amount clearly described as the payment of the last months rent, then any remaining portion of the payment or deposit shall be returned to the tenant at a time as may be mutually agreed upon by landlord and tenant, but in no event later than 30 days from the date the landlord receives possession of the premises.
(2)If the claim of the landlord upon the payment or deposit is only for defaults in the payment of rent and the security deposit exceeds the amount of one months rent plus a deposit amount clearly described as the payment of the last months rent, then any remaining portion of the payment or deposit in excess of an amount equal to one months rent shall be returned to the tenant no later than two weeks after the date the landlord receives possession of the premises, with the remainder to be returned or accounted for within 30 days from the date the landlord receives possession of the premises.
(3)If the claim of the landlord upon the payment or deposit includes amounts reasonably necessary to repair damages to the premises caused by the tenant or to clean the premises, then any remaining portion of the payment or deposit shall be returned to the tenant at a time as may be mutually agreed upon by landlord and tenant, but in no event later than 30 days from the date the landlord receives possession of the premises.
(e)Upon termination of the landlords interest in the unit in question, whether by sale, assignment, death, appointment of receiver or otherwise, the landlord or the landlords agent shall, within a reasonable time, do one of the following acts, either of which shall relieve the landlord of further liability with respect to the payment or deposit:
(1)Transfer the portion of the payment or deposit remaining after any lawful deductions made under subdivision (d) to the landlords successor in interest, and thereafter notify the tenant by personal delivery or certified mail of the transfer, of any claims made against the payment or deposit, and of the transferees name and address. If the notice to the tenant is made by personal delivery, the tenant shall acknowledge receipt of the notice and sign the tenants name on the landlords copy of the notice.
(2)Return the portion of the payment or deposit remaining after any lawful deductions made under subdivision (d) to the tenant.
(f)Upon receipt of any portion of the payment or deposit under paragraph (1) of subdivision (e), the transferee shall have all of the rights and obligations of a landlord holding the payment or deposit with respect to the payment or deposit.
(g)The bad faith retention by a landlord or transferee of a payment or deposit or any portion thereof, in violation of this section, may subject the landlord or the transferee to damages not to exceed two hundred dollars ($200), in addition to any actual damages.
SEC. 5.Section 1950.9 is added to the Civil Code, to read:1950.9.(a)A landlord may increase a qualified commercial tenants rent to recover building operating costs only if all of the following apply:
(1)The costs are limited to maintenance, a repair by the landlord that is not required by the lease, landscaping, security, trash, disposal, or insurance.
(2)The costs were not paid by the tenant directly to a third party.
(3)A third party, a tenant, or insurance did not reimburse the landlord for the costs.
(4)The costs are allocated proportionately per tenant, by square footage, or another method as substantiated through supporting documentation provided by the landlord to the tenant.
(5)The landlord notifies the tenant of the costs, and the costs were incurred within 18 months of the notification.
(6)The landlord provides the tenant supporting documentation proving that operating costs have been incurred, or are reasonably expected to be incurred within the next 12 months, as follows:
(A)Thirty days before the rent increase if the rent increase is less than 10 percent of the rent charged within the 12-month period before the increase.
(B)Ninety days before the rent increase if the rent increase is 10 percent or more of the rent charged within the 12-month period before the increase.
(b)In an action for an unlawful detainer, ejectment, or other action to recover possession, a qualified commercial tenant may raise, as an affirmative defense, that the landlord violated this section.
(c)A landlord who violates this section shall be subject to a civil penalty of three times the amount of actual damages proximately suffered by the qualified commercial tenant, and the qualified commercial tenant shall be entitled to an award of costs, including reasonable attorneys fees, reasonably incurred in connection with obtaining the civil penalty.
(d)Any waiver of a right under this section by a qualified commercial tenant shall be void as a matter of public policy.
(e)For the purposes of this section, the following definitions apply:
(1)Microenterprise has the same meaning as that term is defined in subdivision (a) of Section 18000 of the Business and Professions Code.
(2)Nonprofit organization means any private nonprofit organization that qualifies under Section 501(c)(3) of the United States Internal Revenue Code of 1986.
(3)Qualified commercial tenant means a tenant of commercial real property that is a microenterprise, a restaurant with fewer than 25 employees, or a nonprofit organization with fewer than 50 employees. A qualified commercial tenant shall provide a landlord with a self-attestation regarding the number of employees.
(4)Supporting documentation means a dated and itemized quote, contract, receipt, or invoice from a licensed contractor or a provider of services that includes, but is not limited to, both of the following:
(A)A tabulation showing how the costs are allocated among tenants in compliance with paragraph (4) of subdivision (a).
(B)A signed and dated attestation by the landlord that the documentation and costs are true and correct.
It is the intent of the Legislature to subsequently amend this act to increase transparency and equity in the application of common area maintenance and other fees charged to qualifying commercial tenants for leases executed on or after January 1, 2025.
SEC. 2.Section 827 of the Civil Code is amended to read:827.(a)(1)Except as provided in subdivision (b), in all leases of lands or tenements, or of any interest therein, from week to week, month to month, or other period less than a month, the landlord may, upon giving notice in writing to the tenant, in the manner prescribed by Section 1162 of the Code of Civil Procedure, change the terms of the lease to take effect, as to tenancies for less than one month, upon the expiration of a period at least as long as the term of the hiring itself, and, as to tenancies from month to month, to take effect at the expiration of not less than 30 days, but if that change takes effect within a rental term, the rent accruing from the first day of the term to the date of that change shall be computed at the rental rate obtained immediately prior to that change; provided, however, that it shall be competent for the parties to provide by an agreement in writing that a notice changing the terms thereof may be given at any time not less than seven days before the expiration of a term, to be effective upon the expiration of the term.
The(2)The notice, when served upon the tenant, shall in and of itself operate and be effectual to create and establish, as a part of the lease, the terms, rents, and conditions specified in the notice, if the tenant shall continue to hold the premises after the notice takes effect.
(b)(1)In all leases of a residential dwelling, commercial real property by a qualified commercial tenant, or of any interest therein, from week to week, month to month, or other period less than a month, the landlord may increase the rent provided in the lease or rental agreement, upon giving written notice to the tenant, as follows, by either of the following procedures:
(A)By delivering a copy to the tenant personally.
(B)By serving a copy by mail under the procedures prescribed in Section 1013 of the Code of Civil Procedure.
(2)If the proposed rent increase for that tenant is 10 percent or less of the rental amount charged to that tenant at any time during the 12 months before the effective date of the increase, either in and of itself or when combined with any other rent increases for the 12 months before the effective date of the increase, the notice shall be delivered at least 30 days before the effective date of the increase, and subject to Section 1013 of the Code of Civil Procedure if served by mail.
(3)(A)If the proposed rent increase for that tenant is greater than 10 percent of the rental amount charged to that tenant at any time during the 12 months before the effective date of the increase, either in and of itself or when combined with any other rent increases for the 12 months before the effective date of the increase, the notice shall be delivered at least 90 days before the effective date of the increase, and subject to Section 1013 of the Code of Civil Procedure if served by mail.
(B)If the proposed rent increase for that tenant is caused by a change in a tenants income or family composition as determined by a recertification required by statute or regulation, the notice shall be delivered at least 30 days before the effective date of the increase as described in paragraph (2), and subparagraph (A) of this paragraph shall not apply.
(4)For the purposes of this subdivision, the following definitions apply:
(A)Commercial real property means all real property in this state, except dwelling units subject to Chapter 2 (commencing with Section 1940) of Title 5 of Part 4 of Division 3, mobilehomes as defined in Section 798.3, and recreational vehicles as defined in Section 799.29.
(B)Nonprofit organization means any private, nonprofit organization that qualifies under Section 501(c)(3) of the United States Internal Revenue Code of 1986.
(C)Qualified commercial tenant means a tenant of commercial real property that is either a business with fewer than 25 employees or a nonprofit organization with fewer than 50 employees.
(c)If a state or federal statute, state or federal regulation, recorded regulatory agreement, or contract provides for a longer period of notice regarding a rent increase than that provided in subdivision (a) or (b), the personal service or mailing of the notice shall be in accordance with the longer period.
SEC. 3.Section 1632 of the Civil Code is amended to read:1632.(a)The Legislature hereby finds and declares all of the following:
(1)This section was enacted in 1976 to increase consumer information and protections for the states sizeable and growing Spanish-speaking population.
(2)Since 1976, the states population has become increasingly diverse and the number of Californians who speak languages other than English as their primary language at home has increased dramatically.
(3)According to data from the American Community Survey, which has replaced the decennial census for detailed socioeconomic information about United States residents, approximately 15.2 million Californians speak a language other than English at home, based on data from combined years 2009 through 2011. This compares to approximately 19.6 million people who speak only English at home. Among the Californians who speak a language other than English at home, approximately 8.4 million speak English very well, and another 3 million speak English well. The remaining 3.8 million Californians surveyed do not speak English well or do not speak English at all. Among this group, the five languages other than English that are most widely spoken at home are Spanish, Chinese, Tagalog, Vietnamese, and Korean. These five languages are spoken at home by approximately 3.5 million of the 3.8 million Californians with limited or no English proficiency, who speak a language other than English at home.
(b)Any A person engaged in a trade or business who negotiates primarily in a language other than English, including, but not limited to, Spanish, Chinese, Tagalog, Vietnamese, or Korean, orally or in writing, in the course of entering into any of the following, shall deliver to the other party to the contract or agreement, and any other person who will be signing the contract or agreement, and before the execution thereof, a translation of the contract or agreement in the language in which the contract or agreement was negotiated, that includes a translation of every term and condition in that contract or agreement:
(1)A contract or agreement subject to the provisions of Title 2 (commencing with Section 1801) of, and Chapter 2b (commencing with Section 2981) and Chapter 2d (commencing with Section 2985.7) of Title 14 of, Part 4 of Division 3.
(2)A loan or extension of credit secured other than by real property, or unsecured, for use primarily for personal, family, or household purposes.
(3)A lease, sublease, rental contract or agreement, or other term of tenancy contract or agreement, for a period of longer than one month, covering a dwelling, an apartment, or mobilehome, or other dwelling unit normally occupied as a residence.
(4)Notwithstanding paragraph (2), a loan or extension of credit for use primarily for personal, family, or household purposes in which the loan or extension of credit is subject to the provisions of Article 7 (commencing with Section 10240) of Chapter 3 of Part 1 of Division 4 of the Business and Professions Code, or Division 7 (commencing with Section 18000), or Division 9 (commencing with Section 22000) of the Financial Code.
(5)Notwithstanding paragraph (2), a reverse mortgage as described in Chapter 8 (commencing with Section 1923) of Title 4 of Part 4 of Division 3.
(6)A contract or agreement, containing a statement of fees or charges, entered into for the purpose of obtaining legal services, when the person who is engaged in business is currently licensed to practice law pursuant to Chapter 4 (commencing with Section 6000) of Division 3 of the Business and Professions Code.
(7)A foreclosure consulting contract subject to Article 1.5 (commencing with Section 2945) of Chapter 2 of Title 14 of Part 4 of Division 3.
(8)A lease, sublease, rental contract or agreement, or other term of tenancy contract or agreement covering a nonresidential-zoned commercial space.
(c)Notwithstanding subdivision (b), for a loan subject to this part and to Article 7 (commencing with Section 10240) of Chapter 3 of Part 1 of Division 4 of the Business and Professions Code, the delivery of a translation of the statement to the borrower required by Section 10240 of the Business and Professions Code in any of the languages specified in subdivision (b) in which the contract or agreement was negotiated, is in compliance with subdivision (b).
(d)At the time and place where a lease, sublease, or rental contract or agreement described in subdivision (b) is executed, notice in any of the languages specified in subdivision (b) in which the contract or agreement was negotiated shall be provided to the lessee or tenant.
(e)Provision by a supervised financial organization of a translation of the disclosures required by Regulation M or Regulation Z, and, if applicable, Division 7 (commencing with Section 18000) or Division 9 (commencing with Section 22000) of the Financial Code in any of the languages specified in subdivision (b) in which the contract or agreement was negotiated, prior to the execution of the contract or agreement, shall also be deemed in compliance with the requirements of subdivision (b) with regard to the original contract or agreement.
(1)Regulation M and Regulation Z mean any rule, regulation, or interpretation promulgated by the Board of Governors of the Federal Reserve System and any interpretation or approval issued by an official or employee duly authorized by the board to issue interpretations or approvals dealing with, respectively, consumer leasing or consumer lending, pursuant to the Federal Truth in Lending Act, as amended (15 U.S.C. Sec. 1601 et seq.).
(2)As used in this section, supervised financial organization means a bank, savings association as defined in Section 5102 of the Financial Code, credit union, or holding company, affiliate, or subsidiary thereof, or any a person subject to Article 7 (commencing with Section 10240) of Chapter 3 of Part 1 of Division 4 of the Business and Professions Code, or Division 7 (commencing with Section 18000) or Division 9 (commencing with Section 22000) of the Financial Code.
(f)At the time and place where a contract or agreement described in paragraph (1) or (2) of subdivision (b) is executed, a notice in any of the languages specified in subdivision (b) in which the contract or agreement was negotiated shall be conspicuously displayed to the effect that the person described in subdivision (b) is required to provide a contract or agreement in the language in which the contract or agreement was negotiated, or a translation of the disclosures required by law in the language in which the contract or agreement was negotiated, as the case may be. If a person described in subdivision (b) does business at more than one location or branch, the requirements of this section shall apply only with respect to the location or branch at which the language in which the contract or agreement was negotiated is used.
(g)(1)The term contract or agreement, as used in this section, means the document creating the rights and obligations of the parties and includes any subsequent document making substantial changes in the rights and obligations of the parties. The term contract or agreement does not include any subsequent documents authorized or contemplated by the original document such as periodic statements, sales slips or invoices representing purchases made pursuant to a credit card agreement, a retail installment contract or account or other revolving sales or loan account, memoranda of purchases in an add-on sale, or refinancing of a purchase as provided by, or pursuant to, the original document.
The(2)The term contract or agreement does not include a home improvement contract as defined in Sections 7151.2 and 7159 of the Business and Professions Code, nor does it include plans, specifications, description of work to be done and materials to be used, or collateral security taken or to be taken for the retail buyers obligation contained in a contract for the installation of goods by a contractor licensed pursuant to Chapter 9 (commencing with Section 7000) of Division 3 of the Business and Professions Code, if the home improvement contract or installation contract is otherwise a part of a contract described in subdivision (b).
Matters(3)Matters ordinarily incorporated by reference in contracts or agreements as described in paragraph (3) of subdivision (b), including, but not limited to, rules and regulations governing a tenancy and inventories of furnishings to be provided by the person described in subdivision (b), are not included in the term contract or agreement.
(h)(1) This section does not apply to any a person engaged in a trade or business who negotiates primarily in a language other than English, as described by subdivision (b), if the party with whom that person is negotiating is a buyer of goods or services, or receives a loan or extension of credit, or enters an agreement obligating that party as a tenant, lessee, or sublessee, or similarly obligates the party by contract or lease, and the party negotiates the terms of the contract, lease, or other obligation through the partys own interpreter.
(2) As used in this subdivision, the partys own interpreter means a person who is not a minor and who is able to speak fluently and read with full understanding both the English language and any of the languages specified in subdivision (b) in which the contract, lease, or other obligation was negotiated, and who is not employed by, or whose service is not made available through, the person engaged in the trade or business.
(3)This subdivision does not apply to a contract or agreement described in paragraph (8) of subdivision (b).
(i)Notwithstanding subdivision (b), a translation may retain the following elements of the executed English-language contract or agreement without translation: names and titles of individuals and other persons, addresses, brand names, trade names, trademarks, registered service marks, full or abbreviated designations of the make and model of goods or services, alphanumeric codes, numerals, dollar amounts expressed in numerals, dates, and individual words or expressions having no generally accepted non-English translation. It is permissible, but not required, that this translation be signed.
(j)The terms of the contract or agreement that is executed in the English language shall determine the rights and obligations of the parties. However, the translation of the contract or the disclosures required by subdivision (e) in any of the languages specified in subdivision (b) in which the contract or agreement was negotiated shall be admissible in evidence only to show that no contract was entered into because of a substantial difference in the material terms and conditions of the contract and the translation.
(k)(1)Upon a failure to comply with the provisions of this section, the person aggrieved may rescind the contract or agreement in the manner provided by this chapter. If the contract for a consumer credit sale or consumer lease that has been sold and assigned to a financial institution is rescinded pursuant to this subdivision, the consumer shall make restitution to and have restitution made by the person with whom the consumer made the contract and shall give notice of rescission to the assignee. Notwithstanding that the contract was assigned without recourse, the assignment shall be deemed rescinded, and the assignor shall promptly repurchase the contract from the assignee.
(2)Notwithstanding paragraph (1), only a tenant may rescind a contract described in paragraph (8) of subdivision (b) pursuant to this subdivision.
SEC. 4.Section 1946.1 of the Civil Code is amended to read:1946.1.(a)Notwithstanding Section 1946, a hiring of residential real property or commercial real property by a qualified commercial tenant for a term not specified by the parties, is deemed to be renewed as stated in Section 1945, at the end of the term implied by law unless one of the parties gives written notice to the other of his or her the partys intention to terminate the tenancy, as provided in this section.
(b)An owner of a residential dwelling or commercial real property hired by a qualified commercial tenant giving notice pursuant to this section shall give notice at least 60 days prior to the proposed date of termination. A tenant giving notice pursuant to this section shall give notice for a period at least as long as the term of the periodic tenancy prior to the proposed date of termination.
(c)Notwithstanding subdivision (b), an owner of a residential dwelling or commercial real property hired by a qualified commercial tenant giving notice pursuant to this section shall give notice at least 30 days prior to the proposed date of termination if any a tenant or resident has resided in the dwelling or occupied the property for less than one year.
(d)Notwithstanding subdivision (b), an owner of commercial real property hired by a qualified commercial tenant giving notice pursuant to this section shall give notice at least 90 days prior to the proposed date of termination if a tenant has occupied the property for three or more years.
(d)(e)Notwithstanding subdivision (b), an owner of a residential dwelling giving notice pursuant to this section shall give notice at least 30 days prior to the proposed date of termination if all of the following apply:
(1)The dwelling or unit is alienable separate from the title to any other dwelling unit.
(2)The owner has contracted to sell the dwelling or unit to a bona fide purchaser for value, and has established an escrow with a title insurer or an underwritten title company, as defined in Sections 12340.4 and 12340.5 of the Insurance Code, respectively, a licensed escrow agent, as defined in Sections 17004 and 17200 of the Financial Code, or a licensed real estate broker, as defined in Section 10131 of the Business and Professions Code.
(3)The purchaser is a natural person or persons.
(4)The notice is given no more than 120 days after the escrow has been established.
(5)Notice was not previously given to the tenant pursuant to this section.
(6)The purchaser in good faith intends to reside in the property for at least one full year after the termination of the tenancy.
(e)(f)After an owner has given notice of his or her the owners intention to terminate the tenancy pursuant to this section, a tenant may also give notice of his or her the owners intention to terminate the tenancy pursuant to this section, provided that the tenants notice is for a period at least as long as the term of the periodic tenancy and the proposed date of termination occurs before the owners proposed date of termination.
(f)(g)The notices required by this section shall be given in the manner prescribed in Section 1162 of the Code of Civil Procedure or by sending a copy by certified or registered mail.
(g)(h)This section may not be construed to affect the authority of a public entity that otherwise exists to regulate or monitor the basis for eviction.
(h)Any(i)A notice given by an owner pursuant to this section shall contain, in substantially the same form, the following:
State law permits former tenants to reclaim abandoned personal property left at the former address of the tenant, subject to certain conditions. You may or may not be able to reclaim property without incurring additional costs, depending on the cost of storing the property and the length of time before it is reclaimed. In general, these costs will be lower the sooner you contact your former landlord after being notified that property belonging to you was left behind after you moved out.
(j)For the purposes of this section, the following definitions apply:
(1)Commercial real property means all real property in this state, except dwelling units subject to this chapter, mobilehomes as defined in Section 798.3, and recreational vehicles as defined in Section 799.29.
(2)Nonprofit organization means any private, nonprofit organization that qualifies under Section 501(c)(3) of the United States Internal Revenue Code of 1986.
(3)Qualified commercial tenant means a tenant of commercial real property that is either a business with fewer than 25 employees or a nonprofit organization with fewer than 50 employees.
SEC. 5.Section 1950.7 of the Civil Code is amended to read:1950.7.(a)Any A payment or deposit of money the primary function of which is to secure the performance of a rental agreement for other than residential property or any part of the agreement, other than a payment or deposit, including an advance payment of rent, made to secure the execution of a rental agreement, shall be governed by the provisions of this section. With respect to residential property, the provisions of Section 1950.5 shall prevail.
(b)(1)A landlord shall not demand or receive a payment or deposit of money from a qualified commercial tenant, however denominated, in an amount or value in excess of an amount equal to one months rent, in addition to rent for the first month paid on or before initial occupancy.
(2)This subdivision does not apply to a payment or deposit of money requested by a landlord before January 1, 2025.
(3)For the purposes of this subdivision, the following definitions apply:
(A)Commercial real property means all real property in this state, except dwelling units subject to this chapter, mobilehomes as defined in Section 798.3, and recreational vehicles as defined in Section 799.29.
(B)Nonprofit organization means any private, nonprofit organization that qualifies under Section 501(c)(3) of the United States Internal Revenue Code of 1986.
(C)Qualified commercial tenant means a tenant of commercial real property that is either a business with fewer than 25 employees or a nonprofit organization with fewer than 50 employees.
(b)(c)The payment or deposit of money shall be held by the landlord for the tenant who is party to the agreement. The claim of a tenant to the payment or deposit shall be prior to the claim of any creditor of the landlord, except a trustee in bankruptcy.
(c)(d)The landlord may claim of the payment or deposit only those amounts as are reasonably necessary to remedy tenant defaults in the payment of rent, to repair damages to the premises caused by the tenant, or to clean the premises upon termination of the tenancy, if the payment or deposit is made for any or all of those specific purposes.
(1)If the claim of the landlord upon the payment or deposit is only for defaults in the payment of rent and the security deposit equals no more than one months rent plus a deposit amount clearly described as the payment of the last months rent, then any remaining portion of the payment or deposit shall be returned to the tenant at a time as may be mutually agreed upon by landlord and tenant, but in no event later than 30 days from the date the landlord receives possession of the premises.
(2)If the claim of the landlord upon the payment or deposit is only for defaults in the payment of rent and the security deposit exceeds the amount of one months rent plus a deposit amount clearly described as the payment of the last months rent, then any remaining portion of the payment or deposit in excess of an amount equal to one months rent shall be returned to the tenant no later than two weeks after the date the landlord receives possession of the premises, with the remainder to be returned or accounted for within 30 days from the date the landlord receives possession of the premises.
(3)If the claim of the landlord upon the payment or deposit includes amounts reasonably necessary to repair damages to the premises caused by the tenant or to clean the premises, then any remaining portion of the payment or deposit shall be returned to the tenant at a time as may be mutually agreed upon by landlord and tenant, but in no event later than 30 days from the date the landlord receives possession of the premises.
(d)(e)Upon termination of the landlords interest in the unit in question, whether by sale, assignment, death, appointment of receiver or otherwise, the landlord or the landlords agent shall, within a reasonable time, do one of the following acts, either of which shall relieve the landlord of further liability with respect to the payment or deposit:
(1)Transfer the portion of the payment or deposit remaining after any lawful deductions made under subdivision (c) (d) to the landlords successor in interest, and thereafter notify the tenant by personal delivery or certified mail of the transfer, of any claims made against the payment or deposit, and of the transferees name and address. If the notice to the tenant is made by personal delivery, the tenant shall acknowledge receipt of the notice and sign his or her the tenants name on the landlords copy of the notice.
(2)Return the portion of the payment or deposit remaining after any lawful deductions made under subdivision (c) (d) to the tenant.
(e)(f)Upon receipt of any portion of the payment or deposit under paragraph (1) of subdivision (d), (e), the transferee shall have all of the rights and obligations of a landlord holding the payment or deposit with respect to the payment or deposit.
(f)(g)The bad faith retention by a landlord or transferee of a payment or deposit or any portion thereof, in violation of this section, may subject the landlord or the transferee to damages not to exceed two hundred dollars ($200), in addition to any actual damages.
(g)This section is declarative of existing law and therefore operative as to all tenancies, leases, or rental agreements for other than residential property created or renewed on or after January 1, 1971.|
Date
|
Status
|
|---|---|
| Sep 30, 2024 | Chaptered by Secretary of State. Chapter 1015, Statutes of 2024. |
| Sep 30, 2024 | Approved by the Governor. |
| Sep 11, 2024 | Enrolled and presented to the Governor at 3 p.m. |
| Aug 31, 2024 | Assembly amendments concurred in. (Ayes 22. Noes 9. Page 5785.) Ordered to engrossing and enrolling. |
| Aug 30, 2024 | In Senate. Concurrence in Assembly amendments pending. |
| Aug 30, 2024 | Read third time. Passed. (Ayes 44. Noes 17. Page 7007.) Ordered to the Senate. |
| Aug 22, 2024 | Read third time and amended. |
| Aug 22, 2024 | Ordered to third reading. |
| Jun 27, 2024 | Read second time. Ordered to third reading. |
| Jun 26, 2024 | Read second time and amended. Ordered to second reading. |
| Jun 25, 2024 | From committee: Do pass as amended. (Ayes 7. Noes 2.) (June 25). |
| Jun 3, 2024 | Referred to Com. on JUD. |
| May 22, 2024 | In Assembly. Read first time. Held at Desk. |
| May 21, 2024 | Read third time. Passed. (Ayes 22. Noes 10. Page 4082.) Ordered to the Assembly. |
| May 8, 2024 | Read second time and amended. Ordered to third reading. |
| May 7, 2024 | From committee: Do pass as amended. (Ayes 9. Noes 2. Page 3820.) (April 30). |
| Apr 22, 2024 | From committee with author's amendments. Read second time and amended. Re-referred to Com. on JUD. |
| Apr 12, 2024 | Set for hearing April 30. |
| Feb 21, 2024 | Referred to Com. on JUD. |
| Feb 14, 2024 | From printer. May be acted upon on or after March 15. |
| Feb 13, 2024 | Introduced. Read first time. To Com. on RLS. for assignment. To print. |
|
Date
|
Description
|
Location
|
Votes
|
|
|---|---|---|---|---|
| Aug 31, 2024 | Unfinished Business SB1103 Menjivar et al. Concurrence | Senate Floor |
Passed |
|
| Aug 30, 2024 | SB 1103 Menjivar Senate Third Reading By Lee | Assembly Floor |
Passed |
|
| Jun 25, 2024 | Do pass as amended. | Assembly Standing Committee on Judiciary |
Passed |
|
| May 21, 2024 | Senate 3rd Reading SB1103 Menjivar | Senate Floor |
Passed |
|
| Apr 30, 2024 | Do pass as amended | Senate Standing Committee on Judiciary |
Passed |
This list shows positions taken on this bill by organizations on the date displayed, which is linked to the original source.
Positions by individuals are not included.
|
Organization
|
Position
|
Date
|
|---|---|---|
| AAPI Equity Alliance | ** Support | |
| ACCE Action | ** Support | |
| Access Plus Capital | ** Support | |
| Accessity | ** Support | |
| AHA Projects | ** Support | |
| Alliance for A Better Community | ** Support | |
| Alliance for Community Development | ** Support | |
| AltCap California | ** Support | |
| Angie Rojas | ** Support | |
| Apartment Association of Greater Los Angeles | ** Against | |
| API Small Business Collaborative | ** Support | |
| Arts for Healing and Justice Network | ** Support | |
| Asian Americans Advancing Justice Southern California | ** Support | |
| Asian Pacific Islander Small Business Collaborative | ** Support | |
| Asian Pacific Islander Small Business Program WBC LTSC Community Development Corp. | ** Support | |
| ASiAN, Inc. | ** Support | |
| Asociacion De Emprendedor@s | ** Support | |
| Ben Tzedek Legal Services | ** Support | |
| Bet Tzedek | ** Support | |
| Beverly-Vermont Community Land Trust | ** Support | |
| BOMA California | ** Against | |
| Building Owners and Managers Association of California | ** Against | |
| Cal Asian Chamber of Commerce | ** Against | |
| California Asian Pacific Chamber Of Commerce | ** Against | |
| California Association for Micro Enterprise Opportunity | ** Support | |
| California Association Of Realtors | ** Against | |
| California Black Chamber of Commerce | ** Support | |
| California Building Industry Association | ** Against | |
| California Business Properties Association | ** Against | |
| California Business Roundtable | ** Against | |
| California Chamber Of Commerce | ** Against | |
| California Coalition for Community Investment | ** Support | |
| California Community Economic Development Association | ** Support | |
| California Downtown Association | * Against | Jun 25, 2024 |
| California Environmental Voters | ** Support | |
| California Hispanic Chamber Of Commerce | ** Against | |
| California Immigrant Policy Center | ** Support | |
| California LGBT Arts Alliance | ** Support | |
| California Low-Income Consumer Coalition | ** Support | |
| California Manufacturers & Technology Association | ** Against | |
| California Mba | ** Against | |
| California Mortgage Bankers Association | ** Against | |
| California NOW | ** Support | |
| California Rental Housing Association | ** Against | |
| California State Council of Service Employees International Union | ** Support | |
| California Youth Empowerment Service | ** Support | |
| CalNonprofits | ** Support | |
| Cambodia Town, Inc. | ** Support | |
| CAMEO | ** Support | |
| CDC Small Business Finance | ** Support | |
| Cdtech | ** Support | |
| Center for Nonprofit Management | ** Support | |
| Charles & Company | ** Support | |
| Child Care Law Center | ** Support | |
| Child Development Corps | ** Support | |
| Chinatown Community Development Center | ** Support | |
| Chinatown Community for Equitable Development | ** Support | |
| City Heights CDC | ** Support | |
| City Of Daly City | ** Support | |
| City Of Los Angeles | ** Support | |
| City of San Jose | ** Support | |
| Community Development Technologies | ** Support | |
| Community Vision Capital and Consulting | ** Support | |
| Conaxion Inc. | ** Support | |
| Consumer Attorneys Of California | ** Support | |
| Corn A'copia Productions | ** Support | |
| Corporation | ** Support | |
| Council of Equity Advocacy San Diego | ** Support | |
| Courage California | ** Support | |
| Cupertino Chamber of Commerce | ** Against | |
| Danville Area Chamber of Commerce | ** Against | |
| Deborah Murphy Urban Design + Planning | ** Support | |
| Destination Crenshaw | ** Support | |
| Developers Conference | ** Support | |
| Discovery World Early Education Center | ** Support | |
| East Bay Community Law Center | ** Support | |
| East LA Community Corporation | ** Support | |
| Eastside LEADS | ** Support | |
| Ekstrepe, LLC | ** Support | |
| El Chaparrito Tacos LLC | ** Support | |
| El Corredor Restaurant | ** Support | |
| Ella Baker Center For Human Rights | ** Support | |
| Escargo.io | ** Support | |
| Estela Bravo Soperanes | ** Support | |
| Freedom Assembly, Inc. | ** Support | |
| Fresno Black Chamber | ** Support | |
| Fresno Pacific University Center for Community Transformation | ** Support | |
| Friends of the Los Angeles River | ** Support | |
| Go Local Sonoma County | ** Support | |
| Goddess Next Door Corporation | ** Support | |
| Greater High Desert Chamber of Commerce | ** Against | |
| Greater San Fernando Valley Chamber of Commerce | ** Against | |
| Green Line | * Support | Jun 25, 2024 |
| Greenlining Institute | ** Support | |
| Heal One World | ** Support | |
| Heart Centered Leadership Coaching & Consulting Group | ** Support | |
| Host Friendly LLC | ** Support | |
| Humbleroot | ** Support | |
| Huntington Beach Chamber of Commerce | ** Against | |
| I Did Something Good Today Foundation | ** Support | |
| Icon CDC | ** Support | |
| ICSC | ** Against | |
| Immigrant Defense Advocates | * Support | Jun 25, 2024 |
| Immigrants Rising | ** Support | |
| Inclusive Action for the City | ** Support | |
| Independent Hospitality Coalition | ** Support | |
| Inland Coalition for Immigrant Justice | ** Support | |
| Insight Center for Community Economic Development | ** Support | |
| Institute of Real Estate Management | ** Against | |
| International Council of Shopping Centers | ** Against | |
| Join Against Domestic Violence | ** Support | |
| Keren Subramanya | ** Support | |
| kiwa | ** Support | |
| Kmg Family Services | ** Support | |
| Koreatown Youth and Community Center | ** Support | |
| Kras Family Child Care LLC | ** Support | |
| LA Canada Flintridge Chamber of Commerce | ** Against | |
| LA Casa De Frida Los Angeles | ** Support | |
| La Cocina | ** Support | |
| LA Food Policy Council | ** Support | |
| la forward | ** Support | |
| la mas | ** Support | |
| LA Más | ** Support | |
| LA Percussion Rentals | ** Support | |
| Laguna Nigel Chamber of Commerce | ** Against | |
| Lawyers Committee for Civil Rights of the San Francisco Bay Area | ** Support | |
| Learning Rights Law Center | ** Support | |
| Legal Aid Foundation of Los Angeles | ** Support | |
| LISC Bay Area | ** Support | |
| Little Portion Social Center | ** Support | |
| Little Sprouts Language Immersion Preschool | ** Support | |
| Little Tokyo Community Council | ** Support | |
| Little Tokyo Service Center | ** Support | |
| Livermore Chamber Of Commerce | ** Against | |
| livermore valley chamber of commerce | ** Against | |
| Long Beach Area Chamber of Commerce | ** Against | |
| Long Beach Forward | ** Support | |
| Los Angeles County Business Federation | ** Against | |
| Los Angeles Neighborhood Land Trust | ** Support | |
| Madeline Garden | ** Support | |
| Mandela Partners | ** Support | |
| Manzanita Capital Collective | ** Support | |
| Mend-Meet Each Need With Dignity | ** Support | |
| Mend: Meet Each Need With Dignity | ** Support | |
| Microenterprise Collaboration | ** Support | |
| Middleman Merchandise | ** Support | |
| Mission Asset Fund | ** Support | |
| Mission Economic Development Agency | ** Support | |
| Modesto Chamber of Commerce | ** Against | |
| Monforte Studio | ** Support | |
| Montana Preschool Santa Monica | ** Support | |
| Multicultural Business Alliance | ** Support | |
| Naiop California | ** Against | |
| National Association for Latino Community Asset Builders | ** Support | |
| National CAPACD | ** Support | |
| Newport Beach Area Chamber of Commerce | ** Against | |
| Newport Beach Chamber of Commerce | ** Against | |
| Nonprofit Finance Fund | ** Support | |
| Oakland African American Chamber Of Commerce | ** Support | |
| Oakland Chamber of Commerce | ** Support | |
| Oakland Indie Alliance | ** Support | |
| Orange County Business Council | ** Against | |
| Pacific Asian Consortium in Employment | ** Support | |
| Pacific Community Ventures | ** Support | |
| Pact, an Adopt Alliance | ** Support | |
| Paloma Market | ** Support | |
| Project Equity | ** Support | |
| Public Counsel | ** Support | |
| Public Law Center | ** Support | |
| Rediscover Center | ** Support | |
| Renaissance Entrepreneurship Center | ** Support | |
| Rise Economy | ** Support | |
| Riverside County Black Chamber of Commerce | ** Support | |
| Sac Dispensary | ** Support | |
| Sacramento Hispanic Chamber of Commerce | ** Support | |
| Saje | ** Support | |
| San Diego Regional Chamber Of Commerce | ** Against | |
| San Francisco Filipino American Chamber of Commerce | ** Support | |
| Santa Clarita Valley Chamber of Commerce | ** Against | |
| Sara Daleiden Consulting | ** Support | |
| Score | ** Support | |
| Shakespeare Center of Los Angeles | ** Support | |
| Simi Valley Chamber of Commerce | ** Against | |
| Small Business Anti-displacement Network | ** Support | |
| Small Business Majority | ** Support | |
| South Asian Network | ** Support | |
| South Los Angeles Transit Empowerment Zone | ** Support | |
| Southeast Asian Community Alliance | ** Support | |
| Southern California Leadership Council | ** Against | |
| Stepping Out Performing Art Studio | * Support | Jun 25, 2024 |
| Strategic Actions for a Just Economy | ** Support | |
| Sustainable Economies Law Center | ** Support | |
| Syrenity Consulting | ** Support | |
| Team Friday | ** Support | |
| Thai Community Development Center | ** Support | |
| The Chamber Newport Beach | ** Against | |
| The Greenlining Institute | ** Support | |
| Therapy for Latinx | ** Support | |
| Tulare Chamber of Commerce | ** Against | |
| Ucan Chambers of Commerce | ** Against | |
| United Cambodian Community | ** Support | |
| United Core Alliance | ** Support | |
| United Neighbors In Defense Against Displacement | ** Support | |
| United Way of Greater Los Angeles | ** Support | |
| Uptima Entrepreneur Cooperative | ** Support | |
| Uptown Style Jamaican Food | ** Support | |
| Urban Soyal | ** Support | |
| Urtone Skin LLC | ** Support | |
| Valle Vida | ** Support | |
| Valley Industry & Commerce Association | ** Against | |
| Vermont Slauson Economic Development Corporation | ** Support | |
| Vermont-Slauson LDC, Inc. | ** Support | |
| Village Arts | ** Support | |
| Voices for Progress | ** Support | |
| Wah Gwaan Jamaican Kitchen Bar | ** Support | |
| Walker Community Ventures | ** Support | |
| Walnut Creek Chamber of Commerce | ** Against | |
| Western Manufactured Housing Communities Association | ** Against | |
| Women's Economic Ventures | ** Support | |
| Working Solutions | ** Support | |
| Working Solutions CDFI | ** Support | |
| Yi Family Child Care | ** Support | |
| ZOE International | ** Support |
SENATE RULES COMMITTEE Office of Senate Floor Analyses (916) 651-1520 Fax: (916) 327-4478 | SB 1103 |
UNFINISHED BUSINESS
Bill No: SB 1103
Author: Menjivar (D), et al.
Amended: 8/22/24
Vote: 21
SENATE JUDICIARY COMMITTEE: 9-2, 4/30/24
AYES: Umberg, Allen, Blakespear, Caballero, Dodd, Durazo, Laird, Min, Wiener
NOES: Wilk, Niello
SENATE FLOOR: 22-10, 5/21/24
AYES: Ashby, Atkins, Becker, Caballero, Durazo, Eggman, Gonzalez, Hurtado, Laird, Limón, McGuire, Menjivar, Min, Padilla, Roth, Rubio, Skinner, Smallwood-Cuevas, Stern, Umberg, Wahab, Wiener
NOES: Alvarado-Gil, Dahle, Dodd, Grove, Jones, Nguyen, Niello, Ochoa Bogh, Seyarto, Wilk
NO VOTE RECORDED: Allen, Archuleta, Blakespear, Bradford, Cortese, Glazer, Newman, Portantino
ASSEMBLY FLOOR: 44-17, 8/30/24 - See last page for vote
SUBJECT: Tenancy of commercial real properties: agreements: building operating costs
SOURCE: Bet Tzedek
California Association for Micro Enterprise Opportunity
Inclusive Action for the City
Lawyers’ Committee for Civil Rights of the San Francisco Bay Area
Public Counsel
Small Business Majority
DIGEST:
This bill extends various protections and notice requirements for lease terminations or rent increases to qualified commercial tenants, and places transparency and proportionality requirements for fees a landlord may charge a qualified commercial tenant to recover building operating costs.
Assembly Amendments
require that a qualified commercial tenant under the bill’s various provisions must have provided the required written notice that they are a qualified commercial tenant to their landlord within the previous 12 months; require that a qualified commercial tenant provide this self-attestation annually after providing it before or upon the execution of the lease; specify that the bill’s translation requirements apply to a lease or other tenancy for a non residential-zoned commercial space between a landlord and a qualified commercial tenant entered into on or after January 1, 2025; make various clarifying changes to the bill’s provisions on permissible building operating costs; amend the requirement that a landlord provide supporting documentation for building operating costs within 30 days of a written request; specify that a landlord may not alter the method or formula used to allocate building operating costs in a way that increases the qualified commercial tenant’s share of such costs unless the landlord provides the tenant written notice of the change with supporting documentation; rework the bill’s enforcement provisions for its building operating costs requirements to provide for reasonable attorney’s fees and costs at the court’s discretion, and that three times the amount of actual damages and punitive damages are allowable only upon a showing that the landlord, lessor, or agent acted willfully or with oppression, fraud, or malice; allow that a district attorney, city attorney, or county counsel of the appropriate jurisdiction may seek injunctive relief for a violation of the building operating costs provisions; limit the application of the bill’s building operating costs provisions to leases executed or commenced or renewed on or after January 1, 2025, a tenancy that is week to week, month to month, or other period less than a month, and to leases executed or commenced before January 1, 2025 that do not contain a provision regarding building operating costs; and incorporate technical amendments to avoid chaptering out issues with AB 3281 and SB 611.
ANALYSIS:
Existing law:
- Provides that, in all periodic leases of land or tenements, the landlord may, upon giving notice in writing to the tenant as prescribed, change the terms of the lease upon the expiration of a period at least as long as the rental term, as specified. Provides that, in all leases of a residential dwelling or any interest in it, the landlord may increase the rent upon giving written notice to the tenant by delivering a copy to the tenant personally or by serving a copy by mail. IF the proposed rent increase is 10 percent or less than the rental amount charged during the 12 months prior, the notice of the rent increase must be delivered at least 30 days before the effective date of the increase. Provides that, if the proposed rent increase is greater than 10 percent of the rent charged during any time in the 12 months prior, the notice must be delivered at least 90 days before the effective date of the increase. (Civ. Code § 827.)
- Requires that any person engaged in a trade or business who negotiates a specified contract or agreement primarily in Spanish, Chinese, Tagalog, Vietnamese, or Korean deliver to the other party to the contract or agreement, or anyone who will be signing the agreement, and before the execution of that contract or agreement, a translation of the contract or agreement in the language in which the contract was negotiated. (Civ. Code § 1632(b).)
- Provides an exception to this requirement where the party with whom the person engaged in a trade or business is negotiating negotiates the terms of the contract or agreement through their own interpreter.
- Provides that the terms in the English version of the contract shall determine the rights and obligations of the parties, and that the translated version may only be used in court as evidence to show that no contract was entered into because of substantial differences in material terms between the English version and the translated version.
- Provides that an aggrieved person for a violation of this provision may rescind the contract or agreement, as provided.
- Provides that, when residential real property is leased for an unspecified term, the lease is deemed renewed at the end of the term implied by law, unless one of the parties gives written notice to the other of their intent to terminate the tenancy. (Civ. Code § 1946.1.)
- Provides that, if the residential tenant has resided in the dwelling for less than a year, the landlord must provide notice of termination at least 30 days prior to the termination, and that the landlord must provide notice of termination at least 60 days prior to the termination if the tenant has resided in the residential property for a year or more, except as provided. Provides that a tenant must provide notice of their intention to terminate their tenancy for a periodic tenancy at least as long as the term of the periodic tenancy. If the tenant has received a notice of termination from the owner, the tenant may provide a notice of termination for a period at least as long as the term of a periodic tenancy, if such termination occurs before the owner’s date of termination. (Civ. Code § 1946.1(b)-(d).)
- Defines a “microenterprise” as a sole proprietorship, partnership, limited liability company, or corporation that:
- has five or fewer employees, including the owner, that may be part or full time employees;
- generally lacks sufficient access to loans, equity, or other financial capital. (Bus. & Prof. Code § 18000(a).)
This bill:
- Provides, for the purposes of its various statutory changes, the following definitions:
- “Qualified commercial tenant” as a tenant of commercial real property that meets both of the following:
- The tenant is a microenterprise, a restaurant with fewer than 10 employees, or a nonprofit organization with fewer than 20 employees.
- The tenant provides the landlord with a written notice within the previous 12 months that it is a qualified commercial tenant and a self-attestation regarding the number of employees it has, and that the tenant provides this notice and attestation, unless the tenancy is from week to week, month to month, or other period less than a month, before or upon execution of the lease, and annually thereafter. Provides that the various requirements under the bill come into effect at such time this notice and attestation is provided to the landlord.
- “Nonprofit organization” as any private, nonprofit organization that qualifies under Section 501(c)(3) of the United States Internal Revenue Code of 1986.
- “Microenterprise” as the same meaning as the term is defined in Business and Professions Code Section 18000(a).
- “Commercial real property” as all real property in the state, except dwelling units, mobilehomes, and recreational vehicles, as specified.
- “Qualified commercial tenant” as a tenant of commercial real property that meets both of the following:
- Extends the requirement that a person engaged in a trade or business that negotiates a contract or agreement in Spanish, Chinese, Tagalog, Vietnamese, or Korean provide a translated version of the contract or agreement in the language in which it was negotiated to apply to a sublease, rental contract or agreement, or other term of tenancy entered into on or after January 1, 2025 for a commercial lease agreement for qualified commercial tenants covering a nonresidential-zoned commercial space.
- Specifies that the exception to this requirement for when the party negotiating with the person engaged in a trade or business negotiates through their own interpreter does not apply to the specified commercial lease agreements.
- Specifies that only a qualified commercial tenant may rescind a contract for a violation of the translation requirement.
- Extends the above-described requirement that a landlord provides notice of rent increases, as specified, to commercial real property leased by a qualified commercial tenant. Specifies that, for qualified commercial tenants of commercial real property, the landlord must include in the notice of increase information on the required notice provided in the above-described provisions. Specifies that such rent increases for a qualified commercial tenant are not effective until the required notice period has expired, and that, notwithstanding any other provision, a violation of these provisions by a landlord of commercial real property does not entitle the qualified commercial tenant to civil penalties.
- Extends the above-described requirements that a tenancy is deemed renewed unless a party notifies the other party of their intent to terminate the tenancy to commercial real property by a qualified commercial tenant.
- Extends the above-described requirement that a landlord provide advance notice, as specified, to a tenant for the termination of a tenancy to commercial real property for a qualified commercial tenant.
- Provides that a landlord of a commercial real property must include in a notice of termination information on the above-described notice requirements for qualified commercial tenants.
- Provides that a landlord of commercial real property may not charge a qualified commercial tenant a fee to recover building operating costs, unless all of the following apply:
- The costs are allocated proportionately per tenant, by square footage or other method substantiated through supporting documentation provided by the landlord;
- The building operating costs have been incurred within the previous 18 months, or are reasonably expected to be incurred within the next 12 months, based on reasonable estimates;
- Before the execution of the lease, the landlord provides the prospective qualified commercial tenant a paper or electronic notice that the tenant may inspect any supporting documentation of building operating costs upon written request;
- Within 30 days of a written request, the landlord provides the qualified commercial tenant supporting documentation of building operating costs;
- The costs do not include expenses paid by the tenant directly to a third party;
- The costs do not include expenses for which a third party, tenant, or insurance reimbursed the landlord for the costs;
- Specifies that a landlord of a commercial real property may not charge a fee to recover building operating costs from a qualified commercial tenant until the landlord provide the tenant supporting documentation.
- Specifies that, during the course of a commercial tenancy, the landlord may not alter the method or formula used to allocate building operating costs to the qualified commercial tenant in a way that increases the qualified commercial tenant’s share, unless the landlord provides written notice of the change with supporting documentation of the basis of the alteration.
- Defines “supporting evidence,” as a dated and itemized quote, contract, receipt, or invoice from a licensed contractor or provider of services that includes, but is not limited to, a tabulation showing how the costs are allocated among tenants proportionately, as required, and a signed and dated attestation by the landlord that the documentation and costs are true and correct.
- Provides that, in an unlawful detainer action, ejectment, or other action to recover possession of the premises based on the tenant’s failure to pay a fee to recover operating costs, a qualified commercial tenant may raise, as an affirmative defense, that the landlord did not comply with (6), above.
- Provides that a landlord who violates (6), above, regarding charging fees for building operating costs, shall be subject to actual damages, and reasonable attorney’s fees and costs at the court’s discretion, and shall be subject to a civil penalty of three times the amount of actual damages proximately suffered by the qualified commercial tenant and punitive damages upon a showing that the landlord, lessor, or their agent has acted willfully or with oppression, fraud, or malice.
- Provides that any waiver of a right in (6) through (11), above, is void as a matter of public policy.
- Provides that the bill’s provisions on building operating costs only apply to the following:
- Leases executed or tenancies commenced or renewed on or after January 1, 2025;
- A tenancy that is from week to week, month to month, or other period less than a month; and
- Leases executed or tenancies commenced before January 1, 2025 that do not contain a provision regarding building operating costs.
- Includes double-jointing amendments to avoid chaptering out issues with SB 611, which also amends Civil Code Section 1946.1, and AB 3281, which also amends Civil Code Section 1632.
FISCAL EFFECT: Appropriation: No Fiscal Com.: No Local: No
SUPPORT: (Verified 8/30/24)
Bet Tzedek (co-source)
California Association for Micro Enterprise Opportunity (co-source)
Inclusive Action for the City (co-source)
Lawyers’ Committee for Civil Rights of the San Francisco Bay Area (co-source)
Public Counsel (co-source)
Small Business Majority (co-source)
AAPI Equity Alliance
ACCE Action
Access Plus Capital
Accessity
Aha Projects
Alliance for A Better Community
Alliance for Community Development
Altcap California
Angie Rojas
API Small Business Collaborative
Arts for Healing and Justice Network
Asian Americans Advancing Justice Southern California
Asian Pacific Islander Small Business Collaborative
Asian Pacific Islander Small Business Program Wbc Ltsc Community Development Corp.
Asian, Inc.
Asociacion De Emprendedor@s
Ben Tzedek Legal Services
Beverly-Vermont Community Land Trust
California Black Chamber of Commerce
California Coalition for Community Investment
California Environmental Voters
California Immigrant Policy Center
California LGBT Arts Alliance
California Low-income Consumer Coalition
California Now
California State Council of Service Employees International Union
California Youth Empowerment Service
Calnonprofits
Cambodia Town INC.
CAMEO
CDC Small Business Finance
Cdtech
Center for Nonprofit Management
Charles & Company
Child Care Law Center
Child Development Corps
Chinatown Community Development Center
City Heights CDC
City of Daly City
City of Los Angeles
City of San Jose
Community Development Technologies
Community Vision Capital and Consulting
Consumer Attorneys of California
Corn A'copia Productions
Corporation
Courage California
Deborah Murphy Urban Design + Planning
Developers Conference
Discovery World Early Education Center
East Bay Community Law Center
East LA Community Corporation
Eastside Leads
El Chaparrito Tacos LLC
El Corredor Restaurant
Ella Baker Center for Human Rights
Escargo.io
Estela Bravo Soperanes
Freedom Assembly, Inc.
Fresno Black Chamber
Fresno Pacific University Center for Community Transformation
Friends of The Los Angeles River
Go Local Sonoma County
Goddess Next Door Corporation
Greenlining Institute
Heal One World
Heart Centered Leadership Coaching & Consulting Group
Host Friendly LLC
I Did Something Good Today Foundation
Icon CDC
Immigrants Rising
Independent Hospitality Coalition
Inland Coalition for Immigrant Justice
Insight Center for Community Economic Development
Join Against Domestic Violence
Keren Subramanya
Kiwa
Kmg Family Services
Koreatown Youth and Community Center
Kras Family Child Care LLC
LA Casa De Frida Los Angeles
LA Cocina
LA Food Policy Council
LA Forward
LA Mas
LA Percussion Rentals
Learning Rights Law Center
Legal Aid Foundation of Los Angeles
Lisc Bay Area
Little Sprouts Language Immersion Preschool
Little Tokyo Community Council
Long Beach Forward
Los Angeles Neighborhood Land Trust
Mandela Partners
Manzanita Capital Collective
Mend-meet Each Need With Dignity
Mend: Meet Each Need With Dignity
Microenterprise Collaboration
Middleman Merchandise
Mission Asset Fund
Mission Economic Development Agency
Monforte Studio
Montana Preschool Santa Monica
Multicultural Business Alliance
National Association for Latino Community Asset Builders
National Capacd
Nonprofit Finance Fund
Nonprofit Finance Fund
Oakland African American Chamber of Commerce
Oakland Chamber of Commerce
Oakland Indie Alliance
Pacific Asian Consortium in Employment
Pact, an Adopt Alliance
Paloma Market
Project Equity
Public Law Center
Rediscover Center
Renaissance Entrepreneurship Center
Rise Economy
Riverside County Black Chamber of Commerce
Sacramento Hispanic Chamber of Commerce
Saje
San Francisco Filipino American Chamber of Commerce
Sara Daleiden Consulting
Score
Shakespeare Center of Los Angeles
Small Business Anti-displacement Network
South Asian Network
South Los Angeles Transit Empowerment Zone
Southeast Asian Community Alliance
Sustainable Economies Law Center
Syrenity Consulting
Thai Community Development Center
The Greenlining Institute
United Cambodian Community
United Core Alliance
United Neighbors in Defense Against Displacement
United Way of Greater Los Angeles
Uptima Entrepreneur Cooperative
Uptown Style Jamaican Food
Urtone Skin LLC
Valle Vida
Vermont-slauson Economic Development Corporation
Village Arts
Voices for Progress
Wah Gwaan Jamaican Kitchen Bar
Walker Community Ventures
Women's Economic Ventures
Working Solutions
Yi Family Child Care
Zo International
OPPOSITION: (Verified 8/30/24)
Apartment Association of Greater Los Angeles
BOMA California
Building Owners and Managers Association of California
Cal Asian Chamber of Commerce
California Asian Pacific Chamber of Commerce
California Association of Realtors
California Building Industry Association
California Business Properties Association
California Business Roundtable
California Chamber of Commerce
California Hispanic Chamber of Commerce
California Manufacturers & Technology Association
California Mba
California Mortgage Bankers Association
California Rental Housing Association
Cupertino Chamber of Commerce
Danville Area Chamber of Commerce
Greater High Desert Chamber of Commerce
Greater San Fernando Valley Chamber of Commerce
Huntington Beach Chamber of Commerce
ICSC
Institute of Real Estate Management
International Council of Shopping Centers
LA Canada Flintridge Chamber of Commerce
Laguna Niguel Chamber of Commerce
Livermore Chamber of Commerce
Livermore Valley Chamber of Commerce
Long Beach Area Chamber of Commerce
Los Angeles County Business Federation
Modesto Chamber of Commerce
NAIOP California
Newport Beach Area Chamber of Commerce
Newport Beach Chamber of Commerce
Orange County Business Council
San Deigo Regional Chamber of Commerce
Santa Clarita Valley Chamber of Commerce
Simi Valley Chamber of Commerce
Southern California Leadership Council
The Chamber Newport Beach
Tulare Chamber of Commerce
Ucan Chambers of Commerce
Valley Industry & Commerce Association
Walnut Creek Chamber of Commerce
Western Manufactured Housing Communities Association
ARGUMENTS IN SUPPORT: According to the coalition of organizations that are sponsoring this bill:
SB 1103 will help small businesses and nonprofits remain in their communities and continue to provide culturally significant goods and services. Currently, many small businesses and nonprofits are struggling to stay afloat due to rising rents, inflation, and gentrification—SB 1103’s commercial tenant protections provide much-needed support to small business owners and nonprofits, and reduce the risk of these community pillars being displaced.
California, with its diverse population and varying consumer demands, is also a state with extreme income inequality. As the cost of living in California rises, many small businesses have been forced to close or have been displaced, which harms our local neighborhoods and our regional economies. Community-serving small businesses and nonprofits, pillars of our local economy, have minimal legal protections. Rent increases, unclear and unfair lease terms, as well as exorbitant added fees, make it difficult to find and stay in a commercial space. For example, a small restaurant that provides healthy food in South Los Angeles was recently informed without prior notice or back-up documentation that their common area maintenance fees (fees charged to commercial tenants for items such as landscaping, maintenance, property management, taxes, insurance, repairs, and security) would increase from $1,000 to $1,890 per month and was issued an eviction notice for not paying those fees immediately.
Small businesses and nonprofits would benefit greatly from commercial tenant protections; landlords are currently allowed to raise rents and evict small businesses without statutory restriction. As corporate landlords buy up more commercial properties in low-income neighborhoods, long-term community-serving small businesses and nonprofits are seeing huge rent increases and displacement. Statewide and local commercial eviction moratoriums and federal grants offered during the height of the pandemic provided much needed support to small businesses and nonprofits. Now that the moratoriums and grants have expired, small businesses and small community-serving nonprofits are vulnerable as they continue to recover from the effects of the pandemic.
SB 1103 will provide important and ground-breaking protections to small businesses and nonprofits in three ways:
- Language justice and lease transparency, by requiring translation of commercial lease agreements when negotiated in non-English languages;
- Fee transparency and equity, by capping security deposits at one month’s rent as well as creating standards and transparency with respect to common area maintenance fees; and
Enhanced notice protections, by increasing statutory notice periods for rent increases and termination of tenancies.
ARGUMENTS IN OPPOSITION: According to the California Business Properties Association and a coalition of business interests opposed to this bill:
Despite the amendments, we remain deeply concerned that SB 1103 continues to impose burdensome and ill-conceived mandates on commercial leases. It is critical to note that the commercial real estate industry has not been included in meaningful policy discussions regarding this bill. In fact, despite submitting several pages of proposed amendments to address our concerns, these suggestions were wholly rejected. This decision indicates that input from the commercial real estate sector is not being considered, which is alarming given the significant impact this legislation will have on our industry.
The translation requirements, cost recovery limits, timing constraints, and the failure to distinguish between commercial and residential real estate dynamics impose substantial financial and administrative hardships. Additionally, the provision allowing tenants to rescind leases at any time for non-compliance with translation requirements introduces severe legal uncertainties and risks that disproportionately impact small landlords, threatening the stability of the rental market. The ripple effects of SB 1103 will lead to increased costs for tenants, reduced commercial space availability, and ultimately harm the very businesses and nonprofits it purports to support.
ASSEMBLY FLOOR: 44-17, 8/30/24
AYES: Addis, Aguiar-Curry, Arambula, Bains, Bauer-Kahan, Bennett, Boerner, Bonta, Bryan, Calderon, Wendy Carrillo, Connolly, Mike Fong, Friedman, Garcia, Grayson, Haney, Hart, Holden, Jackson, Jones-Sawyer, Kalra, Lee, Low, Lowenthal, McCarty, McKinnor, Muratsuchi, Pellerin, Quirk-Silva, Ramos, Rendon, Reyes, Luz Rivas, Santiago, Schiavo, Ting, Ward, Weber, Wicks, Wilson, Wood, Zbur, Robert Rivas
NOES: Alanis, Chen, Megan Dahle, Davies, Dixon, Essayli, Flora, Gallagher, Hoover, Lackey, Mathis, Jim Patterson, Joe Patterson, Sanchez, Ta, Waldron, Wallis
NO VOTE RECORDED: Alvarez, Berman, Juan Carrillo, Cervantes, Gabriel, Gipson, Irwin, Maienschein, Stephanie Nguyen, Ortega, Pacheco, Papan, Petrie-Norris, Rodriguez, Blanca Rubio, Soria, Valencia, Villapudua
Prepared by: Ian Dougherty / JUD. / (916) 651-4113
8/31/24 14:48:04
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SENATE RULES COMMITTEE Office of Senate Floor Analyses (916) 651-1520 Fax: (916) 327-4478 | SB 1103 |
UNFINISHED BUSINESS
Bill No: SB 1103
Author: Menjivar (D), et al.
Amended: 8/22/24
Vote: 21
SENATE JUDICIARY COMMITTEE: 9-2, 4/30/24
AYES: Umberg, Allen, Blakespear, Caballero, Dodd, Durazo, Laird, Min, Wiener
NOES: Wilk, Niello
SENATE FLOOR: 22-10, 5/21/24
AYES: Ashby, Atkins, Becker, Caballero, Durazo, Eggman, Gonzalez, Hurtado, Laird, Limón, McGuire, Menjivar, Min, Padilla, Roth, Rubio, Skinner, Smallwood-Cuevas, Stern, Umberg, Wahab, Wiener
NOES: Alvarado-Gil, Dahle, Dodd, Grove, Jones, Nguyen, Niello, Ochoa Bogh, Seyarto, Wilk
NO VOTE RECORDED: Allen, Archuleta, Blakespear, Bradford, Cortese, Glazer, Newman, Portantino
ASSEMBLY FLOOR: 42-16, 8/30/24 – Roll call vote not available
SUBJECT: Tenancy of commercial real properties: agreements: building operating costs
SOURCE: Bet Tzedek
California Association for Micro Enterprise Opportunity
Inclusive Action for the City
Lawyers’ Committee for Civil Rights of the San Francisco Bay Area
Public Counsel
Small Business Majority
DIGEST:
This bill extends various protections and notice requirements for lease terminations or rent increases to qualified commercial tenants, and places transparency and proportionality requirements for fees a landlord may charge a qualified commercial tenant to recover building operating costs.
Assembly Amendments
require that a qualified commercial tenant under the bill’s various provisions must have provided the required written notice that they are a qualified commercial tenant to their landlord within the previous 12 months; require that a qualified commercial tenant provide this self-attestation annually after providing it before or upon the execution of the lease; specify that the bill’s translation requirements apply to a lease or other tenancy for a non residential-zoned commercial space between a landlord and a qualified commercial tenant entered into on or after January 1, 2025; make various clarifying changes to the bill’s provisions on permissible building operating costs; amend the requirement that a landlord provide supporting documentation for building operating costs within 30 days of a written request; specify that a landlord may not alter the method or formula used to allocate building operating costs in a way that increases the qualified commercial tenant’s share of such costs unless the landlord provides the tenant written notice of the change with supporting documentation; rework the bill’s enforcement provisions for its building operating costs requirements to provide for reasonable attorney’s fees and costs at the court’s discretion, and that three times the amount of actual damages and punitive damages are allowable only upon a showing that the landlord, lessor, or agent acted willfully or with oppression, fraud, or malice; allow that a district attorney, city attorney, or county counsel of the appropriate jurisdiction may seek injunctive relief for a violation of the building operating costs provisions; limit the application of the bill’s building operating costs provisions to leases executed or commenced or renewed on or after January 1, 2025, a tenancy that is week to week, month to month, or other period less than a month, and to leases executed or commenced before January 1, 2025 that do not contain a provision regarding building operating costs; and incorporate technical amendments to avoid chaptering out issues with AB 3281 and SB 611.
ANALYSIS:
Existing law:
- Provides that, in all periodic leases of land or tenements, the landlord may, upon giving notice in writing to the tenant as prescribed, change the terms of the lease upon the expiration of a period at least as long as the rental term, as specified. Provides that, in all leases of a residential dwelling or any interest in it, the landlord may increase the rent upon giving written notice to the tenant by delivering a copy to the tenant personally or by serving a copy by mail. IF the proposed rent increase is 10 percent or less than the rental amount charged during the 12 months prior, the notice of the rent increase must be delivered at least 30 days before the effective date of the increase. Provides that, if the proposed rent increase is greater than 10 percent of the rent charged during any time in the 12 months prior, the notice must be delivered at least 90 days before the effective date of the increase. (Civ. Code § 827.)
- Requires that any person engaged in a trade or business who negotiates a specified contract or agreement primarily in Spanish, Chinese, Tagalog, Vietnamese, or Korean deliver to the other party to the contract or agreement, or anyone who will be signing the agreement, and before the execution of that contract or agreement, a translation of the contract or agreement in the language in which the contract was negotiated. (Civ. Code § 1632(b).)
- Provides an exception to this requirement where the party with whom the person engaged in a trade or business is negotiating negotiates the terms of the contract or agreement through their own interpreter.
- Provides that the terms in the English version of the contract shall determine the rights and obligations of the parties, and that the translated version may only be used in court as evidence to show that no contract was entered into because of substantial differences in material terms between the English version and the translated version.
- Provides that an aggrieved person for a violation of this provision may rescind the contract or agreement, as provided.
- Provides that, when residential real property is leased for an unspecified term, the lease is deemed renewed at the end of the term implied by law, unless one of the parties gives written notice to the other of their intent to terminate the tenancy. (Civ. Code § 1946.1.)
- Provides that, if the residential tenant has resided in the dwelling for less than a year, the landlord must provide notice of termination at least 30 days prior to the termination, and that the landlord must provide notice of termination at least 60 days prior to the termination if the tenant has resided in the residential property for a year or more, except as provided. Provides that a tenant must provide notice of their intention to terminate their tenancy for a periodic tenancy at least as long as the term of the periodic tenancy. If the tenant has received a notice of termination from the owner, the tenant may provide a notice of termination for a period at least as long as the term of a periodic tenancy, if such termination occurs before the owner’s date of termination. (Civ. Code § 1946.1(b)-(d).)
- Defines a “microenterprise” as a sole proprietorship, partnership, limited liability company, or corporation that:
- has five or fewer employees, including the owner, that may be part or full time employees;
- generally lacks sufficient access to loans, equity, or other financial capital. (Bus. & Prof. Code § 18000(a).)
This bill:
- Provides, for the purposes of its various statutory changes, the following definitions:
- “Qualified commercial tenant” as a tenant of commercial real property that meets both of the following:
- The tenant is a microenterprise, a restaurant with fewer than 10 employees, or a nonprofit organization with fewer than 20 employees.
- The tenant provides the landlord with a written notice within the previous 12 months that it is a qualified commercial tenant and a self-attestation regarding the number of employees it has, and that the tenant provides this notice and attestation, unless the tenancy is from week to week, month to month, or other period less than a month, before or upon execution of the lease, and annually thereafter. Provides that the various requirements under the bill come into effect at such time this notice and attestation is provided to the landlord.
- “Nonprofit organization” as any private, nonprofit organization that qualifies under Section 501(c)(3) of the United States Internal Revenue Code of 1986.
- “Microenterprise” as the same meaning as the term is defined in Business and Professions Code Section 18000(a).
- “Commercial real property” as all real property in the state, except dwelling units, mobilehomes, and recreational vehicles, as specified.
- “Qualified commercial tenant” as a tenant of commercial real property that meets both of the following:
- Extends the requirement that a person engaged in a trade or business that negotiates a contract or agreement in Spanish, Chinese, Tagalog, Vietnamese, or Korean provide a translated version of the contract or agreement in the language in which it was negotiated to apply to a sublease, rental contract or agreement, or other term of tenancy entered into on or after January 1, 2025 for a commercial lease agreement for qualified commercial tenants covering a nonresidential-zoned commercial space.
- Specifies that the exception to this requirement for when the party negotiating with the person engaged in a trade or business negotiates through their own interpreter does not apply to the specified commercial lease agreements.
- Specifies that only a qualified commercial tenant may rescind a contract for a violation of the translation requirement.
- Extends the above-described requirement that a landlord provides notice of rent increases, as specified, to commercial real property leased by a qualified commercial tenant. Specifies that, for qualified commercial tenants of commercial real property, the landlord must include in the notice of increase information on the required notice provided in the above-described provisions. Specifies that such rent increases for a qualified commercial tenant are not effective until the required notice period has expired, and that, notwithstanding any other provision, a violation of these provisions by a landlord of commercial real property does not entitle the qualified commercial tenant to civil penalties.
- Extends the above-described requirements that a tenancy is deemed renewed unless a party notifies the other party of their intent to terminate the tenancy to commercial real property by a qualified commercial tenant.
- Extends the above-described requirement that a landlord provide advance notice, as specified, to a tenant for the termination of a tenancy to commercial real property for a qualified commercial tenant.
- Provides that a landlord of a commercial real property must include in a notice of termination information on the above-described notice requirements for qualified commercial tenants.
- Provides that a landlord of commercial real property may not charge a qualified commercial tenant a fee to recover building operating costs, unless all of the following apply:
- The costs are allocated proportionately per tenant, by square footage or other method substantiated through supporting documentation provided by the landlord;
- The building operating costs have been incurred within the previous 18 months, or are reasonably expected to be incurred within the next 12 months, based on reasonable estimates;
- Before the execution of the lease, the landlord provides the prospective qualified commercial tenant a paper or electronic notice that the tenant may inspect any supporting documentation of building operating costs upon written request;
- Within 30 days of a written request, the landlord provides the qualified commercial tenant supporting documentation of building operating costs;
- The costs do not include expenses paid by the tenant directly to a third party;
- The costs do not include expenses for which a third party, tenant, or insurance reimbursed the landlord for the costs;
- Specifies that a landlord of a commercial real property may not charge a fee to recover building operating costs from a qualified commercial tenant until the landlord provide the tenant supporting documentation.
- Specifies that, during the course of a commercial tenancy, the landlord may not alter the method or formula used to allocate building operating costs to the qualified commercial tenant in a way that increases the qualified commercial tenant’s share, unless the landlord provides written notice of the change with supporting documentation of the basis of the alteration.
- Defines “supporting evidence,” as a dated and itemized quote, contract, receipt, or invoice from a licensed contractor or provider of services that includes, but is not limited to, a tabulation showing how the costs are allocated among tenants proportionately, as required, and a signed and dated attestation by the landlord that the documentation and costs are true and correct.
- Provides that, in an unlawful detainer action, ejectment, or other action to recover possession of the premises based on the tenant’s failure to pay a fee to recover operating costs, a qualified commercial tenant may raise, as an affirmative defense, that the landlord did not comply with (6), above.
- Provides that a landlord who violates (6), above, regarding charging fees for building operating costs, shall be subject to actual damages, and reasonable attorney’s fees and costs at the court’s discretion, and shall be subject to a civil penalty of three times the amount of actual damages proximately suffered by the qualified commercial tenant and punitive damages upon a showing that the landlord, lessor, or their agent has acted willfully or with oppression, fraud, or malice.
- Provides that any waiver of a right in (6) through (11), above, is void as a matter of public policy.
- Provides that the bill’s provisions on building operating costs only apply to the following:
- Leases executed or tenancies commenced or renewed on or after January 1, 2025;
- A tenancy that is from week to week, month to month, or other period less than a month; and
- Leases executed or tenancies commenced before January 1, 2025 that do not contain a provision regarding building operating costs.
- Includes double-jointing amendments to avoid chaptering out issues with SB 611, which also amends Civil Code Section 1946.1, and AB 3281, which also amends Civil Code Section 1632.
FISCAL EFFECT: Appropriation: No Fiscal Com.: No Local: No
SUPPORT: (Verified 8/30/24)
Bet Tzedek (co-source)
California Association for Micro Enterprise Opportunity (co-source)
Inclusive Action for the City (co-source)
Lawyers’ Committee for Civil Rights of the San Francisco Bay Area (co-source)
Public Counsel (co-source)
Small Business Majority (co-source)
AAPI Equity Alliance
ACCE Action
Access Plus Capital
Accessity
Aha Projects
Alliance for A Better Community
Alliance for Community Development
Altcap California
Angie Rojas
API Small Business Collaborative
Arts for Healing and Justice Network
Asian Americans Advancing Justice Southern California
Asian Pacific Islander Small Business Collaborative
Asian Pacific Islander Small Business Program Wbc Ltsc Community Development Corp.
Asian, Inc.
Asociacion De Emprendedor@s
Ben Tzedek Legal Services
Beverly-Vermont Community Land Trust
California Black Chamber of Commerce
California Coalition for Community Investment
California Environmental Voters
California Immigrant Policy Center
California LGBT Arts Alliance
California Low-income Consumer Coalition
California Now
California State Council of Service Employees International Union
California Youth Empowerment Service
Calnonprofits
Cambodia Town INC.
CAMEO
CDC Small Business Finance
Cdtech
Center for Nonprofit Management
Charles & Company
Child Care Law Center
Child Development Corps
Chinatown Community Development Center
City Heights CDC
City of Daly City
City of Los Angeles
City of San Jose
Community Development Technologies
Community Vision Capital and Consulting
Consumer Attorneys of California
Corn A'copia Productions
Corporation
Courage California
Deborah Murphy Urban Design + Planning
Developers Conference
Discovery World Early Education Center
East Bay Community Law Center
East LA Community Corporation
Eastside Leads
El Chaparrito Tacos LLC
El Corredor Restaurant
Ella Baker Center for Human Rights
Escargo.io
Estela Bravo Soperanes
Freedom Assembly, Inc.
Fresno Black Chamber
Fresno Pacific University Center for Community Transformation
Friends of The Los Angeles River
Go Local Sonoma County
Goddess Next Door Corporation
Greenlining Institute
Heal One World
Heart Centered Leadership Coaching & Consulting Group
Host Friendly LLC
I Did Something Good Today Foundation
Icon CDC
Immigrants Rising
Independent Hospitality Coalition
Inland Coalition for Immigrant Justice
Insight Center for Community Economic Development
Join Against Domestic Violence
Keren Subramanya
Kiwa
Kmg Family Services
Koreatown Youth and Community Center
Kras Family Child Care LLC
LA Casa De Frida Los Angeles
LA Cocina
LA Food Policy Council
LA Forward
LA Mas
LA Percussion Rentals
Learning Rights Law Center
Legal Aid Foundation of Los Angeles
Lisc Bay Area
Little Sprouts Language Immersion Preschool
Little Tokyo Community Council
Long Beach Forward
Los Angeles Neighborhood Land Trust
Mandela Partners
Manzanita Capital Collective
Mend-meet Each Need With Dignity
Mend: Meet Each Need With Dignity
Microenterprise Collaboration
Middleman Merchandise
Mission Asset Fund
Mission Economic Development Agency
Monforte Studio
Montana Preschool Santa Monica
Multicultural Business Alliance
National Association for Latino Community Asset Builders
National Capacd
Nonprofit Finance Fund
Nonprofit Finance Fund
Oakland African American Chamber of Commerce
Oakland Chamber of Commerce
Oakland Indie Alliance
Pacific Asian Consortium in Employment
Pact, an Adopt Alliance
Paloma Market
Project Equity
Public Law Center
Rediscover Center
Renaissance Entrepreneurship Center
Rise Economy
Riverside County Black Chamber of Commerce
Sacramento Hispanic Chamber of Commerce
Saje
San Francisco Filipino American Chamber of Commerce
Sara Daleiden Consulting
Score
Shakespeare Center of Los Angeles
Small Business Anti-displacement Network
South Asian Network
South Los Angeles Transit Empowerment Zone
Southeast Asian Community Alliance
Sustainable Economies Law Center
Syrenity Consulting
Thai Community Development Center
The Greenlining Institute
United Cambodian Community
United Core Alliance
United Neighbors in Defense Against Displacement
United Way of Greater Los Angeles
Uptima Entrepreneur Cooperative
Uptown Style Jamaican Food
Urtone Skin LLC
Valle Vida
Vermont-slauson Economic Development Corporation
Village Arts
Voices for Progress
Wah Gwaan Jamaican Kitchen Bar
Walker Community Ventures
Women's Economic Ventures
Working Solutions
Yi Family Child Care
Zo International
OPPOSITION: (Verified 8/30/24)
Apartment Association of Greater Los Angeles
BOMA California
Building Owners and Managers Association of California
Cal Asian Chamber of Commerce
California Asian Pacific Chamber of Commerce
California Association of Realtors
California Building Industry Association
California Business Properties Association
California Business Roundtable
California Chamber of Commerce
California Hispanic Chamber of Commerce
California Manufacturers & Technology Association
California Mba
California Mortgage Bankers Association
California Rental Housing Association
Cupertino Chamber of Commerce
Danville Area Chamber of Commerce
Greater High Desert Chamber of Commerce
Greater San Fernando Valley Chamber of Commerce
Huntington Beach Chamber of Commerce
ICSC
Institute of Real Estate Management
International Council of Shopping Centers
LA Canada Flintridge Chamber of Commerce
Laguna Niguel Chamber of Commerce
Livermore Chamber of Commerce
Livermore Valley Chamber of Commerce
Long Beach Area Chamber of Commerce
Los Angeles County Business Federation
Modesto Chamber of Commerce
NAIOP California
Newport Beach Area Chamber of Commerce
Newport Beach Chamber of Commerce
Orange County Business Council
San Deigo Regional Chamber of Commerce
Santa Clarita Valley Chamber of Commerce
Simi Valley Chamber of Commerce
Southern California Leadership Council
The Chamber Newport Beach
Tulare Chamber of Commerce
Ucan Chambers of Commerce
Valley Industry & Commerce Association
Walnut Creek Chamber of Commerce
Western Manufactured Housing Communities Association
ARGUMENTS IN SUPPORT: According to the coalition of organizations that are sponsoring this bill:
SB 1103 will help small businesses and nonprofits remain in their communities and continue to provide culturally significant goods and services. Currently, many small businesses and nonprofits are struggling to stay afloat due to rising rents, inflation, and gentrification—SB 1103’s commercial tenant protections provide much-needed support to small business owners and nonprofits, and reduce the risk of these community pillars being displaced.
California, with its diverse population and varying consumer demands, is also a state with extreme income inequality. As the cost of living in California rises, many small businesses have been forced to close or have been displaced, which harms our local neighborhoods and our regional economies. Community-serving small businesses and nonprofits, pillars of our local economy, have minimal legal protections. Rent increases, unclear and unfair lease terms, as well as exorbitant added fees, make it difficult to find and stay in a commercial space. For example, a small restaurant that provides healthy food in South Los Angeles was recently informed without prior notice or back-up documentation that their common area maintenance fees (fees charged to commercial tenants for items such as landscaping, maintenance, property management, taxes, insurance, repairs, and security) would increase from $1,000 to $1,890 per month and was issued an eviction notice for not paying those fees immediately.
Small businesses and nonprofits would benefit greatly from commercial tenant protections; landlords are currently allowed to raise rents and evict small businesses without statutory restriction. As corporate landlords buy up more commercial properties in low-income neighborhoods, long-term community-serving small businesses and nonprofits are seeing huge rent increases and displacement. Statewide and local commercial eviction moratoriums and federal grants offered during the height of the pandemic provided much needed support to small businesses and nonprofits. Now that the moratoriums and grants have expired, small businesses and small community-serving nonprofits are vulnerable as they continue to recover from the effects of the pandemic.
SB 1103 will provide important and ground-breaking protections to small businesses and nonprofits in three ways:
- Language justice and lease transparency, by requiring translation of commercial lease agreements when negotiated in non-English languages;
- Fee transparency and equity, by capping security deposits at one month’s rent as well as creating standards and transparency with respect to common area maintenance fees; and
Enhanced notice protections, by increasing statutory notice periods for rent increases and termination of tenancies.
ARGUMENTS IN OPPOSITION: According to the California Business Properties Association and a coalition of business interests opposed to this bill:
Despite the amendments, we remain deeply concerned that SB 1103 continues to impose burdensome and ill-conceived mandates on commercial leases. It is critical to note that the commercial real estate industry has not been included in meaningful policy discussions regarding this bill. In fact, despite submitting several pages of proposed amendments to address our concerns, these suggestions were wholly rejected. This decision indicates that input from the commercial real estate sector is not being considered, which is alarming given the significant impact this legislation will have on our industry.
The translation requirements, cost recovery limits, timing constraints, and the failure to distinguish between commercial and residential real estate dynamics impose substantial financial and administrative hardships. Additionally, the provision allowing tenants to rescind leases at any time for non-compliance with translation requirements introduces severe legal uncertainties and risks that disproportionately impact small landlords, threatening the stability of the rental market. The ripple effects of SB 1103 will lead to increased costs for tenants, reduced commercial space availability, and ultimately harm the very businesses and nonprofits it purports to support.
Prepared by: Ian Dougherty / JUD. / (916) 651-4113
8/30/24 17:27:07
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SENATE THIRD READING
STR Bill Id:SB 1103
Author:(Menjivar)
As Amended Ver:August 22, 2024
Majority vote
SUMMARY
Requires commercial landlords to provide "qualified commercial tenants," as defined, to provide contract translation and notice for month-to-month rent increases or termination, and places transparency and proportionality requirements on the fees a landlord may impose to recover building operating costs from qualified tenants.
Major Provisions
- Defines "commercial real property," "microenterprise" and "nonprofit organization" as provided under existing law.
- Defines "qualified commercial tenant" as a tenant of commercial real property, who has attested in writing that they are one of the following:
- A microenterprise;
- A restaurant with fewer than 10 employees; or
- A nonprofit organization with fewer than 20 employees.
- Requires a prospective tenant to provide the landlord, within the previous 12 months, with a self-attestation, establishing that they are a "qualified commercial tenant," in order to avail themselves of the protections provided in this legislation.
- Establishes that a landlord of a qualified commercial tenant in a month-to-month lease must provide the tenant with 30 days' written notice of a rent increase of less than 10% and 90 days' notice if the rent increase is greater than 10%.
- Establishes that for qualified commercial tenants, as defined, a rent increase can only go into effect after the prescribed notice period has expired.
- Clarifies that a violation of the notice requirement regarding rent increases does not entitle a qualified commercial tenant to civil penalties.
- Provides that a month-to-month commercial lease by a qualified commercial tenant is deemed renewed at the end of the term unless one of the parties gives written notice to the other of the party's intention to terminate the tenancy, as provided.
- Requires a landlord of a commercial property to give a qualified commercial tenant in a month-to-month lease, who has occupied the property for more than one year, at least 60 days' notice prior to the proposed termination of tenancy.
- Requires a landlord of a commercial property to give a qualified commercial tenant in a month-to-month lease, who has occupied the property for less than one year, at least 30 days' notice prior to the proposed termination of tenancy.
- Establishes that a person engaged in a trade or business who negotiates primarily in Spanish, Chinese, Tagalog, Vietnamese, or Korean, orally or in writing, in the course of entering into a commercial lease must deliver to the other party to the agreement a translation of the contract in the language in which the contract was negotiated.
- Clarifies that the translation requirement applies even if the qualified commercial tenant brings their own interpreter.
- Establishes that only a "qualified commercial tenant," as defined, may avail themselves of the lease translation provision.
- Establishes that only a tenant, and not a landlord, may rescind a contract for failing to comply with the language translation requirement.
- Clarifies that the language translation requirement for commercial leases entered between a qualified commercial tenant and a landlord applies prospectively to leases entered on or after January 1, 2025.
- Prohibits a landlord of a commercial real property from charging a qualified commercial tenant a fee to recover building operating costs unless all of the following apply:
- The building operating costs are allocated proportionately per tenant, by square footage, or another method as substantiated through supporting documentation provided by the landlord to the qualified commercial tenant;
- The costs do not include expenses paid by the tenant directly to a third party;
- The costs do not include expenses for which a third party, tenant, or insurance reimbursed the landlord;
- The building operating costs have been incurred within the previous 18 months, or are reasonably expected to be incurred within the next 12 months based on reasonable estimates;
- Within 30 days of a written request, the landlord provides the qualified commercial tenant supporting documentation of the previously incurred or reasonably expected building operating costs; and
- Before the execution of the lease, the landlord provides the prospective tenant with a notice stating that tenants may inspect the supporting documentation upon written request.
- Clarifies that a landlord is prohibited from altering the method or formula used to allocate building costs to a qualified commercial tenant in a way that increases the tenant's share of those costs, unless the tenant is provided with written notice of the change with documents supporting the basis for the alteration.
- Defines "building operating costs" as costs that are incurred on behalf of a tenant for the operation, maintenance, or repair of the commercial real property, including but not limited to maintenance of common areas, utilities that are not separately metered, and taxes or assessments charged to the landlord pursuant to property ownership.
- Defines "supporting documentation" as a dated and itemized quote, contract, receipt, or invoice from a licensed contractor or a provider of services that includes both: 1) a tabulation showing how the costs are allocated among tenants; and 2) a signed and dated attestation by the landlord that the documentation and costs are true and correct.
- Establishes that a tenant may raise a landlord's violation of 15), above, as a defense against an action for unlawful detainer or failure to pay.
- Establishes that a landlord who violates 15), above, is liable to a qualified commercial tenant for actual damages, reasonable attorney's fees and costs, and treble or punitive damages based on a showing of willful conduct, or conduct performed with oppression, fraud, or malice.
- Establishes that a waiver of the building operating costs requirements described in 15), above, is void as a matter of public policy.
- Provides that 15), above, applies to:
- Leases executed on or after January 1, 2025.
- Month-to-month commercial leases.
- A commercial lease executed before January 1, 2025 that does not contain a provision regarding building operating costs.
- Makes technical and conforming changes.
- Makes chaptering amendments to resolve conflicts with SB 611 and AB 3281.
COMMENTS
What is a "qualified commercial tenant"? This measure, and all the protections it provides, applies only to a "qualified commercial tenant." Though commercial leases are business-to-business transactions generally considered to involve parties with equal bargaining power, the author's focus is on commercial tenants who do not have the same power. Specifically, this bill defines a "qualified commercial tenant" as a restaurant with fewer than 10 employees, a nonprofit with fewer than 20 employees, and microenterprises (defined under existing law as having five or fewer employees, including the owner, that may be part or full time employees, and; generally lacking sufficient access to loans, equity, or other financial capital). Employee counts may not be a perfect proxy for "small business" as one could imagine numerous examples where a business with few employees could still generate significant revenue (and thus have plenty of sophistication and bargaining power), such as consulting firms, legal and medical practices, real estate investors, and app developers, to name a few. But none of those should fall within this bill's definition of "qualified commercial tenant" because they are not a restaurant or nonprofit, and while their employee count could fall within the "microenterprise" definition, their ability to access capital would make them ineligible for the protections of this measure. The method for confirming whether a business is a qualified commercial tenant is through an annually updated self-attestation.
This bill extends language translation to commercial leases for qualified commercial tenants. California law recognizes the importance of language access. Under existing law, if certain consumer contracts or residential leases are negotiated in Spanish, Chinese, Tagalog, Vietnamese, or Korean, then the consumer/tenant must be given an unsigned copy of the contract, which has been translated into the same language it was negotiated in, to review before signing. A consumer/tenant who does not receive the mandated translation has a right to rescind the contract. This translation requirement governs a vast range of consumer contracts, including auto sales and leases, apartment leases and rental agreements, most home mortgages and reverse mortgages, agreements for legal services, and virtually all loans and extensions of credit meant primarily for personal, family, or household purposes. But current law does not provide the same rights to those who enter into commercial lease agreements. This bill extends language translation rights to commercial lease contracts. It also specifies that, if a translated version of the commercial lease agreement is not provided, only a tenant (as opposed to either negotiating party) may rescind the contract. The language translation accessibility provisions in commercial leases would not be available for all commercial leases; it could only be triggered by a "qualified commercial tenant," as defined.
This bill adopts notice requirements for month-to-month commercial leases involving qualified commercial tenants. Existing law requires notices of rent increases and termination of tenancy in month-to-month residential leases; this bill applies the existing requirements to month-to-month commercial leases where the tenant is a qualified commercial tenant, as defined. This plays out as follows: imagine Restaurant, an establishment that employs five people, is in a month-to-month lease with Landlord. Restaurant pays Landlord $5,000 in monthly rent. If Landlord wants to increase the rent by $500 or less starting July 1, it must notify Restaurant by June 1 of the impending increase. If Landlord intends to raise the rent by $501 or more starting July 1, it must notify Restaurant no later than April 1 – 90 days before the increase. Similarly, if Landlord intends to terminate the tenancy with Restaurant on July 1 for whatever reason, it must notify Restaurant by June 1 (30 days prior) (if Restaurant has occupied the space for less than a year), or by May 1 (60 days prior) (if Restaurant has been there more than one year).
This bill establishes a framework for charging and substantiating building operating costs. Building operating costs are incurred on behalf of a tenant for the operation, maintenance, or repair of the commercial real property, including but not limited to maintenance of common areas, utilities that are not separately metered, and taxes or assessments charged to the landlord pursuant to property ownership. The author and sponsors of this measure explain that these charges can be significant, unpredictable, inconsistent, and unsubstantiated—further exacerbating the tight margins many of these small businesses are operating within.
According to the Author
The author, following a small business tour in her district in the San Fernando Valley, brought this measure. She explains how it will aid small business, like those in her district:
Small businesses and nonprofits are a vital resource for many in my district and across California. Their storefronts contribute to the aesthetics and vitality of our business corridors, as well as increase the walkability and cultural representation within neighborhoods. Government agencies alone cannot close the service gaps afflicting the most vulnerable Californians and we rely on the dedicated service of nonprofits. SB 1103 will protect those making immeasurable contributions to their communities and local economies. Specifically, this bill will expand the required notice periods for qualifying microenterprises, small nonprofits, and restaurants facing rent increases to 30 days for rate increases of less than 10% and 90 days for rate increases over 10%. It also requires commercial landlords to give a longer notice before the termination of a tenancy. SB 1103 will require commercial landlords to disclose to qualified commercial tenants that they are entitled to review supporting documentation that justifies increase in common area maintenance (CAM) fees. Further, this bill will require commercial lease contracts to be translated if the negotiations are done in Spanish, Chinese, Tagalog, Vietnamese or Korean. These common sense measures are needed in order to preserve and protect the small businesses and non-profits that are essential to the wellbeing our communities.
Arguments in Support
A broad coalition of consumer protection, community investment, civil rights, and small business groups jointly write to explain the need for this measure:
Community-serving microbusinesses and nonprofits in California are struggling. Expensive rents and fees, the lingering impacts of the pandemic, and inaccessible and opaque lease terms are contributing to the escalating displacement of microbusinesses and small nonprofits. Senate Bill 1103 will help small businesses and nonprofits remain in their communities and continue to provide relevant goods and services that strengthen our neighborhoods and enhance our local economy.
Senate Bill 1103's protections do not apply widely; they are provided only to the most vulnerable microenterprises and small nonprofits. By tailoring the benefits in this way, Senate Bill 1103 does not affect complex business-to-business (B2B) transactions. Rather, it levels the playing field for those microbusinesses and small nonprofits that do not have the same resources, representation, or negotiating power as large commercial tenants. Senate Bill 1103 is necessary for an equitable small business ecosystem, where California's immigrant and low-income entrepreneurs have a change to find and stay in commercial spaces to provide for their families, and sustain our communities.
Arguments in Opposition
Opponents of this bill dispute its premise. They argue that the government interventions in business-to-business transactions this measure imposes will disadvantage the very people the author is trying to help. The unintended consequence of this measure is that landlords will be less likely to rent out to "qualified commercial tenants," making their rental options scarcer and more expensive. A coalition letter by business organizations such as the Chamber of Commerce and local affiliates, as well as the California Business Properties Association explain how this measure would negatively impact small landlords, which are not distinguished from large commercial landlords in this measure:
In crafting SB 1103, it is imperative to recognize the nuanced distinctions between residential and commercial real estate regulations. Unlike residential laws, which differentiate between small and large landlords, commercial transactions have historically not distinguished based on the size of the landlord. SB 1103 extends residential notification requirements indiscriminately to all commercial leases, failing to consider the diverse bargaining powers inherent in commercial transactions. This broad application imposes undue burdens on small commercial property owners and introduces onerous new requirements across all commercial transactions, exacerbating challenges for small landlords without providing equivalent protections. Such regulatory overreach threatens the economic viability and operational flexibility of small commercial landlords, who play a critical role in the business ecosystem.
FISCAL COMMENTS
None.
VOTES
SENATE FLOOR: 22-10-8
YES: Ashby, Atkins, Becker, Caballero, Durazo, Eggman, Gonzalez, Hurtado, Laird, Limón, McGuire, Menjivar, Min, Padilla, Roth, Rubio, Skinner, Smallwood-Cuevas, Stern, Umberg, Wahab, Wiener
NO: Alvarado-Gil, Dahle, Dodd, Grove, Jones, Nguyen, Niello, Ochoa Bogh, Seyarto, Wilk
ABS, ABST OR NV: Allen, Archuleta, Blakespear, Bradford, Cortese, Glazer, Newman, Portantino
ASM JUDICIARY: 7-2-3
YES: Kalra, Bryan, Connolly, Haney, Maienschein, McKinnor, Reyes
NO: Dixon, Sanchez
ABS, ABST OR NV: Bauer-Kahan, Pacheco, Joe Patterson
UPDATED
VERSION: August 22, 2024
CONSULTANT: Shiran Zohar / JUD. / (916) 319-2334 FN: 0004490
SENATE THIRD READING
STR Bill Id:SB 1103
Author:(Menjivar)
As Amended Ver:June 26, 2024
Majority vote
SUMMARY
Requires commercial landlords to provide "qualified commercial tenants," as defined, to provide contract translation and notice for month-to-month rent increases or termination, and places transparency and proportionality requirements on the fees a landlord may impose to recover building operating costs from qualified tenants.
Major Provisions
- Defines "commercial real property," "microenterprise" and "nonprofit organization" as provided under existing law.
- Defines "qualified commercial tenant" as a tenant of commercial real property, who has attested in writing that they are one of the following:
- A microenterprise;
- A restaurant with fewer than 10 employees; or
- A nonprofit organization with fewer than 20 employees.
- Requires a prospective tenant to provide the landlord, within the previous 12 months, with a self-attestation, establishing that they are a "qualified commercial tenant," in order to avail themselves of the protections provided in this legislation.
- Establishes that a landlord of a qualified commercial tenant in a month-to-month lease must provide the tenant with 30 days' written notice of a rent increase of less than 10% and 90 days' notice if the rent increase is greater than 10%.
- Establishes that for qualified commercial tenants, as defined, a rent increase can only go into effect after the prescribed notice period has expired.
- Clarifies that a violation of the notice requirement regarding rent increases does not entitle a qualified commercial tenant to civil penalties.
- Provides that a month-to-month commercial lease by a qualified commercial tenant is deemed renewed at the end of the term unless one of the parties gives written notice to the other of the party's intention to terminate the tenancy, as provided.
- Requires a landlord of a commercial property to give a qualified commercial tenant in a month-to-month lease, who has occupied the property for more than one year, at least 60 days' notice prior to the proposed termination of tenancy.
- Requires a landlord of a commercial property to give a qualified commercial tenant in a month-to-month lease, who has occupied the property for less than one year, at least 30 days' notice prior to the proposed termination of tenancy.
- Establishes that a person engaged in a trade or business who negotiates primarily in Spanish, Chinese, Tagalog, Vietnamese, or Korean, orally or in writing, in the course of entering into a commercial lease must deliver to the other party to the agreement a translation of the contract in the language in which the contract was negotiated.
- Establishes that only a "qualified commercial tenant," as defined, may avail themselves of the lease translation provision.
- Establishes that only a tenant, and not a landlord, may rescind a contract for failing to comply with the language translation requirement.
- Clarifies that the language translation requirement for commercial leases entered between a qualified commercial tenant and a landlord applies prospectively to leases entered on or after January 1, 2025.
- Prohibits a landlord of a commercial real property from charging a qualified commercial tenant a fee to recover building operating costs unless all of the following apply:
- The building operating costs are allocated proportionately per tenant, by square footage, or another method as substantiated through supporting documentation provided by the landlord to the qualified commercial tenant;
- The costs do not include expenses paid by the tenant directly to a third party;
- The costs do not include expenses for which a third party, tenant, or insurance reimbursed the landlord;
- The building operating costs have been incurred within the previous 18 months, or are reasonably expected to be incurred within the next 12 months;
- Within 30 days of a written request, the landlord provides the qualified commercial tenant supporting documentation of the previously incurred or reasonably expected building operating costs; and
- Before the execution of the lease, the landlord provides the prospective tenant with a notice stating that tenants may inspect the supporting documentation upon written request.
- Defines "building operating costs" as costs that are incurred on behalf of a tenant for the operation, maintenance, or repair of the commercial real property, including but not limited to maintenance of common areas, utilities that are not separately metered, and taxes or assessments charged to the landlord pursuant to property ownership.
- Defines "supporting documentation" as a dated and itemized quote, contract, receipt, or invoice from a licensed contractor or a provider of services that includes both: 1) a tabulation showing how the costs are allocated among tenants; and 2) a signed and dated attestation by the landlord that the documentation and costs are true and correct.
- Establishes that a tenant may raise a landlord's violation of 14), above, as a defense against an action for unlawful detainer or failure to pay.
- Establishes that a landlord who violates 14), above, is liable to a qualified commercial tenant for actual damages, reasonable attorney's fees and costs, and treble or punitive damages based on a showing of willful conduct, or conduct performed with oppression, fraud, or malice.
- Establishes that a waiver of the building operating costs requirements described in 14), above, is void as a matter of public policy.
- Provides that 14), above, applies to:
- Leases executed on or after January 1, 2025.
- Month-to-month commercial leases.
- A commercial lease that does not contain a provision regarding building operating costs.
COMMENTS
What is a "qualified commercial tenant"? This measure, and all the protections it provides, applies only to a "qualified commercial tenant." Though commercial leases are business-to-business transactions generally considered to involve parties with equal bargaining power, the author's focus is on commercial tenants who do not have the same power. Specifically, this bill defines a "qualified commercial tenant" as a restaurant with fewer than 10 employees, a nonprofit with fewer than 20 employees, and microenterprises (defined under existing law as having five or fewer employees, including the owner, that may be part or full time employees, and; generally lacking sufficient access to loans, equity, or other financial capital). Employee counts may not be a perfect proxy for "small business" as one could imagine numerous examples where a business with few employees could still generate significant revenue (and thus have plenty of sophistication and bargaining power), such as consulting firms, legal and medical practices, real estate investors, and app developers, to name a few. But none of those should fall within this bill's definition of "qualified commercial tenant" because they are not a restaurant or nonprofit, and while their employee count could fall within the "microenterprise" definition, their ability to access capital would make them ineligible for the protections of this measure. The method for confirming whether a business is a qualified commercial tenant is through an annually updated self-attestation.
This bill extends language translation to commercial leases for qualified commercial tenants. California law recognizes the importance of language access. Under existing law, if certain consumer contracts or residential leases are negotiated in Spanish, Chinese, Tagalog, Vietnamese, or Korean, then the consumer/tenant must be given an unsigned copy of the contract, which has been translated into the same language it was negotiated in, to review before signing. A consumer/tenant who does not receive the mandated translation has a right to rescind the contract. This translation requirement governs a vast range of consumer contracts, including auto sales and leases, apartment leases and rental agreements, most home mortgages and reverse mortgages, agreements for legal services, and virtually all loans and extensions of credit meant primarily for personal, family, or household purposes. But current law does not provide the same rights to those who enter into commercial lease agreements. This bill extends language translation rights to commercial lease contracts. It also specifies that, if a translated version of the commercial lease agreement is not provided, only a tenant (as opposed to either negotiating party) may rescind the contract. The language translation accessibility provisions in commercial leases would not be available for all commercial leases; it could only be triggered by a "qualified commercial tenant," as defined.
This bill adopts notice requirements for month-to-month commercial leases involving qualified commercial tenants. Existing law requires notices of rent increases and termination of tenancy in month-to-month residential leases; this bill applies the existing requirements to month-to-month commercial leases where the tenant is a qualified commercial tenant, as defined. This plays out as follows: imagine Restaurant, an establishment that employs five people, is in a month-to-month lease with Landlord. Restaurant pays Landlord $5,000 in monthly rent. If Landlord wants to increase the rent by $500 or less starting July 1, it must notify Restaurant by June 1 of the impending increase. If Landlord intends to raise the rent by $501 or more starting July 1, it must notify Restaurant no later than April 1 – 90 days before the increase. Similarly, if Landlord intends to terminate the tenancy with Restaurant on July 1 for whatever reason, it must notify Restaurant by June 1 (30 days prior) (if Restaurant has occupied the space for less than a year), or by May 1 (60 days prior) (if Restaurant has been there more than one year).
This bill establishes a framework for charging and substantiating building operating costs. Building operating costs are incurred on behalf of a tenant for the operation, maintenance, or repair of the commercial real property, including but not limited to maintenance of common areas, utilities that are not separately metered, and taxes or assessments charged to the landlord pursuant to property ownership. The author and sponsors of this measure explain that these charges can be significant, unpredictable, inconsistent, and unsubstantiated—further exacerbating the tight margins many of these small businesses are operating within.
According to the Author
The author, following a small business tour in her district in the San Fernando Valley, brought this measure. She explains how it will aid small business, like those in her district:
Small businesses and nonprofits are a vital resource for many in my district and across California. Their storefronts contribute to the aesthetics and vitality of our business corridors, as well as increase the walkability and cultural representation within neighborhoods. Government agencies alone cannot close the service gaps afflicting the most vulnerable Californians and we rely on the dedicated service of nonprofits. SB 1103 will protect those making immeasurable contributions to their communities and local economies. Specifically, this bill will expand the required notice periods for qualifying microenterprises, small nonprofits, and restaurants facing rent increases to 30 days for rate increases of less than 10% and 90 days for rate increases over 10%. It also requires commercial landlords to give a longer notice before the termination of a tenancy. SB 1103 will require commercial landlords to disclose to qualified commercial tenants that they are entitled to review supporting documentation that justifies increase in common area maintenance (CAM) fees. Further, this bill will require commercial lease contracts to be translated if the negotiations are done in Spanish, Chinese, Tagalog, Vietnamese or Korean. These common sense measures are needed in order to preserve and protect the small businesses and non-profits that are essential to the wellbeing our communities.
Arguments in Support
A broad coalition of consumer protection, community investment, civil rights, and small business groups jointly write to explain the need for this measure:
Community-serving microbusinesses and nonprofits in California are struggling. Expensive rents and fees, the lingering impacts of the pandemic, and inaccessible and opaque lease terms are contributing to the escalating displacement of microbusinesses and small nonprofits. Senate Bill 1103 will help small businesses and nonprofits remain in their communities and continue to provide relevant goods and services that strengthen our neighborhoods and enhance our local economy.
Senate Bill 1103's protections do not apply widely; they are provided only to the most vulnerable microenterprises and small nonprofits. By tailoring the benefits in this way, Senate Bill 1103 does not affect complex business-to-business (B2B) transactions. Rather, it levels the playing field for those microbusinesses and small nonprofits that do not have the same resources, representation, or negotiating power as large commercial tenants. Senate Bill 1103 is necessary for an equitable small business ecosystem, where California's immigrant and low-income entrepreneurs have a change to find and stay in commercial spaces to provide for their families, and sustain our communities.
Arguments in Opposition
Opponents of this bill dispute its premise. They argue that the government interventions in business-to-business transactions this measure imposes will disadvantage the very people the author is trying to help. The unintended consequence of this measure is that landlords will be less likely to rent out to "qualified commercial tenants," making their rental options scarcer and more expensive. A coalition letter by business organizations such as the Chamber of Commerce and local affiliates, as well as the California Business Properties Association explain how this measure would negatively impact small landlords, which are not distinguished from large commercial landlords in this measure:
In crafting SB 1103, it is imperative to recognize the nuanced distinctions between residential and commercial real estate regulations. Unlike residential laws, which differentiate between small and large landlords, commercial transactions have historically not distinguished based on the size of the landlord. SB 1103 extends residential notification requirements indiscriminately to all commercial leases, failing to consider the diverse bargaining powers inherent in commercial transactions. This broad application imposes undue burdens on small commercial property owners and introduces onerous new requirements across all commercial transactions, exacerbating challenges for small landlords without providing equivalent protections. Such regulatory overreach threatens the economic viability and operational flexibility of small commercial landlords, who play a critical role in the business ecosystem.
FISCAL COMMENTS
None.
VOTES
SENATE FLOOR: 22-10-8
YES: Ashby, Atkins, Becker, Caballero, Durazo, Eggman, Gonzalez, Hurtado, Laird, Limón, McGuire, Menjivar, Min, Padilla, Roth, Rubio, Skinner, Smallwood-Cuevas, Stern, Umberg, Wahab, Wiener
NO: Alvarado-Gil, Dahle, Dodd, Grove, Jones, Nguyen, Niello, Ochoa Bogh, Seyarto, Wilk
ABS, ABST OR NV: Allen, Archuleta, Blakespear, Bradford, Cortese, Glazer, Newman, Portantino
ASM JUDICIARY: 7-2-3
YES: Kalra, Bryan, Connolly, Haney, Maienschein, McKinnor, Reyes
NO: Dixon, Sanchez
ABS, ABST OR NV: Bauer-Kahan, Pacheco, Joe Patterson
UPDATED
VERSION: June 26, 2024
CONSULTANT: Shiran Zohar / JUD. / (916) 319-2334 FN: 0003638
Date of Hearing: June 25, 2024
ASSEMBLY COMMITTEE ON JUDICIARY
Ash Kalra, Chair
SBPCA Bill Id:SB 1103
Author:(Menjivar) – As Amended Ver:May 8, 2024
As Proposed to be Amended
SENATE VOTE: 22-10
SUBJECT: Tenancy of commercial real properties: agreements: operating costs
KEY ISSUE: SHOULD THE LEGISLATURE EXTEND CONTRACT TRANSLATION PROTECTIONS AND NOTICE REQUIREMENTS FOR LEASE TERMINATIONS AND RENT INCREASES TO QUALIFIED COMMERCIAL TENANTS, AND put in PLACE TRANSPARENCY AND PROPORTIONALITY REQUIREMENTS FOR FEES A LANDLORD MAY CHARGE A QUALIFIED COMMERCIAL TENANT TO RECOVER BUILDING OPERATING COSTS?
SYNOPSIS
Small businesses are the lifeblood of economies, embodying innovation, resilience, and community impact—especially within immigrant communities. According to the author, small businesses and nonprofits continue to be forced out of business and displaced from their communities at alarming rates as a consequence of increasing rents and exorbitant fees. For years, the Legislature has worked to pass legislation protecting the rights of residential tenants in the face of skyrocketing rents across the state. This bill, as proposed to amended, aims to protect the rights of what it defines as a “qualified commercial tenant.” A “qualified commercial tenant” is defined as either: 1) a microenterprise (i.e., having five or fewer employees and generally lacking sufficient access to capital); 2) a restaurant with fewer than 10 employees; or 3) a nonprofit organization with fewer than 20 employees. SB 1103 provides that a tenant who self-attests to being a “qualified commercial tenant” would receive new protections. First, if their commercial lease was primarily negotiated in one of the five non-English most spoken languages in the state (Spanish, Chinese, Tagalog, Vietnamese, or Korean), the landlord would be required to translate the lease into that language. Secondly, the existing law’s 30-, 60-, and 90-day notice requirements for rent increases or lease termination in month-to-month residential leases would apply to commercial leases. Finally, landlords would be prohibited from recovering building operating costs, unless certain requirements are met to provide notice and substantiate those costs, before charging the tenant.
The proposed amendments are discussed throughout this analysis and are reflected in the SUMMARY below. This bill is co-sponsored by Bet Tzedek Legal Services, CAMEO, Inclusive Action for the City, Public Counsel, and the Small Business Majority. It is opposed by a coalition of business organizations such as the Chamber of Commerce and local affiliates, as well as the California Business Properties Association.
SUMMARY: Requires commercial landlords to provide “qualified commercial tenants,” as defined, to provide contract translation and notice for month-to-month rent increases or termination, and places transparency and proportionality requirements on the fees a landlord may impose to recover building operating costs from qualified tenants. Specifically, this bill:
- Defines “commercial real property,” “microenterprise” and “nonprofit organization” as provided under existing law.
- Defines “qualified commercial tenant” as a tenant of commercial real property, who has attested in writing that they are one of the following:
- A microenterprise;
- A restaurant with fewer than 10 employees; or
- A nonprofit organization with fewer than 20 employees.
- Requires a prospective tenant to provide the landlord, within the previous 12 months, with a self-attestation, establishing that they are a “qualified commercial tenant,” in order to avail themselves of the protections provided in this legislation.
- Establishes that a landlord of a qualified commercial tenant in a month-to-month lease must provide the tenant with 30 days’ written notice of a rent increase of less than 10 percent and 90 days’ notice if the rent increase is greater than 10 percent.
- Establishes that for qualified commercial tenants, as defined, a rent increase can only go into effect after the prescribed notice period has expired.
- Clarifies that a violation of the notice requirement regarding rent increases does not entitle a qualified commercial tenant to civil penalties.
- Provides that a month-to-month commercial lease by a qualified commercial tenant is deemed renewed at the end of the term unless one of the parties gives written notice to the other of the party’s intention to terminate the tenancy, as provided.
- Requires a landlord of a commercial property to give a qualified commercial tenant in a month-to-month lease, who has occupied the property for more than one year, at least 60 days’ notice prior to the proposed termination of tenancy.
- Requires a landlord of a commercial property to give a qualified commercial tenant in a month-to-month lease, who has occupied the property for less than one year, at least 30 days’ notice prior to the proposed termination of tenancy.
- Establishes that a person engaged in a trade or business who negotiates primarily in Spanish, Chinese, Tagalog, Vietnamese, or Korean, orally or in writing, in the course of entering into a commercial lease must deliver to the other party to the agreement a translation of the contract in the language in which the contract was negotiated.
- Establishes that only a “qualified commercial tenant,” as defined, may avail themselves of the lease translation provision.
- Establishes that only a tenant, and not a landlord, may rescind a contract for failing to comply with the language translation requirement.
- Clarifies that the language translation requirement for commercial leases entered between a qualified commercial tenant and a landlord applies prospectively to leases entered on or after January 1, 2025.
- Prohibits a landlord of a commercial real property from charging a qualified commercial tenant a fee to recover building operating costs unless all of the following apply:
- The building operating costs are allocated proportionately per tenant, by square footage, or another method as substantiated through supporting documentation provided by the landlord to the qualified commercial tenant;
- The costs do not include expenses paid by the tenant directly to a third party;
- The costs do not include expenses for which a third party, tenant, or insurance reimbursed the landlord;
- The building operating costs have been incurred within the previous 18 months, or are reasonably expected to be incurred within the next 12 months;
- Within 30 days of a written request, the landlord provides the qualified commercial tenant supporting documentation of the previously incurred or reasonably expected building operating costs; and
- Before the execution of the lease, the landlord provides the prospective tenant with a notice stating that tenants may inspect the supporting documentation upon written request.
- Defines “building operating costs” as costs that are incurred on behalf of a tenant for the operation, maintenance, or repair of the commercial real property, including but not limited to maintenance of common areas, utilities that are not separately metered, and taxes or assessments charged to the landlord pursuant to property ownership.
- Defines “supporting documentation” as a dated and itemized quote, contract, receipt, or invoice from a licensed contractor or a provider of services that includes both: 1) a tabulation showing how the costs are allocated among tenants; and 2) a signed and dated attestation by the landlord that the documentation and costs are true and correct.
- Establishes that a tenant may raise a landlord’s violation of 14) as a defense against an action for unlawful detainer or failure to pay.
- Establishes that a landlord who violates 14) is liable to a qualified commercial tenant for actual damages, reasonable attorney’s fees and costs, and treble or punitive damages based on a showing of willful conduct, or conduct performed with oppression, fraud, or malice.
- Establishes that a waiver of the building operating costs requirements described in 14) is void as a matter of public policy.
- Provides that 14) applies to:
- Leases executed on or after January 1, 2025.
- Month-to-month commercial leases.
- A commercial lease that does not contain a provision regarding building operating costs.
EXISTING LAW:
- Provides that in month-to-month residential leases the landlord may, upon giving notice in writing to the tenant, change the terms of the lease upon the expiration of a period at least as long as the rental term, as specified. (Civil Code Section 827 (a). All further statutory references are to the Civil Code, unless otherwise indicated.)
- Provides that in month-to-month residential leases, the landlord may change the terms and rents of the lease by delivering a copy personally or through the mail, as provided. (Section 827 (b)(1).)
- Establishes that, if the proposed rent increase in a month-to-month residential lease is 10 percent or less than the rental amount charged during the 12 months prior, the notice of the rent increase must be delivered at least 30 days before the effective date of the increase. (Section 827 (b)(2).)
- Provides that, if the proposed rent increase in a month-to-month residential lease is greater than 10 percent of the rent charged during any time in the 12 months prior, the notice must be delivered at least 90 days before the effective date of the increase. (Section 827 (b)(3).)
- Provides that, when residential real property is leased for an unspecified term, the lease is deemed renewed at the end of the term implied by law, unless one of the parties gives written notice to the other of their intent to terminate the tenancy. (Section 1946.1.)
- Provides that, if the residential tenant has resided in the dwelling for less than a year, the landlord must provide notice of termination at least 30 days prior to the termination, and that the landlord must provide notice of termination at least 60 days prior to the termination if the tenant has resided in the residential property for a year or more, except as provided. (Id.)
- Provides that a tenant must provide notice of their intention to terminate their tenancy for a periodic tenancy at least as long as the term of the periodic tenancy. If the tenant has received a notice of termination from the owner, the tenant may provide a notice of termination for a period at least as long as the term of a periodic tenancy, if such termination occurs before the owner’s date of termination. (Id.)
- Requires that any person engaged in a trade or business who negotiates a specified contract or agreement primarily in Spanish, Chinese, Tagalog, Vietnamese, or Korean provide to the other party to the contract or agreement, or anyone who will be signing the agreement, a translation of the contract or agreement in the language in which the contract was negotiated before the execution of that contract or agreement. (Section 1632 (b).)
- Defines a “microenterprise” as a sole proprietorship, partnership, limited liability company, or corporation that:
- Has five or fewer employees, including the owner, that may be part or full time employees, and;
- Generally lacks sufficient access to loans, equity, or other financial capital. (Business and Professions Code Section 18000 (a).)
FISCAL EFFECT: As currently in print this bill is keyed non-fiscal.
COMMENTS: For years, the Legislature has worked to pass legislation protecting the rights of residential tenants in the face of skyrocketing rents across the state. SB 1103 aims to extend some of these protections to what the bill defines as “qualified commercial tenants,” using low employee numbers as a proxy for small businesses entitled to the protections of this measure.
The author, following a small business tour in her district in the San Fernando Valley, brought this measure. She explains how it will aid small business, like those in her district:
Small businesses and nonprofits are a vital resource for many in my district and across California. Their storefronts contribute to the aesthetics and vitality of our business corridors, as well as increase the walkability and cultural representation within neighborhoods. Government agencies alone cannot close the service gaps afflicting the most vulnerable Californians and we rely on the dedicated service of nonprofits. SB 1103 will protect those making immeasurable contributions to their communities and local economies. Specifically, this bill will expand the required notice periods for qualifying microenterprises, small nonprofits, and restaurants facing rent increases to 30 days for rate increases of less than 10% and 90 days for rate increases over 10%. It also requires commercial landlords to give a longer notice before the termination of a tenancy. SB 1103 will require commercial landlords to disclose to qualified commercial tenants that they are entitled to review supporting documentation that justifies increase in common area maintenance (CAM) fees. Further, this bill will require commercial lease contracts to be translated if the negotiations are done in Spanish, Chinese, Tagalog, Vietnamese or Korean. These common sense measures are needed in order to preserve and protect the small businesses and non-profits that are essential to the wellbeing our communities.
The bill, as proposed to amended, seeks to accomplish its objectives by focusing on three distinct issues affecting “qualified commercial tenants.” First, it extends the translation requirement for consumer contracts and residential landlord-tenant leases negotiated in other languages to commercial leases between a landlord and a qualified commercial tenant. Second, it extends certain notice requirements for rent increases and tenancy termination in month-to month residential leases to month-to-month qualified commercial tenants. Finally, it prohibits a landlord of a commercial real property from charging a qualified commercial tenant fees to recover building operating costs, unless certain requirements are met.
Small businesses. Small businesses and nonprofits continue to be forced out of business and displaced from their communities at alarming rates. According to a report by Rise Economy, a survey of nonprofits working with thousands of small business owners in California found that 86% of respondents reported that small businesses often (54%) or sometimes (32%) face displacement. (Stein, Kevin (Rise Economy, formerly the California Reinvestment Coalition), available at https://static1.squarespace.com/static/52b7d7a6e4b0b3e376ac8ea2/t/5b1eb1950e2e72b49f5a1679/1528738430348/Disrupting+Displacement+Financing.pdf (June 2018).)
The author explains the existential problems small businesses tenants—who lack the protections of residential tenants—are facing:
Rent increases, unclear and unfair lease terms, as well as exorbitant added fees make it extremely difficult to find and stay in commercial space. Small business owners with limited English proficiency often encounter complex commercial lease agreements that are difficult to navigate. While existing state law requires many contracts, including residential leases, to be translated when negotiated in other languages, commercial leases are not included. This has a devastating chilling effect on immigrant entrepreneurship and runs counter to the State commitment to language and economic justice.
On top of rising rents, small business owners and small nonprofits also commonly encounter exorbitant added fees. For example, security deposits routinely exceed multiple months of rent and common area maintenance fees often compound the costs of a lease without adequate explanation or notice. Small businesses and nonprofits are also afforded only 30 days’ notice for a rent increase or termination of tenancy. This short window often precludes a business or small nonprofit from remaining in their existing location or relocating within the same community, leading to preventable business closures and the loss of critical community based and culturally significant goods and services in low-income and immigrant communities across California.
What is a “qualified commercial tenant”? This measure, and all the protections it provides, applies only to a “qualified commercial tenant.” Though commercial leases are business-to-business transactions generally considered to involve parties with equal bargaining power, the author’s focus is on commercial tenants who do not have the same power. Specifically, this bill defines a “qualified commercial tenant” as a restaurant with fewer than 10 employees, a nonprofit with fewer than 20 employees, and microenterprises (defined under existing law as having five or fewer employees, including the owner, that may be part or full time employees, and; generally lacking sufficient access to loans, equity, or other financial capital). Employee counts may not be a perfect proxy for “small business” as one could imagine numerous examples where a business with few employees could still generate significant revenue (and thus have plenty of sophistication and bargaining power), such as consulting firms, legal and medical practices, real estate investors, and app developers, to name a few. But none of those should fall within this bill’s definition of “qualified commercial tenant” because they are not a restaurant or nonprofit, and while their employee count could fall within the “microenterprise” definition, their ability to access capital would make them ineligible for the protections of this measure. The method for confirming whether a business is a qualified commercial tenant is through an annually updated self-attestation.
This bill extends language translation to commercial leases for qualified commercial tenants. A former restaurant owner from the author’s district explains the importance of signing a lease in the same language it was negotiated, “more than anything, receiving a copy of our lease in Spanish, my first language, would have helped me be well informed on what I was signing. The most important thing for anyone is to receive a lease in their native language.” (https://sd20.senate.ca.gov/news/increasing-commercial-tenant-protections-california-small-businesses-and-nonprofits.)
California law recognizes the importance of language access. Under existing law, if certain consumer contracts or residential leases are negotiated in Spanish, Chinese, Tagalog, Vietnamese, or Korean, then the consumer/tenant must be given an unsigned copy of the contract, which has been translated into the same language it was negotiated in, to review before signing. A consumer/tenant who does not receive the mandated translation has a right to rescind the contract. This translation requirement governs a vast range of consumer contracts, including auto sales and leases, apartment leases and rental agreements, most home mortgages and reverse mortgages, agreements for legal services, and virtually all loans and extensions of credit meant primarily for personal, family, or household purposes. But current law does not provide the same rights to those who enter into commercial lease agreements.
This bill extends language translation rights to commercial lease contracts. It also specifies that, if a translated version of the commercial lease agreement is not provided, only a tenant (as opposed to either negotiating party) may rescind the contract.
As proposed to be amended, the language translation accessibility provisions in commercial leases would not be available for all commercial leases; it could only be triggered by a “qualified commercial tenant,” as defined.
Opponents of the measure argue that extending language translation requirements to commercial leases would be cost-prohibitive, because of the cost associated with accurately translating complex lease agreements. They argue that this will result in landlords increasing rents in order to recoup the costs of translation, and that the looming threat of rescission for inaccuracies could be exploited, ultimately leading to leases being negotiated exclusively in English – an unintended consequence of this provision. The opposition’s concerns are somewhat belied by history. Translation requirements have been in place for consumer contracts and residential leases since 1976. The languages referenced in the section have been periodically updated since that time, to reflect California’s changing demographics. The Committee is unaware of any problems implementing these translation provisions or any of the adverse consequence the opposition warns of. The proposed amendments, which limit this requirement to commercial leases involving qualified commercial tenants should significantly lower the concern about the cost and complexity, given that lease templates, like the California Association of Realtors’ Commercial Lease Agreement, are widely available for use for standard leasing arrangements.
This bill adopts notice requirements for month-to-month commercial leases involving qualified commercial tenants. Existing law requires notices of rent increases and termination of tenancy in month-to-month residential leases; this bill would apply the existing requirements to month-to-month commercial leases where the tenant is a qualified commercial tenant, as defined.
This plays out as follows: imagine Restaurant, an establishment that employs 5 people, is in a month-to-month lease with Landlord. Restaurant pays Landlord $5,000 in monthly rent. If Landlord wants to increase the rent by $500 or less starting July 1, it must notify Restaurant by June 1 of the impending increase. If Landlord intends to raise the rent by $501 or more starting July 1, it must notify Restaurant no later than April 1 – 90 days before the increase.
Similarly, if Landlord intends to terminate the tenancy with Restaurant on July 1 for whatever reason, it must notify Restaurant by June 1 (30 days prior) (if Restaurant has occupied the space for less than a year), or by May 1 (60 days prior) (if Restaurant has been there more than one year).
This bill establishes a framework for charging and substantiating building operating costs. Building operating costs are incurred on behalf of a tenant for the operation, maintenance, or repair of the commercial real property, including but not limited to maintenance of common areas, utilities that are not separately metered, and taxes or assessments charged to the landlord pursuant to property ownership. The author and sponsors of this measure explain that these charges can be significant, unpredictable, inconsistent, and unsubstantiated—further exacerbating the tight margins many of these small businesses are operating within. Opposition raised numerous concerns with the building operating costs section of the bill in print, arguing that it would prevent them from collecting certain operating expenses at all, even if they incurred them on behalf of the tenant. Among other concerns, they also argued that the notice provisions for charging building operating costs were impossible to meet, as landlords did not know these costs in the timelines established by the bill. To address these concerns and others, the author has reworked this portion of the bill, as detailed in the Author’s amendments below.
Author’s amendments.
- The author is proposing clarifying amendments that the language translation requirement in commercial leases applies only to those involving a qualified commercial tenant and commencing on or after January 1, 2025.
1632(a)(8). A lease, sublease, rental contract or agreement, or other term of tenancy contract or agreement covering a nonresidential-zoned commercial space entered into between a landlord and a qualified commercial tenant on or after January 1, 2025.
1632(l). (l) For purposes of this section, “qualified commercial tenant” means a tenant of commercial real property that meets both of the following requirements:
(A) The tenant is a microenterprise, a restaurant with fewer than 10 employees, or a nonprofit organization with fewer than 20 employees.
(B) (i) Subject to clause (ii), the tenant has provided a landlord with a written notice that the tenant is a qualified commercial tenant and a self-attestation regarding the number of employees, at such time the protections under this section come into place.
(ii) Unless the tenancy is from week to week, month to month, or other period less than a month, the tenant provided the notice and self-attestation described in clause (i) before or upon execution of the lease, and annually thereafter, at such time the protections under this section come into place.
- Amendments clarifying the self-attestation of a “qualified commercial tenant” must be updated annually.
827(b)(7)(D)(ii)(II). Unless the tenancy is from week to week, month to month, or other period less than a month, the tenant provided the notice and self-attestation described in subclause (I) before or upon execution of the lease, and annually thereafter, at such time the protections under this subdivision come into place.
1946.1(j)(4)(B)(ii). Unless the tenancy is from week to week, month to month, or other period less than a month, the tenant provided the notice and self-attestation described in clause (i) before or upon execution of the lease, and annually thereafter, at such time the protections under this section come into place.
1950.9(g)(5)(B)(ii). (ii) Unless the tenancy is from week to week, month to month, or other period less than a month, the tenant provided the notice and self-attestation described in clause (i) before or upon execution of the lease, and annually thereafter, at such time the protections under this section subdivision come into place.
3) Amendments that provide a clearer framework and add certain limitations to the business operating expenses requirement, make the requirements expressly prospective, and amend the enforcement provisions. These amendments should address some of the concerns raised by the opposition, but are unlikely to remove their opposition entirely.
1950.9. (a) A landlord of a commercial real property may shall not charge a qualified commercial tenant a fee to recover building operating costs, also known as common area maintenance fees, only if unless all of the following apply:
(1) The costs are limited to maintenance or a repair by the landlord that is not required by the lease, landscaping, security, trash, disposal, or insurance.
(2) The costs do not include expenses paid by the tenant directly to a third party.
(3) The costs do not include expenses for which a third party, tenant, or insurance reimbursed the landlord.
(4) (1) The building operating costs are allocated proportionately per tenant, by square footage, or another method as substantiated through supporting documentation provided by the landlord to the qualified commercial tenant.
(5) (2) Before the execution of the lease, the landlord provides the prospective qualified commercial tenant a paper or electronic notice stating that tenants may inspect any supporting documentation of building operating costs upon written request, as provided in paragraph (4) of this subdivision (a).
(3) The landlord provides the tenant supporting documentation proving that building operating costs have been incurred within the previous 18 months, or are reasonably expected to be incurred within the next 12 months., if requested by the tenant, as follows:
(4) Within 30 days of a written request, the landlord provides the qualified commercial tenant supporting documentation of the previously incurred or reasonably expected building operating costs.
(5) The costs do not include expenses paid by the tenant directly to a third party.
(6) The costs do not include expenses for which a third party, tenant, or insurance reimbursed the landlord.
(b) A landlord of a commercial real property shall not collect any building operating costs from the qualified commercial tenant until the landlord provides the tenant supporting documentation as required in paragraph (4) of subdivision (a).
(A) Thirty days before the tenant is required to pay for the costs, unless the condition in subparagraph (B) is met.
(B) Ninety days before the tenant is required to pay for the costs if the cost increase is 10 percent or more of the amount charged to the tenant for the operating costs at any time during the 12-month period before the effective date of the increase.
(6) The landlord notifies the tenant of the right to receive supporting documentation pursuant to paragraph (5).
(c) During the course of a commercial tenancy, the landlord shall not alter the method or formula used to allocate building operating costs to the qualified commercial tenant in a way that increases the tenant’s share of those costs.
(b) (d) In an action for an unlawful detainer, ejectment, or other action to recover possession based on a failure to pay a fee to recover building operating costs, a qualified commercial tenant may raise, as an affirmative defense, that the landlord violated this section.
(c) A landlord of a commercial real property who violates this section shall be subject to a civil penalty of three times the amount of actual damages proximately suffered by the qualified commercial tenant, and the qualified commercial tenant shall be entitled to an award of costs, including reasonable attorney’s fees, reasonably incurred in connection with obtaining the civil penalty.
(e) A landlord of a commercial real property who violates this section shall be liable to the qualified commercial tenant in a civil action for all of the following:
(1) Actual damages.
(2) In the court’s discretion, reasonable attorney’s fees and costs.
(3) Upon a showing that the landlord, lessor, or their agent has acted willfully or with oppression, fraud, or malice, up to three times the actual damages. An award may also be entered for punitive damages for the benefit of the qualified commercial tenant.
(d) (f)Any waiver of a right under this section by a qualified commercial tenant shall be void as a matter of public policy.
(e) (g) For the purposes of this section, the following definitions apply:
(1) “Building operating costs” means costs that are incurred on behalf of a tenant for the operation, maintenance, or repair of the commercial real property, including but not limited to maintenance of common areas, utilities that are not separately metered, and taxes or assessments charged to the landlord pursuant to property ownership.
…
(h) This section shall only apply to any of the following:
(1) A lease executed or tenancy commenced or renewed on or after January 1, 2025.
(2) A tenancy that is from week to week, month to month, or other period less than a month.
(3) A lease that does not contain a provision regarding building operating costs.
ARGUMENTS IN SUPPORT: A broad coalition of consumer protection, community investment, civil rights, and small business groups jointly write to explain the need for this measure:
Community-serving microbusinesses and nonprofits in California are struggling. Expensive rents and fees, the lingering impacts of the pandemic, and inaccessible and opaque lease terms are contributing to the escalating displacement of microbusinesses and small nonprofits. Senate Bill 1103 will help small businesses and nonprofits remain in their communities and continue to provide relevant goods and services that strengthen our neighborhoods and enhance our local economy.
…
Senate Bill 1103’s protections do not apply widely; they are provided only to the most vulnerable microenterprises and small nonprofits. By tailoring the benefits in this way, Senate Bill 1103 does not affect complex business-to-business (B2B) transactions. Rather, it levels the playing field for those microbusinesses and small nonprofits that do not have the same resources, representation, or negotiating power as large commercial tenants. Senate Bill 1103 is necessary for an equitable small business ecosystem, where California’s immigrant and low-income entrepreneurs have a change to find and stay in commercial spaces to provide for their families, and sustain our communities.
ARGUMENTS IN OPPOSITION: Opponents of this bill dispute its premise. They argue that the government interventions in business-to-business transactions this measure imposes will disadvantage the very people the author is trying to help. The unintended consequence of this measure is that landlords will be less likely to rent out to “qualified commercial tenants,” making their rental options scarcer and more expensive. A coalition letter by business organizations such as the Chamber of Commerce and local affiliates, as well as the California Business Properties Association explain how this measure would negatively impact small landlords, which are not distinguished from large commercial landlords in this measure:
In crafting SB 1103, it is imperative to recognize the nuanced distinctions between residential and commercial real estate regulations. Unlike residential laws, which differentiate between small and large landlords, commercial transactions have historically not distinguished based on the size of the landlord. SB 1103 extends residential notification requirements indiscriminately to all commercial leases, failing to consider the diverse bargaining powers inherent in commercial transactions. This broad application imposes undue burdens on small commercial property owners and introduces onerous new requirements across all commercial transactions, exacerbating challenges for small landlords without providing equivalent protections. Such regulatory overreach threatens the economic viability and operational flexibility of small commercial landlords, who play a critical role in the business ecosystem.
REGISTERED SUPPORT / OPPOSITION:
Support
Bet Tzedek Legal Services (co-sponsor)
Cameo Network (co-sponsor)
Inclusive Action for the City (co-sponsor)
Public Counsel (co-sponsor)
Small Business Majority (co-sponsor)
Acce Action
Accessity
Alliance for A Better Community
Altcap California
Angie Rojas
Arts for Healing and Justice Network
Asian Americans Advancing Justice Southern California
Asian Pacific Islander Small Business Program Wbc Ltsc Community Development Corp.
Asociacion De Emprendedor@s
California Coalition for Community Investment
California Environmental Voters
California Immigrant Policy Center
California Lgbt Arts Alliance
California Low-income Consumer Coalition
Calnonprofits
Cdtech
Charles & Company
Child Care Law Center
City of Daly City
City of San Jose
Consumer Attorneys of California
Corn A'copia Productions
Corporation
Courage California
Deborah Murphy Urban Design + Planning
East Bay Community Law Center
Eastside Leads
El Corredor Restaurant
Ella Baker Center for Human Rights
Escargo.io
Friends of The Los Angeles River
Goddess Next Door Corporation
Greenlining Institute
Host Friendly LLC
I Did Something Good Today Foundation
Icon CDC
Immigrants Rising
Independent Hospitality Coalition
Keren Subramanya
Kiwa
Kmg Family Services
Kras Family Child Care LLC
LA Casa De Frida Los Angeles
LA Food Policy Council
LA Forward
LA Percussion Rentals
Learning Rights Law Center
Lisc Bay Area
Little Sprouts Language Immersion Preschool
Long Beach Forward
Manzanita Capital Collective
Mend: Meet Each Need With Dignity
Middleman Merchandise
National Association for Latino Community Asset Builders
Nonprofit Finance Fund (NFF)
Pacific Asian Consortium in Employment
Pact, an Adopt Alliance
Paloma Market
Project Equity
Rediscover Center
Sacramento Hispanic Chamber of Commerce
Saje
Sara Daleiden Consulting
Score
Shakespeare Center of Los Angeles
Small Business Anti-displacement Network
South Asian Network
Southeast Asian Community Alliance
Sustainable Economies Law Center
Syrenity Consulting
Thai Community Development Center
Urtone Skin LLC
Vermont-slauson Economic Development Corporation
Village Arts
Voices for Progress
Yi Family Child Care
Zo International
Opposition
Boma California
Cal Asian Chamber of Commerce
California Association of Realtors
California Building Industry Association (CBIA)
California Business Properties Association
California Business Roundtable
California Chamber of Commerce
California Downtown Association
California Hispanic Chamber of Commerce
California Manufacturers & Technology Association
California Mba
Cupertino Chamber of Commerce
Danville Area Chamber of Commerce
Greater High Desert Chamber of Commerce
Greater San Fernando Valley Chamber of Commerce
Icsc
LA Canada Flintridge Chamber of Commerce
Laguna Niguel Chamber of Commerce
Livermore Chamber of Commerce
Long Beach Area Chamber of Commerce
Los Angeles County Business Federation (BIZFED)
Modesto Chamber of Commerce
Naiop California
Orange County Business Council
San Diego Regional Chamber of Commerce
Santa Clarita Valley Chamber of Commerce
Simi Valley Chamber of Commerce
The Chamber Newport Beach
Tulare Chamber of Commerce
Ucan Chambers of Commerce
Valley Industry and Commerce Association (VICA)
Walnut Creek Chamber of Commerce & Visitors Bureau
Western Manufactured Housing Communities Association
Analysis Prepared by: Shiran Zohar / JUD. / (916) 319-2334
SENATE RULES COMMITTEE Office of Senate Floor Analyses (916) 651-1520 Fax: (916) 327-4478 | SB 1103 |
THIRD READING
Bill No: SB 1103
Author: Menjivar (D)
Amended: 5/8/24
Vote: 21
SENATE JUDICIARY COMMITTEE: 9-2, 4/30/24
AYES: Umberg, Allen, Blakespear, Caballero, Dodd, Durazo, Laird, Min, Wiener
NOES: Wilk, Niello
SUBJECT: Tenancy of commercial real properties: agreements: operating costs
SOURCE: Bet Tzedek
California Association for Micro Enterprise Opportunity
Inclusive Action for the City
Lawyers’ Committee for Civil Rights of the San Francisco Bay Area
Public Counsel
Small Business Majority
DIGEST:
This bill extends various protections and notice requirements for lease terminations or rent increases to qualified commercial tenants, and places transparency and proportionality requirements for fees a landlord may charge a qualified commercial tenant to recover building operating costs.
ANALYSIS:
Existing law:
- Provides that, in all periodic leases of land or tenements, the landlord may, upon giving notice in writing to the tenant as prescribed, change the terms of the lease upon the expiration of a period at least as long as the rental term, as specified. Provides that, in all leases of a residential dwelling or any interest in it, the landlord may increase the rent upon giving written notice to the tenant by delivering a copy to the tenant personally or by serving a copy by mail. If the proposed rent increase is 10 percent or less than the rental amount charged during the 12 months prior, the notice of the rent increase must be delivered at least 30 days before the effective date of the increase. Provides that, if the proposed rent increase is greater than 10 percent of the rent charged during any time in the 12 months prior, the notice must be delivered at least 90 days before the effective date of the increase. (Civ. Code § 827.)
- Requires that any person engaged in a trade or business who negotiates a specified contract or agreement primarily in Spanish, Chinese, Tagalog, Vietnamese, or Korean deliver to the other party to the contract or agreement, or anyone who will be signing the agreement, and before the execution of that contract or agreement, a translation of the contract or agreement in the language in which the contract was negotiated. (Civ. Code § 1632(b).)
- Provides an exception to this requirement where the party with whom the person engaged in a trade or business is negotiating negotiates the terms of the contract or agreement through their own interpreter.
- Provides that the terms in the English version of the contract shall determine the rights and obligations of the parties, and that the translated version may only be used in court as evidence to show that no contract was entered into because of substantial differences in material terms between the English version and the translated version.
- Provides that an aggrieved person for a violation of this provision may rescind the contract or agreement, as provided.
- Provides that, when residential real property is leased for an unspecified term, the lease is deemed renewed at the end of the term implied by law, unless one of the parties gives written notice to the other of their intent to terminate the tenancy. (Civ. Code § 1946.1.)
- Provides that, if the residential tenant has resided in the dwelling for less than a year, the landlord must provide notice of termination at least 30 days prior to the termination, and that the landlord must provide notice of termination at least 60 days prior to the termination if the tenant has resided in the residential property for a year or more, except as provided. Provides that a tenant must provide notice of their intention to terminate their tenancy for a periodic tenancy at least as long as the term of the periodic tenancy. If the tenant has received a notice of termination from the owner, the tenant may provide a notice of termination for a period at least as long as the term of a periodic tenancy, if such termination occurs before the owner’s date of termination. (Civ. Code § 1946.1(b)-(d).)
- Defines a “microenterprise” as a sole proprietorship, partnership, limited liability company, or corporation that:
- Has five or fewer employees, including the owner, that may be part or full time employees;
- Generally lacks sufficient access to loans, equity, or other financial capital. (Bus. & Prof. Code § 18000(a).)
This bill:
- Provides, for the purposes of its various statutory changes, the following definitions:
- “Qualified commercial tenant” as a tenant of commercial real property that meets both of the following:
- The tenant is a microenterprise, a restaurant with fewer than 10 employees, or a nonprofit organization with fewer than 20 employees.
- The tenant provides the landlord with a written notice that it is a qualified commercial tenant and a self-attestation regarding the number of employees it has, and that the tenant provides this notice and attestation, unless the tenancy is from week to week, month to month, or other period less than a month, before or upon execution of the lease. Provides that the various requirements under the bill do not come into effect until such notice and attestation is provided to the landlord.
- “Nonprofit organization” as any private, nonprofit organization that qualifies under Section 501(c)(3) of the United States Internal Revenue Code of 1986.
- “Microenterprise” as the same meaning as the term is defined in Business and Professions Code Section 18000(a).
- “Commercial real property” as all real property in the state, except dwelling units, mobilehomes, and recreational vehicles, as specified.
- “Qualified commercial tenant” as a tenant of commercial real property that meets both of the following:
- Extends the requirement that a person engaged in a trade or business that negotiates a contract or agreement in Spanish, Chinese, Tagalog, Vietnamese, or Korean provide a translated version of the contract or agreement in the language in which it was negotiated to apply to a sublease, rental contract or agreement, or other term of tenancy for a commercial lease agreement for qualified commercial tenants.
- Specifies that the exception to this requirement for when the party negotiating with the person engaged in a trade or business negotiates through their own interpreter does not apply to the specified commercial lease agreements.
- Specifies that only a qualified commercial tenant may rescind a contract for a violation of the translation requirement.
- Extends the above-described requirement that a landlord provides notice of rent increases, as specified, to commercial real property leased by a qualified commercial tenant. Specifies that, for qualified commercial tenants of commercial real property, the landlord must include in the notice of increase information on the required notice provided in the above-described provisions. Specifies that such rent increases for a qualified commercial tenant are not effective until the required notice period has expired, and that, notwithstanding any other provision, a violation of these provisions by a landlord of commercial real property does not entitle the qualified commercial tenant to civil penalties.
- Extends the above-described requirements that a tenancy is deemed renewed unless a party notifies the other party of their intent to terminate the tenancy to commercial real property by a qualified commercial tenant.
- Extends the above-described requirement that a landlord provide advance notice, as specified, to a tenant for the termination of a tenancy to commercial real property for a qualified commercial tenant.
- Provides that a landlord of a commercial real property must include in a notice of termination information on the above-described notice requirements for qualified commercial tenants.
- Provides that a landlord of commercial real property may charge a qualified commercial tenant a fee to recover building operating costs, also known as Common Area Maintenance fees, only if the following apply:
- The costs are limited to maintenance or a repair by the landlord that is not required by the lease, landscaping, security, trash, disposal, or insurance;
- The costs do not include expenses paid by the tenant directly to a third party;
- The costs do not include expenses for which a third party, tenant, or insurance reimbursed the landlord for the costs;
- The costs are allocated proportionately per tenant, by square footage or other method substantiated through supporting documentation provided by the landlord;
- The landlord provides the tenant supporting documentation providing that operating costs have been incurred within the previous 18 months, or are reasonably expected to be incurred within the next 12 months, if requested by the tenant, either:
- 30 days before the tenant is required to pay for the costs, if the cost increase is less than 10 percent of the amount charged for operating costs during the last 12 months;
- 90 days before the tenant is required to pay for the costs if the cost increase is 10 percent or more of the amount charged for operating costs during the last 12 months.
- Defines “supporting evidence,” as a dated and itemized quote, contract, receipt, or invoice from a licensed contractor or provider of services that includes, but is not limited to, a tabulation showing how the costs are allocated among tenants proportionately, as required, and a signed and dated attestation by the landlord that the documentation and costs are true and correct.
- Provides that, in an unlawful detainer action, ejectment, or other action to recover possession of the premises based on the tenant’s failure to pay a fee to recover operating costs, a qualified commercial tenant may raise, as an affirmative defense, that the landlord did not comply with 6), above.
- Provides that a landlord who violates 6), above, regarding charging fees for operating costs, shall be subject to a civil penalty of three times the amount of actual damages proximately suffered by the qualified commercial tenant, and that the qualified commercial tenant shall be entitled to reasonable attorney’s fees and costs reasonably incurred in connection with obtaining the civil penalty.
- Provides that any waiver of a right in 6) through 9), above, is void as a matter of public policy.
FISCAL EFFECT: Appropriation: No Fiscal Com.: No Local: No
SUPPORT: (Verified 5/8/24)
Bet Tzedek (co-source)
California Association for Micro Enterprise Opportunity (co-source)
Inclusive Action for the City (co-source)
Lawyers’ Committee for Civil Rights of the San Francisco Bay Area (co-source)
Public Counsel (co-source)
Small Business Majority (co-source)
AAPI Equity Alliance
Access Plus Capital
AHA Projects
Alliance for Community Development
AltCap California
Asian Pacific Islander Small Business Collaborative
Associacion de Emprendedor@s
California Black Chamber of Commerce
California Coalition for Community Investment
California Community Economic Development Association
California Immigrant Policy Center
California NOW
California Youth Empowerment Service
Center for Nonprofit Management
Child Care Law Center
Child Development Corps
Chinatown Community Development Center
Chinatown Community for Equitable Development
City Heights CDC
Community Development Technologies
Community Vision Capital and Consulting
Conaxion Inc.
Council of Equity Advocacy San Diego
Courage California
Destination Crenshaw
Discovery World Early Education Center
East Bay Community Law Center
East LA Community Corporation
Eastside LEADS
Ekstrepe, LLC
El Chaparrito Tacos LLC
Ella Baker Center for Human Rights
Freedom Assembly, INC.
GO Local Sonoma County
Heal One World
Humbleroot
I Did Something Good Today Foundation
ICON CDC
Inclusive Action for the City
Inland Coalition for Immigrant Justice
Join Against Domestic Violence
KIWA
Koreatown Youth & Community Center
La Cocina
LA Más
LA Percussion Rentals
Legal Aid Foundation of Los Angeles
LISC Bay Area
LISC LA
Little Portion Social Center
Little Tokyo Community Council
Little Tokyo Service Center
Long Beach Forward
Los Angeles Neighborhood Land Trust
Madeline Garden
Mandela Partners
Microenterprise Collaborative of Inland Southern California
Mission Asset Fund
Mission Economic Development Agency
Monforte Studio
Montana Preschool Santa Monica
Multicultural Business Alliance
Oakland Indie Alliance
Pacific Asian Consortium in Employment
Pacific Community Ventures
Rediscover Center
Rise Economy
Riverside County Black Chamber of Commerce
Sac Dispensary
Sacramento Hispanic Chamber of Commerce
South Asian Network
Southeast Asian Community Alliance
Strategic Actions for a Just Economy
Sustainable Economies Law Center
Team Friday
The Independent Hospitality Coalition
Therapy for Latinx
Thai Community Development Center
United Cambodian Community
United CORE Alliance
United Neighbors in Defense Against Displacement
United Way of Greater Los Angeles
Uptima Entrepreneur Cooperative
Uptown Style Jamaican Food
Urban Soyal
Valle Vida
Vermont Slauson Economic Development Corporation
Vermont-Slauson LDC, Inc.
Village Arts
Working Solutions CDFI
OPPOSITION: (Verified 5/8/24)
Apartment Association of Greater Los Angeles
Boma California
Building Owners and Managers Association of California
California Asian Pacific Chamber of Commerce
California Association of Realtors
California Building Industry Association
California Business Properties Association
California Business Roundtable
California Chamber of Commerce
California Mba
California Mortgage Bankers Association
California Rental Housing Association
Cupertino Chamber of Commerce
Danville Area Chamber of Commerce
Greater San Fernando Valley Chamber of Commerce
Huntington Beach Chamber of Commerce
Institute of Real Estate Management
La Cañada Flintridge Chamber of Commerce
Laguna Niguel Chamber of Commerce
Livermore Chamber of Commerce
Long Beach Area Chamber of Commerce
Modesto Chamber of Commerce
NAIOP California
Newport Beach Chamber of Commerce
Orange County Business Council
San Diego Regional Chamber of Commerce
Santa Clarita Valley Chamber of Commerce
Simi Valley Chamber of Commerce
Southern California Leadership Council
Tulare Chamber of Commerce
Walnut Creek Chamber of Commerce & Visitors Bureau
Western Manufactured Housing Communities Association
ARGUMENTS IN SUPPORT: According to the coalition of organizations that are sponsoring SB 1103:
SB 1103 will help small businesses and nonprofits remain in their communities and continue to provide culturally significant goods and services. Currently, many small businesses and nonprofits are struggling to stay afloat due to rising rents, inflation, and gentrification—SB 1103’s commercial tenant protections provide much-needed support to small business owners and nonprofits, and reduce the risk of these community pillars being displaced.
California, with its diverse population and varying consumer demands, is also a state with extreme income inequality. As the cost of living in California rises, many small businesses have been forced to close or have been displaced, which harms our local neighborhoods and our regional economies. Community-serving small businesses and nonprofits, pillars of our local economy, have minimal legal protections. Rent increases, unclear and unfair lease terms, as well as exorbitant added fees, make it difficult to find and stay in a commercial space. For example, a small restaurant that provides healthy food in South Los Angeles was recently informed without prior notice or back-up documentation that their common area maintenance fees (fees charged to commercial tenants for items such as landscaping, maintenance, property management, taxes, insurance, repairs, and security) would increase from $1,000 to $1,890 per month and was issued an eviction notice for not paying those fees immediately.
Small businesses and nonprofits would benefit greatly from commercial tenant protections; landlords are currently allowed to raise rents and evict small businesses without statutory restriction. As corporate landlords buy up more commercial properties in low-income neighborhoods, long-term community-serving small businesses and nonprofits are seeing huge rent increases and displacement. Statewide and local commercial eviction moratoriums and federal grants offered during the height of the pandemic provided much needed support to small businesses and nonprofits. Now that the moratoriums and grants have expired, small businesses and small community-serving nonprofits are vulnerable as they continue to recover from the effects of the pandemic.
SB 1103 will provide important and ground-breaking protections to small businesses and nonprofits in three ways:
- Language justice and lease transparency, by requiring translation of commercial lease agreements when negotiated in non-English languages;
- Fee transparency and equity, by capping security deposits at one month’s rent as well as creating standards and transparency with respect to common area maintenance fees; and
- Enhanced notice protections, by increasing statutory notice periods for rent increases and termination of tenancies.
ARGUMENTS IN OPPOSITION: According to a coalition of groups opposed to SB 1103, including the California Chamber of Commerce:
[SB 1103] would upend commercial real estate contracts and leasing by imposing requirements detrimental to both property owners and the small businesses and nonprofits this bill aims to protect.
SB 1103 does not recognize the fundamental differences between business-to-business (B2B) and business-to-individual (B2I) real estate transactions, which, if enacted into law, will jeopardize the flexibility and mutual benefits of commercial leasing. Capping security deposits at one month's rent disregards their essential role in risk management and post-tenancy restoration, particularly for new or financially unproven businesses, potentially dissuading landlords from leasing to these enterprises.
Additionally, the bill overlooks important elements of commercial leases, such as NNN (triple net lease) expenses necessary for property maintenance and fails to appreciate the long-term nature of these agreements. This oversight could destabilize the economic framework of commercial real estate, affecting both landlords and tenants.
Despite its intentions, SB 1103's lack of understanding in commercial leasing nuances may harm the growth and viability of small businesses and nonprofits, possibly disadvantaging the very groups it aims to support. We urge you to vote “no” on SB 1103.
Click here to enter text.
Prepared by: Ian Dougherty / JUD. / (916) 651-4113
5/17/24 19:08:58
**** END ****
SENATE RULES COMMITTEE Office of Senate Floor Analyses (916) 651-1520 Fax: (916) 327-4478 | SB 1103 |
THIRD READING
Bill No: SB 1103
Author: Menjivar (D)
Amended: 5/08/24
Vote: 21
SENATE JUDICIARY COMMITTEE: 9-2, 4/30/24
AYES: Umberg, Allen, Blakespear, Caballero, Dodd, Durazo, Laird, Min, Wiener
NOES: Wilk, Niello
SUBJECT: Tenancy of commercial real properties: agreements: securities and costs
SOURCE: Bet Tzedek
California Association for Micro Enterprise Opportunity
Inclusive Action for the City
Lawyers’ Committee for Civil Rights of the San Francisco Bay Area
Public Counsel
Small Business Majority
DIGEST:
This bill extends various protections and notice requirements for lease terminations or rent increases to qualified commercial tenants, and places transparency and proportionality requirements for fees a landlord may charge a qualified commercial tenant to recover building operating costs.
ANALYSIS:
Existing law:
- Provides that, in all periodic leases of land or tenements, the landlord may, upon giving notice in writing to the tenant as prescribed, change the terms of the lease upon the expiration of a period at least as long as the rental term, as specified. Provides that, in all leases of a residential dwelling or any interest in it, the landlord may increase the rent upon giving written notice to the tenant by delivering a copy to the tenant personally or by serving a copy by mail. If the proposed rent increase is 10 percent or less than the rental amount charged during the 12 months prior, the notice of the rent increase must be delivered at least 30 days before the effective date of the increase. Provides that, if the proposed rent increase is greater than 10 percent of the rent charged during any time in the 12 months prior, the notice must be delivered at least 90 days before the effective date of the increase. (Civ. Code § 827.)
- Requires that any person engaged in a trade or business who negotiates a specified contract or agreement primarily in Spanish, Chinese, Tagalog, Vietnamese, or Korean deliver to the other party to the contract or agreement, or anyone who will be signing the agreement, and before the execution of that contract or agreement, a translation of the contract or agreement in the language in which the contract was negotiated. (Civ. Code § 1632(b).)
- Provides an exception to this requirement where the party with whom the person engaged in a trade or business is negotiating negotiates the terms of the contract or agreement through their own interpreter.
- Provides that the terms in the English version of the contract shall determine the rights and obligations of the parties, and that the translated version may only be used in court as evidence to show that no contract was entered into because of substantial differences in material terms between the English version and the translated version.
- Provides that an aggrieved person for a violation of this provision may rescind the contract or agreement, as provided.
- Provides that, when residential real property is leased for an unspecified term, the lease is deemed renewed at the end of the term implied by law, unless one of the parties gives written notice to the other of their intent to terminate the tenancy. (Civ. Code § 1946.1.)
- Provides that, if the residential tenant has resided in the dwelling for less than a year, the landlord must provide notice of termination at least 30 days prior to the termination, and that the landlord must provide notice of termination at least 60 days prior to the termination if the tenant has resided in the residential property for a year or more, except as provided. Provides that a tenant must provide notice of their intention to terminate their tenancy for a periodic tenancy at least as long as the term of the periodic tenancy. If the tenant has received a notice of termination from the owner, the tenant may provide a notice of termination for a period at least as long as the term of a periodic tenancy, if such termination occurs before the owner’s date of termination. (Civ. Code § 1946.1(b)-(d).)
- Defines a “microenterprise” as a sole proprietorship, partnership, limited liability company, or corporation that:
- Has five or fewer employees, including the owner, that may be part or full time employees;
- Generally lacks sufficient access to loans, equity, or other financial capital. (Bus. & Prof. Code § 18000(a).)
This bill:
- Provides, for the purposes of its various statutory changes, the following definitions:
- “Qualified commercial tenant” as a tenant of commercial real property that meets both of the following:
- The tenant is a microenterprise, a restaurant with fewer than 10 employees, or a nonprofit organization with fewer than 20 employees.
- The tenant provides the landlord with a written notice that it is a qualified commercial tenant and a self-attestation regarding the number of employees it has, and that the tenant provides this notice and attestation, unless the tenancy is from week to week, month to month, or other period less than a month, before or upon execution of the lease. Provides that the various requirements under the bill do not come into effect until such notice and attestation is provided to the landlord.
- “Nonprofit organization” as any private, nonprofit organization that qualifies under Section 501(c)(3) of the United States Internal Revenue Code of 1986.
- “Microenterprise” as the same meaning as the term is defined in Business and Professions Code Section 18000(a).
- “Commercial real property” as all real property in the state, except dwelling units, mobilehomes, and recreational vehicles, as specified.
- “Qualified commercial tenant” as a tenant of commercial real property that meets both of the following:
- Extends the requirement that a person engaged in a trade or business that negotiates a contract or agreement in Spanish, Chinese, Tagalog, Vietnamese, or Korean provide a translated version of the contract or agreement in the language in which it was negotiated to apply to a sublease, rental contract or agreement, or other term of tenancy for a commercial lease agreement for qualified commercial tenants.
- Specifies that the exception to this requirement for when the party negotiating with the person engaged in a trade or business negotiates through their own interpreter does not apply to the specified commercial lease agreements.
- Specifies that only a qualified commercial tenant may rescind a contract for a violation of the translation requirement.
- Extends the above-described requirement that a landlord provides notice of rent increases, as specified, to commercial real property leased by a qualified commercial tenant. Specifies that, for qualified commercial tenants of commercial real property, the landlord must include in the notice of increase information on the required notice provided in the above-described provisions. Specifies that such rent increases for a qualified commercial tenant are not effective until the required notice period has expired, and that, notwithstanding any other provision, a violation of these provisions by a landlord of commercial real property does not entitle the qualified commercial tenant to civil penalties.
- Extends the above-described requirements that a tenancy is deemed renewed unless a party notifies the other party of their intent to terminate the tenancy to commercial real property by a qualified commercial tenant.
- Extends the above-described requirement that a landlord provide advance notice, as specified, to a tenant for the termination of a tenancy to commercial real property for a qualified commercial tenant.
- Provides that a landlord of a commercial real property must include in a notice of termination information on the above-described notice requirements for qualified commercial tenants.
- Provides that a landlord of commercial real property may charge a qualified commercial tenant a fee to recover building operating costs, also known as Common Area Maintenance fees, only if the following apply:
- The costs are limited to maintenance or a repair by the landlord that is not required by the lease, landscaping, security, trash, disposal, or insurance;
- The costs do not include expenses paid by the tenant directly to a third party;
- The costs do not include expenses for which a third party, tenant, or insurance reimbursed the landlord for the costs;
- The costs are allocated proportionately per tenant, by square footage or other method substantiated through supporting documentation provided by the landlord;
- The landlord provides the tenant supporting documentation providing that operating costs have been incurred within the previous 18 months, or are reasonably expected to be incurred within the next 12 months, if requested by the tenant, either:
- 30 days before the tenant is required to pay for the costs, if the cost increase is less than 10 percent of the amount charged for operating costs during the last 12 months;
- 90 days before the tenant is required to pay for the costs if the cost increase is 10 percent or more of the amount charged for operating costs during the last 12 months.
- Defines “supporting evidence,” as a dated and itemized quote, contract, receipt, or invoice from a licensed contractor or provider of services that includes, but is not limited to, a tabulation showing how the costs are allocated among tenants proportionately, as required, and a signed and dated attestation by the landlord that the documentation and costs are true and correct.
- Provides that, in an unlawful detainer action, ejectment, or other action to recover possession of the premises based on the tenant’s failure to pay a fee to recover operating costs, a qualified commercial tenant may raise, as an affirmative defense, that the landlord did not comply with 6), above.
- Provides that a landlord who violates 6), above, regarding charging fees for operating costs, shall be subject to a civil penalty of three times the amount of actual damages proximately suffered by the qualified commercial tenant, and that the qualified commercial tenant shall be entitled to reasonable attorney’s fees and costs reasonably incurred in connection with obtaining the civil penalty.
- Provides that any waiver of a right in 6) through 9), above, is void as a matter of public policy.
FISCAL EFFECT: Appropriation: No Fiscal Com.: No Local: No
SUPPORT: (Verified 5/8/24)
Bet Tzedek (co-source)
California Association for Micro Enterprise Opportunity (co-source)
Inclusive Action for the City (co-source)
Lawyers’ Committee for Civil Rights of the San Francisco Bay Area (co-source)
Public Counsel (co-source)
Small Business Majority (co-source)
AAPI Equity Alliance
Access Plus Capital
AHA Projects
Alliance for Community Development
AltCap California
Asian Pacific Islander Small Business Collaborative
Associacion de Emprendedor@s
California Black Chamber of Commerce
California Coalition for Community Investment
California Community Economic Development Association
California Immigrant Policy Center
California NOW
California Youth Empowerment Service
Center for Nonprofit Management
Child Care Law Center
Child Development Corps
Chinatown Community Development Center
Chinatown Community for Equitable Development
City Heights CDC
Community Development Technologies
Community Vision Capital and Consulting
Conaxion Inc.
Council of Equity Advocacy San Diego
Courage California
Destination Crenshaw
Discovery World Early Education Center
East Bay Community Law Center
East LA Community Corporation
Eastside LEADS
Ekstrepe, LLC
El Chaparrito Tacos LLC
Ella Baker Center for Human Rights
Freedom Assembly, INC.
GO Local Sonoma County
Heal One World
Humbleroot
I Did Something Good Today Foundation
ICON CDC
Inclusive Action for the City
Inland Coalition for Immigrant Justice
Join Against Domestic Violence
KIWA
Koreatown Youth & Community Center
La Cocina
LA Más
LA Percussion Rentals
Legal Aid Foundation of Los Angeles
LISC Bay Area
LISC LA
Little Portion Social Center
Little Tokyo Community Council
Little Tokyo Service Center
Long Beach Forward
Los Angeles Neighborhood Land Trust
Madeline Garden
Mandela Partners
Microenterprise Collaborative of Inland Southern California
Mission Asset Fund
Mission Economic Development Agency
Monforte Studio
Montana Preschool Santa Monica
Multicultural Business Alliance
Oakland Indie Alliance
Pacific Asian Consortium in Employment
Pacific Community Ventures
Rediscover Center
Rise Economy
Riverside County Black Chamber of Commerce
Sac Dispensary
Sacramento Hispanic Chamber of Commerce
South Asian Network
Southeast Asian Community Alliance
Strategic Actions for a Just Economy
Sustainable Economies Law Center
Team Friday
The Independent Hospitality Coalition
Therapy for Latinx
Thai Community Development Center
United Cambodian Community
United CORE Alliance
United Neighbors in Defense Against Displacement
United Way of Greater Los Angeles
Uptima Entrepreneur Cooperative
Uptown Style Jamaican Food
Urban Soyal
Valle Vida
Vermont Slauson Economic Development Corporation
Vermont-Slauson LDC, Inc.
Village Arts
Working Solutions CDFI
OPPOSITION: (Verified 5/8/24)
Apartment Association of Greater Los Angeles
Boma California
Building Owners and Managers Association of California
California Asian Pacific Chamber of Commerce
California Association of Realtors
California Building Industry Association
California Business Properties Association
California Business Roundtable
California Chamber of Commerce
California Mba
California Mortgage Bankers Association
California Rental Housing Association
Cupertino Chamber of Commerce
Danville Area Chamber of Commerce
Greater San Fernando Valley Chamber of Commerce
Huntington Beach Chamber of Commerce
Institute of Real Estate Management
La Cañada Flintridge Chamber of Commerce
Laguna Niguel Chamber of Commerce
Livermore Chamber of Commerce
Long Beach Area Chamber of Commerce
Modesto Chamber of Commerce
NAIOP California
Newport Beach Chamber of Commerce
Orange County Business Council
San Diego Regional Chamber of Commerce
Santa Clarita Valley Chamber of Commerce
Simi Valley Chamber of Commerce
Southern California Leadership Council
Tulare Chamber of Commerce
Walnut Creek Chamber of Commerce & Visitors Bureau
Western Manufactured Housing Communities Association
ARGUMENTS IN SUPPORT: According to the coalition of organizations that are sponsoring SB 1103:
SB 1103 will help small businesses and nonprofits remain in their communities and continue to provide culturally significant goods and services. Currently, many small businesses and nonprofits are struggling to stay afloat due to rising rents, inflation, and gentrification—SB 1103’s commercial tenant protections provide much-needed support to small business owners and nonprofits, and reduce the risk of these community pillars being displaced.
California, with its diverse population and varying consumer demands, is also a state with extreme income inequality. As the cost of living in California rises, many small businesses have been forced to close or have been displaced, which harms our local neighborhoods and our regional economies. Community-serving small businesses and nonprofits, pillars of our local economy, have minimal legal protections. Rent increases, unclear and unfair lease terms, as well as exorbitant added fees, make it difficult to find and stay in a commercial space. For example, a small restaurant that provides healthy food in South Los Angeles was recently informed without prior notice or back-up documentation that their common area maintenance fees (fees charged to commercial tenants for items such as landscaping, maintenance, property management, taxes, insurance, repairs, and security) would increase from $1,000 to $1,890 per month and was issued an eviction notice for not paying those fees immediately.
Small businesses and nonprofits would benefit greatly from commercial tenant protections; landlords are currently allowed to raise rents and evict small businesses without statutory restriction. As corporate landlords buy up more commercial properties in low-income neighborhoods, long-term community-serving small businesses and nonprofits are seeing huge rent increases and displacement. Statewide and local commercial eviction moratoriums and federal grants offered during the height of the pandemic provided much needed support to small businesses and nonprofits. Now that the moratoriums and grants have expired, small businesses and small community-serving nonprofits are vulnerable as they continue to recover from the effects of the pandemic.
SB 1103 will provide important and ground-breaking protections to small businesses and nonprofits in three ways:
- Language justice and lease transparency, by requiring translation of commercial lease agreements when negotiated in non-English languages;
- Fee transparency and equity, by capping security deposits at one month’s rent as well as creating standards and transparency with respect to common area maintenance fees; and
- Enhanced notice protections, by increasing statutory notice periods for rent increases and termination of tenancies.
ARGUMENTS IN OPPOSITION: According to a coalition of groups opposed to SB 1103, including the California Chamber of Commerce:
[SB 1103] would upend commercial real estate contracts and leasing by imposing requirements detrimental to both property owners and the small businesses and nonprofits this bill aims to protect.
SB 1103 does not recognize the fundamental differences between business-to-business (B2B) and business-to-individual (B2I) real estate transactions, which, if enacted into law, will jeopardize the flexibility and mutual benefits of commercial leasing. Capping security deposits at one month's rent disregards their essential role in risk management and post-tenancy restoration, particularly for new or financially unproven businesses, potentially dissuading landlords from leasing to these enterprises.
Additionally, the bill overlooks important elements of commercial leases, such as NNN (triple net lease) expenses necessary for property maintenance and fails to appreciate the long-term nature of these agreements. This oversight could destabilize the economic framework of commercial real estate, affecting both landlords and tenants.
Despite its intentions, SB 1103's lack of understanding in commercial leasing nuances may harm the growth and viability of small businesses and nonprofits, possibly disadvantaging the very groups it aims to support. We urge you to vote “no” on SB 1103.
Click here to enter text.
Prepared by: Ian Dougherty / JUD. / (916) 651-4113
5/8/24 15:46:18
**** END ****
Senator Thomas Umberg, Chair
2023-2024 Regular Session
Bill No: SB 1103 (Author:Menjivar)
Version: April 22, 2024
Hearing Date: April 30, 2024
Fiscal: No
Urgency: No
Consultant: ID
SUBJECT
Tenancy of commercial real properties: agreements: securities
DIGEST
This bill extends various protections and notice requirements for lease terminations or rent increases to qualified commercial tenants.
EXECUTIVE SUMMARY
Small businesses are vital to California’s economy and its communities. However, in recent years, many small businesses in the state have struggled to pay their rent and stay in operation. In addition, there are reports that landlords provide contracts not in a language the small business owner understands, often increase rent or maintenance fees substantially without notice, and provide notices of termination of community businesses’ leases with little to no advance notice. To remedy these instances and provide California’s small businesses greater protections for the spaces they lease, this bill extends various protections in the law for residential tenants to commercial tenants, and provides protections against landlord rent increases. This bill: requires that landlords of qualified commercial tenants provide notice at least 30 days before a termination of the lease if the commercial tenant has occupied the space for less than a year, and at least 60 days before for a commercial tenant that has occupied the space for more than a year; requires that landlords provide qualified commercial tenants advance notice, as specified, for increases in rent, depending on the length of time for which the tenant has occupied the space; requires a landlord, when a commercial lease agreement is negotiated primarily in Spanish, Chinese, Tagalog, Vietnamese or Korean, to provide the qualified commercial tenant with a translated contract; limits deposits for a qualified commercial tenant to no greater than one month of rent; and places limits and transparency requirements on rent increases upon qualified commercial tenants for a landlord’s operating costs, as specified. SB 1103 is sponsored by a coalition of community and legal services nonprofits, and is opposed by a collection of business, financial, and housing associations.
PROPOSED CHANGES TO THE LAW
Existing law:
- Provides that, in all periodic leases of land or tenements, the landlord may, upon giving notice in writing to the tenant as prescribed, change the terms of the lease upon the expiration of a period at least as long as the rental term, as specified. Provides that, in all leases of a residential dwelling or any interest in it, the landlord may increase the rent upon giving written notice to the tenant by delivering a copy to the tenant personally or by serving a copy by mail. IF the proposed rent increase is 10 percent or less than the rental amount charged during the 12 months prior, the notice of the rent increase must be delivered at least 30 days before the effective date of the increase. Provides that, if the proposed rent increase is greater than 10 percent of the rent charged during any time in the 12 months prior, the notice must be delivered at least 90 days before the effective date of the increase. (Civ. Code § 827.)
- Requires that any person engaged in a trade or business who negotiates a specified contract or agreement primarily in Spanish, Chinese, Tagalog, Vietnamese, or Korean deliver to the other party to the contract or agreement, or anyone who will be signing the agreement, and before the execution of that contract or agreement, a translation of the contract or agreement in the language in which the contract was negotiated. (Civ. Code § 1632(b).)
- Provides an exception to this requirement where the party with whom the person engaged in a trade or business is negotiating negotiates the terms of the contract or agreement through their own interpreter.
- Provides that the terms in the English version of the contract shall determine the rights and obligations of the parties, and that the translated version may only be used in court as evidence to show that no contract was entered into because of substantial differences in material terms between the English version and the translated version.
- Provides that an aggrieved person for a violation of this provision may rescind the contract or agreement, as provided.
- Provides that, when residential real property is leased for an unspecified term, the lease is deemed renewed at the end of the term implied by law, unless one of the parties gives written notice to the other of their intent to terminate the tenancy. (Civ. Code § 1946.1.)
- Provides that, if the residential tenant has resided in the dwelling for less than a year, the landlord must provide notice of termination at least 30 days prior to the termination, and that the landlord must provide notice of termination at least 60 days prior to the termination if the tenant has resided in the residential property for a year or more, except as provided. Provides that a tenant must provide notice of their intention to terminate their tenancy for a periodic tenancy at least as long as the term of the periodic tenancy. If the tenant has received a notice of termination from the owner, the tenant may provide a notice of termination for a period at least as long as the term of a periodic tenancy, if such termination occurs before the owner’s date of termination. (Civ. Code § 1946.1(b)-(d).)
- Provides that the payment of a deposit by the tenant must be held by the landlord for the tenant, and provides that a landlord may only claim from the deposit amount only amounts reasonably necessary to remedy tenant defaults in the payment of rent, to repair damages to the premises caused by the tenant, or to clean the premises upon termination of the tenancy. (Civ. Code § 1950.7.)
- Prohibits a landlord of a residential property that is used as the dwelling of a tenant from demanding or receiving security in an amount greater than two months’ rent if the dwelling is unfurnished, or three months’ rent if furnished, until July 1, 2024. Prohibits a landlord of a residential property that is used as a dwelling of a tenant from demanding or receiving security in an amount greater than one month of rent, in addition to any rent for the first month paid on or before the initial occupancy. (Civ. Code § 1950.5.)
- Defines a “microenterprise” as a sole proprietorship, partnership, limited liability company, or corporation that:
- has five or fewer employees, including the owner, that may be part or full time employees;
- generally lacks sufficient access to loans, equity, or other financial capital.
This bill:
- Provides, for the purposes of its various statutory changes, the following definitions:
- “Qualified commercial tenant” as a tenant of commercial real property that is a microenterprise, a restaurant with fewer than 25 employees, or a nonprofit organization with fewer than 50 employees. Requires that a qualified commercial tenant provide a self-attestation regarding the number of employees it has.
- “Nonprofit organization” as any private, nonprofit organization that qualifies under Section 501(c)(3) of the United States Internal Revenue Code of 1986.
- “Microenterprise” as the same meaning as the term is defined in Business and Professions Code Section 18000(a).
- “Commercial real property” as all real property in the state, except dwelling units, mobilehomes, and recreational vehicles, as specified.
- Extends the requirement that a person engaged in a trade or business that negotiates a contract or agreement in Spanish, Chinese, Tagalog, Vietnamese, or Korean provide a translated version of the contract or agreement in the language in which it was negotiated to apply to a sublease, rental contract or agreement, or other term of tenancy for a commercial lease agreement for qualified commercial tenants.
- Specifies that the exception to this requirement for when the party negotiating with the person engaged in a trade or business negotiates through their own interpreter does not apply to the specified commercial lease agreements.
- Specifies that only a qualified commercial tenant may rescind a contract for a violation of the translation requirement.
- Extends the above-described requirement that a landlord provides notice of rent increases, as specified, for commercial real property by a qualified commercial tenant.
- Extends the above-described requirements that a tenancy is deemed renewed unless a party notifies the other party of their intent to terminate the tenancy to commercial real property by a qualified commercial tenant.
- Extends the above-described requirement that a landlord provide advance notice, as specified, to a tenant for the termination of a tenancy to commercial real property for a qualified commercial tenant.
- Provides that an owner of a commercial real property leasing to a qualified commercial tenant must give notice at least 90 days prior to the proposed date of termination if the tenant has occupied the property for three or more years.
- Provides that a landlord shall not demand or receive a payment or deposit of money from a qualified commercial tenant in an amount or value in excess of an amount equal to one month’s rent, in addition to rent for the first month paid on or before initial occupancy. Applies this limitation on or after January 1, 2025.
- Provides that a landlord may increase a qualified commercial tenant’s rent to recover building operating costs (Common Area Maintenance fees) only if the following apply:
- The costs are limited to maintenance, a repair by the landlord that is not required by the lease, landscaping, security, trash, disposal, or insurance;
- The costs were not paid by the tenant directly to a third party;
- A third party, tenant, or insurance did not reimburse the landlord for the costs;
- The costs are allocated proportionately per tenant, by square footage or other method substantiated through supporting documentation provided by the landlord;
- The landlord notifies the tenant of the costs, and the costs were incurred within 18 months of this notification; and
- The landlord provides the tenant supporting documentation providing that operating costs have been incurred, or are reasonably expected to be incurred within the next 12 months, either:
- 30 days before the rent increase, if the rent increase is less than 10 percent of the rent charged during the last 12 months;
- 90 days before the rent increase if the rent increase is 10 percent or more of the rent charged during the last 12 months.
- Defines “supporting evidence,” as a dated and itemized quote, contract, receipt, or invoice from a licensed contractor or provider of services that includes, but is not limited to, a tabulation showing how the costs are allocated among tenants proportionately, as required, and a signed and dated attestation by the landlord that the documentation and costs are true and correct.
- Provides that, in an unlawful detainer action, ejectment, or other action to recover possession of the premises, a qualified commercial tenant may raise, as an affirmative defense, that the landlord did not comply with (7), above, regarding increases in rent to recover building operating costs.
- Provides that a landlord who violates (7), above, regarding allowable increases in rent to recover building operating costs, shall be subject to a civil penalty of three times the amount of actual damages proximately suffered by the qualified commercial tenant, and that the qualified commercial tenant shall be entitled to reasonable attorney’s fees and costs reasonably incurred in connection with obtaining the civil penalty.
- Provides that any waiver of a right in (7) through (9), above, is void and unenforceable as a matter of public policy.
COMMENTS
- Author’s statement
According to the author:
Small businesses and nonprofits are a vital resource for many in my district and across California. Their storefronts contribute to the aesthetics and vitality of our business corridors, as well as increase the walkability and cultural representation within neighborhoods. Communities also benefit from programs provided by community-based nonprofits. Government agencies alone cannot close the service gaps afflicting the most vulnerable Californians and we rely on the dedicated service of nonprofits. SB 1103 will protect those making immeasurable contributions to their communities and local economies. Specifically, SB 1103 will expand existing translation requirements to commercial leases that are negotiated in a language other than English, limits security deposits to one month’s rent for commercial tenant small businesses and nonprofits, and increases the required notice periods for small business and small nonprofit commercial tenants facing a rent increase or termination of tenancy. These common sense measures are needed in order preserve and protect the small businesses and non-profits that are essential to the wellbeing our communities.
- The state of small businesses in California
Small businesses are important members of the California economy and of communities across the state. They provide vital services where people live, support entrepreneurship and innovation in the marketplace, and offer culturally-relevant goods and services to communities through California. Studies have found that minority-owned small businesses, which account for 46 percent of all of the state’s small businesses, support 10.9 percent of all jobs in the state, generate 3.5 percent of the state’s economic output, and contribute $192.8 billion in economic output a year.[1]
However, the state of small businesses in California is dire. One survey of small businesses with less than $100,000 in annual revenue found that 78 percent say they are struggling to cover their rent.[2] Nearly half – 46 percent – reported being one or more months behind on their rent. An astonishing 56 percent of those surveyed in that study said that they expect they can only survive three months or less without additional funding or market changes. A survey of nonprofits in California that work with thousands of small business owners also found that 86 percent of respondents reported that the small businesses they work with often (54 percent) or sometimes (32 percent) face displacement.[3] As is noted in that report, the Costa-Keene-Seymour Commercial Property Investment Act prevents local governments from enacting local ordinances for commercial rent control protections.
This data paints a picture of a potential looming crisis in small business shutdowns and foreclosures. This looming crisis may in part be due to the dramatic effects that the COVID-19 pandemic had on small businesses. Reports show that small businesses were disproportionately affected by the pandemic, as many reported difficulties navigating and applying for federal relief programs, and many experienced major losses in revenue far beyond the height of the pandemic.[4] While California enacted various programs to assist small businesses impacted by COVID-19, such as the California Venues Grant Program and the Small Business COVID-19 Relief Grant Program, those programs have since ended.
The sponsors of this bill also cite anecdotes of small businesses being given significant rent increases, unclear and unfair lease terms, and exorbitant added fees. In one example provided, a small restaurant in Los Angeles was given an 89 percent increase in their common area maintenance fees, to be paid immediately.
The dire state of small businesses in California has important implications for California’s communities and for historically-disenfranchised communities in the state. Data indicates that minority-owned small businesses have a harder time paying rent and were disproportionately affected by increased interest rates and rent spikes.[5] Minority business owners were also the businesses hardest-hit by COVID-19. The struggles that minority-owned small businesses are experiencing is part of the larger crisis of gentrification that the Bay Area and other areas of the state are continuing to experience.[6]
- SB 1103 aims to protect California’s small businesses from predatory actions by corporate landlords
To address this crisis and provide protections for the state’s small businesses, SB 1103 proposes to extend a variety of protections in place for residential tenants to specified small businesses and non-profits. These protections aim to limit the capital a small business must have in order to lease a space for their business, ensure they receive notice for rent increases and terminations, and provide transparency and proportionality regarding rent increases for operating costs. It makes these changes specifically for micro-enterprises as defined in Section 18000 of the Business and Professions Code, restaurants with fewer than 25 employees, and nonprofits with fewer than 50 employees. Micro-enterprises are defined pursuant to the Business and Professions Code as sole proprietorships, partnerships, limited liability companies, or corporations that have five or fewer full or part-time employees and which generally lack sufficient access to loans, equity or other financial capital. (Bus. & Prof. Code § 18000.) SB 1103 requires that the qualified commercial tenant provide the landlord with a self-attestation regarding the number of employees it has.
- SB 1103 requires that small business owners be provided a translated copy of their commercial lease agreement under specified circumstances
Current law provides that a person engaged in a trade or business who negotiates primarily in Spanish, Chinese, Tagalog, Vietnamese, or Korean, either orally or in writing, and entering into specified types of agreements, must provide the other contracting party or other person signing the agreement with a translation of the contract in the language in which the negotiating took place. (Civ. Code § 1632(b).) Existing law requires that this translated version of the contract be provided prior to the execution of the contract. Currently, this requirement applies to: certain contracts; specified personal loans or extensions of credit secured or not secured by real property; a residential lease, sublease, or other rental contract or agreement; reverse mortgages; legal services contracts by attorneys; and a foreclosure consulting contract. An exception is provided for instances in which the other party negotiates the terms of the contract through their own interpreter. (Civ. Code § 1632(h).) This provision further provides that a failure to comply with the translation requirements provides that an aggrieved person may rescind the contract. (Civ. Code § 1632(k).)
SB 1103 extends these translation requirements to commercial leases, subleases, or rental contract or other term of tenancy contract or agreement covering a nonresidential-zoned commercial space. It exempts such commercial leases from the exception for instances in which the other party to the contract negotiates with the assistance of a translator. It also specifies that, if a translated version of the commercial lease agreement is not provided, only a tenant may rescind the contract. Through this change, SB 1103 ensures that any business that negotiates a commercial lease in Spanish, Chinese, Tagalog, Vietnamese, or Korean will receive from the commercial landlord a translation of the final written contract.
- SB 1103 extends requirements for notices of rent increases to small business tenants
Current law provides certain timelines and parameters regarding when a landlord can increase the rent of a residential lease. If the proposed increase is 10 percent or less of the current rent, the landlord must deliver a notice of the increase at least 30 days before the effective date of the rent increase. (Civ. Code § 827(b).) If the rent increase is more than 10 percent, the landlord must provide the resident notice of the increase at least 90 days before the effective date of the increase.
SB 1103 applies this notice requirement for rent increases to commercial leases to specified small businesses. It defines a small business for its provisions as a micro-enterprise, as defined in Section 18000 of the Business and Professions Code, a restaurant with fewer than 25 employees, or a nonprofit with fewer than 50 employees. To ensure that commercial landlords are aware that their tenant qualifies for this extended notice, a qualifying entity must provide the landlord with a self-attestation of the number of employees it employs such that it qualifies under these provisions.
- SB 1103 provides notice requirements of lease terminations for small businesses
Current law specifies that a residential lease is deemed to be automatically renewed at the end of the lease’s term or the end implied by law, unless either party gives the other written notice of their intent to terminate the tenancy. (Civ. Code § 1946.1.) Current law also specifies that an owner of a residential dwelling must give notice of the lease termination at least 60 days prior to the termination when the tenant has resided in the unit for a year or more, and a tenant must give notice at least as long as the term of the periodic tenancy, if it is such a lease. If the residential tenant has resided in the unit for less than a year, the owner must provide the tenant 30 days’ notice of termination.
SB 1103 extends these notice requirements to commercial leases for qualified commercial tenants. In addition, SB 1103 extends the notice period to 90 days when a qualified commercial tenant has occupied the property for three or more years.
- SB 1103 limits the permissible deposit for a commercial lease to one month for small business tenants
SB 1103 also places a limit on deposits that a landlord can charge a qualified commercial tenant. Like the limits recently placed on residential tenancies (AB 12, Haney, Ch. 733, Stats. 2023), SB 1103 limits deposits to one month’s rent, in addition to rent for the first month paid on or before initial occupancy, for qualified commercial tenants of commercial properties.
- SB 1103 provides certain limitations and transparency requirements on Common Area Maintenance (CAM) fees
Lastly, SB 1103 provides a number of limitations on rent increases that a landlord may charge a qualified commercial tenant for building operating costs to the property. These provisions of the bill allow such increases only if specified criteria and documentation requirements are met. This includes that: the costs are limited to maintenance, a repair by the landlord that is not required by the lease, landscaping, security, trash, disposal, or insurance; the costs were not paid by the tenant directly to a third party; a third party, tenant, or insurance did not reimburse the landlord for the costs; the costs are allocated proportionately per tenant, by square footage or other method substantiated through supporting documentation provided to the tenant; the landlord notifies the tenant of the costs, and such costs were incurred within 18 months of the notification; and that the landlord provides the tenant supporting documentation proving that operating costs have been incurred, or are reasonably expected to be incurred within the next 12 months as specified. The required documentation for the costs incurred or reasonably expected to be incurred by the landlord must either be provided 30 days before the rent increase if the increase is less than 10 percent of the rent charged within the 12-month period before the increase, or 90 days before the rent increase if the increase is 10 percent or more than the rent charged in the preceding 12 months. The bill also defines supporting documentation as a dated and itemized quote, contract, receipt, or invoice from a licensed contractor or a provider of services, including but not limited to a tabulation showing how the costs are allocated among tenants, and a signed and dated attestation by the landlord that the documentation and costs are true and correct.
- Enforcement mechanisms for SB 1103’s requirements
Because SB 1103’s provisions add commercial tenancies for small businesses and nonprofits to existing protections, many of the enforcement mechanisms currently in place for those sections would apply to the protections added by SB 1103. For the translation requirements in the bill, SB 1103 merely adds commercial leases to the list of contracts that must be translated if negotiated in one of the five enumerated languages, thereby adopting the established enforcement mechanisms that already exist for every of the other included types of contracts. These enforcement provisions include that an aggrieved party may bring a civil cause of action to rescind the contract when the person engaged in a trade or business did not provide the required translated contract. For SB 1103’s provisions that incorporate qualified commercial tenants in the notice requirements for rent increases and a termination of a tenancy that are included in Civil Code Sections 827 and 1946.1, an aggrieved qualified commercial tenant may bring a civil cause of action for the violation and raise the violation as an affirmative defense in an unlawful detainer action, as can any aggrieved party under those code sections.
For SB 1103’s transparency and proportionality requirements of common area maintenance fees, the bill provides specific enforcement mechanisms. It specifies that a violation of such provisions may be an affirmative defense to an action for an unlawful detainer, ejectment, or other action to recover possession of the commercial property. It also specifies that a landlord who violates these provisions is subject to a civil penalty of three times the amount of actual damages proximately suffered by the qualified commercial tenant, and that a qualified commercial tenant is entitled to an award of costs, including reasonable attorney’s fees, incurred in connection to obtaining the civil penalty. Additionally, SB 1103 specifies that a waiver of a tenant’s rights under this section is void as a matter of public policy.
- Amendments
The author has agreed to accept a number of amendments to SB 1103. These amendments address concerns with the potential impact and unintended consequences of a number of the bill’s provisions. They do so by removing the section limiting deposits to one month’s rent, by narrowing the definition of a qualified commercial tenant, and by requiring that a qualified tenant provide the landlord notice before or at the execution of the lease agreement, or when they wish to avail themselves of the protections while on a month-to-month lease, that they qualify for the protections under the bill’s requirements. The amendments also clarify that the transparency and proportionality requirements for common area maintenance fees apply only to such fees, and not to rent increases writ large. A full mock-up of these amendments are attached at the end of this analysis.
- Arguments in support
According to the coalition of organizations that are sponsoring SB 1103:
SB 1103 will help small businesses and nonprofits remain in their communities and continue to provide culturally significant goods and services. Currently, many small businesses and nonprofits are struggling to stay afloat due to rising rents, inflation, and gentrification—SB 1103’s commercial tenant protections provide much-needed support to small business owners and nonprofits, and reduce the risk of these community pillars being displaced.
California, with its diverse population and varying consumer demands, is also a state with extreme income inequality. As the cost of living in California rises, many small businesses have been forced to close or have been displaced, which harms our local neighborhoods and our regional economies. Community-serving small businesses and nonprofits, pillars of our local economy, have minimal legal protections. Rent increases, unclear and unfair lease terms, as well as exorbitant added fees, make it difficult to find and stay in a commercial space. For example, a small restaurant that provides healthy food in South Los Angeles was recently informed without prior notice or back-up documentation that their common area maintenance fees (fees charged to commercial tenants for items such as landscaping, maintenance, property management, taxes, insurance, repairs, and security) would increase from $1,000 to $1,890 per month and was issued an eviction notice for not paying those fees immediately.
Small businesses and nonprofits would benefit greatly from commercial tenant protections; landlords are currently allowed to raise rents and evict small businesses without statutory restriction. As corporate landlords buy up more commercial properties in low-income neighborhoods, long-term community-serving small businesses and nonprofits are seeing huge rent increases and displacement. Statewide and local commercial eviction moratoriums and federal grants offered during the height of the pandemic provided much needed support to small businesses and nonprofits. Now that the moratoriums and grants have expired, small businesses and small community-serving nonprofits are vulnerable as they continue to recover from the effects of the pandemic.
SB 1103 will provide important and ground-breaking protections to small businesses and nonprofits in three ways:
- Language justice and lease transparency, by requiring translation of commercial lease agreements when negotiated in non-English languages;
- Fee transparency and equity, by capping security deposits at one month’s rent as well as creating standards and transparency with respect to common area maintenance fees; and
- Enhanced notice protections, by increasing statutory notice periods for rent increases and termination of tenancies.
According to a broad coalition of community groups and nonprofits in support of SB 1103:
Community-serving microbusinesses and nonprofits in California are struggling. Expensive rents and fees, the lingering impacts of the pandemic, and inaccessible and opaque lease terms are contributing to the escalating displacement of microbusinesses and small nonprofits. Senate Bill 1103 will help small businesses and nonprofits remain in their communities and continue to provide relevant goods and services that strengthen our neighborhoods and enhance our local economy.
Specifically, Senate Bill 1103 furthers language justice by requiring commercial leases to be translated when the agreement is negotiated in a language other than English. This brings commercial leases in line with residential leases and numerous other contracts that already have these requirements under California law – a simple step that will help immigrant entrepreneurs and business owners with limited English proficiency to understand core lease provisions and be better positioned to negotiate terms that are right for their business.
Senate Bill 1103 also helps microbusinesses and small nonprofits access commercial leasing opportunities by establishing a reasonable limit on security deposit amounts and transparency with respect to common area maintenance fees. This is directly responsive to some of the biggest challenges facing small commercial tenants as they try to navigate rising rents, increasing costs, and changing conditions.
Further, Senate Bill 1103 supports microbusinesses and small nonprofits by extending notice periods for rent increases and termination of tenancies. In many cases, Senate Bill 1103 will provide qualifying commercial tenants with up to 90 days between when the landlord provides notice of a rent increase or termination of tenancy, and when that increase or termination takes effect. These extended notice periods are absolutely crucial for providing microbusinesses and small nonprofits time to plan, find a new location if necessary, and hopefully stay in their community. This fighting chance to remain in a neighborhood is very important, as many microbusinesses and small nonprofits are community anchors, providing culturally significant and accessible food and retail for immigrant communities that are not available in other spaces.
Senate Bill 1103’s enhanced notice periods will not only assist microbusinesses and small nonprofits, they will also help sustain the foundations of our neighborhoods and our local economies.
Senate Bill 1103’s protections do not apply widely; they are provided only to the most vulnerable microbusinesses and small nonprofits. By tailoring the benefits in this way, Senate Bill 1103 does not affect complex business-to-business (B2B) transactions. Rather, it levels the playing field for those microbusinesses and small nonprofits that do not have the same resources, representation, or negotiating power as large commercial tenants. Senate Bill 1103 is necessary for an equitable small business economy, where California’s immigrant and low-income entrepreneurs have a chance to find and stay in commercial spaces to provide for their families, and sustain our communities.
- Arguments in opposition
According to a coalition of groups opposed to SB 1103, including the California Chamber of Commerce:
[SB 1103] would upend commercial real estate contracts and leasing by imposing requirements detrimental to both property owners and the small businesses and nonprofits this bill aims to protect.
SB 1103 does not recognize the fundamental differences between business-to-business (B2B) and business-to-individual (B2I) real estate transactions, which, if enacted into law, will jeopardize the flexibility and mutual benefits of commercial leasing. Capping security deposits at one month's rent disregards their essential role in risk management and post-tenancy restoration, particularly for new or financially unproven businesses, potentially dissuading landlords from leasing to these enterprises.
Additionally, the bill overlooks important elements of commercial leases, such as NNN (triple net lease) expenses necessary for property maintenance and fails to appreciate the long-term nature of these agreements. This oversight could destabilize the economic framework of commercial real estate, affecting both landlords and tenants.
Despite its intentions, SB 1103's lack of understanding in commercial leasing nuances may harm the growth and viability of small businesses and nonprofits, possibly disadvantaging the very groups it aims to support. We urge you to vote “no” on SB 1103.
SUPPORT
Bet Tzedek (sponsor)
California Association for Micro Enterprise Opportunity (sponsor)
Inclusive Action for the City (sponsor)
Lawyers’ Committee for Civil Rights of the San Francisco Bay Area (sponsor)
Public Counsel (sponsor)
Small Business Majority (sponsor)
AAPI Equity Alliance
Access Plus Capital
AHA Projects
Alliance for Community Development
AltCap California
Asian Pacific Islander Small Business Collaborative
Associacion de Emprendedor@s
California Black Chamber of Commerce
California Coalition for Community Investment
California Community Economic Development Association
California Immigrant Policy Center
California NOW
California Youth Empowerment Service
Center for Nonprofit Management
Child Care Law Center
Child Development Corps
Chinatown Community Development Center
Chinatown Community for Equitable Development
City Heights CDC
Community Development Technologies
Community Vision Capital and Consulting
Conaxion Inc.
Council of Equity Advocacy San Diego
Courage California
Destination Crenshaw
Discovery World Early Education Center
East Bay Community Law Center
East LA Community Corporation
Eastside LEADS
Ekstrepe, LLC
El Chaparrito Tacos LLC
Ella Baker Center for Human Rights
Freedom Assembly, INC.
GO Local Sonoma County
Heal One World
Humbleroot
I Did Something Good Today Foundation
ICON CDC
Inclusive Action for the City
Inland Coalition for Immigrant Justice
Join Against Domestic Violence
KIWA
Koreatown Youth & Community Center
La Cocina
LA Más
LA Percussion Rentals
Legal Aid Foundation of Los Angeles
LISC Bay Area
LISC LA
Little Portion Social Center
Little Tokyo Community Council
Little Tokyo Service Center
Long Beach Forward
Los Angeles Neighborhood Land Trust
Madeline Garden
Mandela Partners
Microenterprise Collaborative of Inland Southern California
Mission Asset Fund
Mission Economic Development Agency
Monforte Studio
Montana Preschool Santa Monica
Multicultural Business Alliance
Oakland Indie Alliance
Pacific Asian Consortium in Employment
Pacific Community Ventures
Rediscover Center
Rise Economy
Riverside County Black Chamber of Commerce
Sac Dispensary
Sacramento Hispanic Chamber of Commerce
South Asian Network
Southeast Asian Community Alliance
Strategic Actions for a Just Economy
Sustainable Economies Law Center
Team Friday
The Independent Hospitality Coalition
Therapy for Latinx
Thai Community Development Center
United Cambodian Community
United CORE Alliance
United Neighbors in Defense Against Displacement
United Way of Greater Los Angeles
Uptima Entrepreneur Cooperative
Uptown Style Jamaican Food
Urban Soyal
Valle Vida
Vermont Slauson Economic Development Corporation
Vermont-Slauson LDC, Inc.
Village Arts
Working Solutions CDFI
OPPOSITION
Apartment Association of Greater Los Angeles
Boma California
Building Owners and Managers Association of California
California Asian Pacific Chamber of Commerce
California Association of Realtors
California Building Industry Association (CBIA)
California Business Properties Association
California Business Roundtable
California Chamber of Commerce
California Mba
California Mortgage Bankers Association
California Rental Housing Association
Cupertino Chamber of Commerce
Danville Area Chamber of Commerce
Greater San Fernando Valley Chamber of Commerce
Huntington Beach Chamber of Commerce
Institute of Real Estate Management (IREM)
La Cañada Flintridge Chamber of Commerce
Laguna Niguel Chamber of Commerce
Livermore Chamber of Commerce
Long Beach Area Chamber of Commerce
Modesto Chamber of Commerce
NAIOP California
Newport Beach Chamber of Commerce
Orange County Business Council
San Diego Regional Chamber of Commerce
Santa Clarita Valley Chamber of Commerce
Simi Valley Chamber of Commerce
Southern California Leadership Council
Tulare Chamber of Commerce
Walnut Creek Chamber of Commerce & Visitors Bureau
Western Manufactured Housing Communities Association
RELATED LEGISLATION
Pending Legislation: AB 500 (Davies, 2023) would have authorized a landlord of a residential property to give notice of an increase in rent by electronic mail. AB 500 died in the Assembly Judiciary Committee.
Prior Legislation:
AB 12 (Haney, Ch. 733, Stats. 2023) provided that, beginning July 1, 2024, landlords of residential real property cannot demand or receive security for a rental agreement that is more than one month’s rent, in addition to any rent for the first month paid on or before initial occupancy.
SB 87 (Caballero, Ch. 7, Stats, 2021) established the California Small Business COVID-19 Relief Grant Program within California Office of Small Business Advocate (CalOSBA) to assist qualified small businesses affected by COVID-19 through administration grants, as prescribed. Repealed its provisions on January 1, 2024.
SB 151 (Committee on Budget and Fiscal Review, Ch. 74, Stats. 2021) created the California Venues Grant Program and the California Microbusiness COVID-19 Relief Grant Program within the CalOSBA for the purpose of providing grants to eligible independent live events that have been affected by the COVID-19 pandemic, among other grants and programs. Repealed both programs on December 31, 2022.
AB 1110 (Friedman, Ch. 595, Stats. 2019) required 90 days’ notice if a landlord of a residential dwelling on a month-to-month tenancy increases the rent by more than 10 percent of the amount of rent previously charged.
AB 309 (Chu, Ch. 330, Stats. 2003) expanded the requirement that a person engaged in a trade or business that negotiates specified contracts or agreements in a language other than English provide a translated copy of the written contract or agreement from Spanish to Spanish, Chinese, Tagalog, Vietnamese, or Korean.
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PROPOSED AMENDMENTS TO SB 1103
SECTION 1.
Section 827 of the Civil Code is amended to read:
827.
(a) (1) Except as provided in subdivision (b), in all leases of lands or tenements, or of any interest therein, from week to week, month to month, or other period less than a month, the landlord may, upon giving notice in writing to the tenant, in the manner prescribed by Section 1162 of the Code of Civil Procedure, change the terms of the lease to take effect, as to tenancies for less than one month, upon the expiration of a period at least as long as the term of the hiring itself, and, as to tenancies from month to month, to take effect at the expiration of not less than 30 days, but if that change takes effect within a rental term, the rent accruing from the first day of the term to the date of that change shall be computed at the rental rate obtained immediately prior to that change; provided, however, that it shall be competent for the parties to provide by an agreement in writing that a notice changing the terms thereof may be given at any time not less than seven days before the expiration of a term, to be effective upon the expiration of the term.
(2) The notice, when served upon the tenant, shall in and of itself operate and be effectual to create and establish, as a part of the lease, the terms, rents, and conditions specified in the notice, if the tenant shall continue to hold the premises after the notice takes effect.
(b) (1) In all leases of a residential dwelling, commercial real property by a qualified commercial tenant, or of any interest therein, from week to week, month to month, or other period less than a month, the landlord may increase the rent provided in the lease or rental agreement, upon giving written notice to the tenant, as follows, by either of the following procedures:
(A) By delivering a copy to the tenant personally.
(B) By serving a copy by mail under the procedures prescribed in Section 1013 of the Code of Civil Procedure.
(2) If the proposed rent increase for that tenant is 10 percent or less of the rental amount charged to that tenant at any time during the 12 months before the effective date of the increase, either in and of itself or when combined with any other rent increases for the 12 months before the effective date of the increase, the notice shall be delivered at least 30 days before the effective date of the increase, and subject to Section 1013 of the Code of Civil Procedure if served by mail.
(3) (A) If the proposed rent increase for that tenant is greater than 10 percent of the rental amount charged to that tenant at any time during the 12 months before the effective date of the increase, either in and of itself or when combined with any other rent increases for the 12 months before the effective date of the increase, the notice shall be delivered at least 90 days before the effective date of the increase, and subject to Section 1013 of the Code of Civil Procedure if served by mail.
(B) If the proposed rent increase for that tenant is caused by a change in a tenant’s income or family composition as determined by a recertification required by statute or regulation, the notice shall be delivered at least 30 days before the effective date of the increase as described in paragraph (2), and subparagraph (A) of this paragraph shall not apply.
(4) For the purposes of this subdivision, the following definitions apply:
(A) “Commercial real property” means all real property in this state, except dwelling units subject to Chapter 2 (commencing with Section 1940) of Title 5 of Part 4 of Division 3, mobilehomes as defined in Section 798.3, and recreational vehicles as defined in Section 799.29.
(B) “Microenterprise” has the same meaning as that term is defined in subdivision (a) of Section 18000 of the Business and Professions Code.
(C) “Nonprofit organization” means any private, nonprofit organization that qualifies under Section 501(c)(3) of the United States Internal Revenue Code of 1986.
(D) “Qualified commercial tenant” means a tenant of commercial real property that is a microenterprise, a restaurant with fewer than 2510 employees, or a nonprofit organization with fewer than 5020 employees. A qualified commercial tenant shall provide a landlord with a self-attestation regarding the number of employees.A landlord shall provide notice of the rights created under subdivision (b) of this Section when serving commercial tenants with a notice to increase rent. Before or upon execution of the lease, a qualified commercial tenant shall provide a landlord notice that they are a qualified commercial tenant under this Section, along with a self-attestation regarding the number of employees in order to be afforded the notice periods provided by subdivision (b) of this section. For periodic or month-to-month leases, the qualified commercial tenant shall provide the landlord notice that they are a qualified commercial tenant under this Section, along with a self-attestation regarding the number of employees, at such time the protections under subdivision (b) come into place.
(5) In all leases of commercial real property to a qualified commercial tenant under this subdivision, any rent increase is stayed or otherwise not effective until the specified period for notice elapses, as required by this subdivision. Notwithstanding any other provision, a violation of this subdivision by a landlord does not entitle a qualified commercial tenant to statutory penalties.
(c) If a state or federal statute, state or federal regulation, recorded regulatory agreement, or contract provides for a longer period of notice regarding a rent increase than that provided in subdivision (a) or (b), the personal service or mailing of the notice shall be in accordance with the longer period.
SEC. 2.
Section 1632 of the Civil Code is amended to read:
1632.
(a) The Legislature hereby finds and declares all of the following:
(1) This section was enacted in 1976 to increase consumer information and protections for the state’s sizeable and growing Spanish-speaking population.
(2) Since 1976, the state’s population has become increasingly diverse and the number of Californians who speak languages other than English as their primary language at home has increased dramatically.
(3) According to data from the American Community Survey, which has replaced the decennial census for detailed socioeconomic information about United States residents, approximately 15.2 million Californians speak a language other than English at home, based on data from combined years 2009 through 2011. This compares to approximately 19.6 million people who speak only English at home. Among the Californians who speak a language other than English at home, approximately 8.4 million speak English very well, and another 3 million speak English well. The remaining 3.8 million Californians surveyed do not speak English well or do not speak English at all. Among this group, the five languages other than English that are most widely spoken at home are Spanish, Chinese, Tagalog, Vietnamese, and Korean. These five languages are spoken at home by approximately 3.5 million of the 3.8 million Californians with limited or no English proficiency, who speak a language other than English at home.
(b) A person engaged in a trade or business who negotiates primarily in Spanish, Chinese, Tagalog, Vietnamese, or Korean, orally or in writing, in the course of entering into any of the following, shall deliver to the other party to the contract or agreement, and any other person who will be signing the contract or agreement, and before the execution thereof, a translation of the contract or agreement in the language in which the contract or agreement was negotiated, that includes a translation of every term and condition in that contract or agreement:
(1) A contract or agreement subject to the provisions of Title 2 (commencing with Section 1801) of, and Chapter 2b (commencing with Section 2981) and Chapter 2d (commencing with Section 2985.7) of Title 14 of, Part 4 of Division 3.
(2) A loan or extension of credit secured other than by real property, or unsecured, for use primarily for personal, family, or household purposes.
(3) A lease, sublease, rental contract or agreement, or other term of tenancy contract or agreement, for a period of longer than one month, covering a dwelling, an apartment, or mobilehome, or other dwelling unit normally occupied as a residence.
(4) Notwithstanding paragraph (2), a loan or extension of credit for use primarily for personal, family, or household purposes in which the loan or extension of credit is subject to the provisions of Article 7 (commencing with Section 10240) of Chapter 3 of Part 1 of Division 4 of the Business and Professions Code, or Division 7 (commencing with Section 18000), or Division 9 (commencing with Section 22000) of the Financial Code.
(5) Notwithstanding paragraph (2), a reverse mortgage as described in Chapter 8 (commencing with Section 1923) of Title 4 of Part 4 of Division 3.
(6) A contract or agreement, containing a statement of fees or charges, entered into for the purpose of obtaining legal services, when the person who is engaged in business is currently licensed to practice law pursuant to Chapter 4 (commencing with Section 6000) of Division 3 of the Business and Professions Code.
(7) A foreclosure consulting contract subject to Article 1.5 (commencing with Section 2945) of Chapter 2 of Title 14 of Part 4 of Division 3.
(8) A lease, sublease, rental contract or agreement, or other term of tenancy contract or agreement covering a nonresidential-zoned commercial space.
(c) Notwithstanding subdivision (b), for a loan subject to this part and to Article 7 (commencing with Section 10240) of Chapter 3 of Part 1 of Division 4 of the Business and Professions Code, the delivery of a translation of the statement to the borrower required by Section 10240 of the Business and Professions Code in any of the languages specified in subdivision (b) in which the contract or agreement was negotiated, is in compliance with subdivision (b).
(d) At the time and place where a lease, sublease, or rental contract or agreement described in subdivision (b) is executed, notice in any of the languages specified in subdivision (b) in which the contract or agreement was negotiated shall be provided to the lessee or tenant.
(e) Provision by a supervised financial organization of a translation of the disclosures required by Regulation M or Regulation Z, and, if applicable, Division 7 (commencing with Section 18000) or Division 9 (commencing with Section 22000) of the Financial Code in any of the languages specified in subdivision (b) in which the contract or agreement was negotiated, prior to the execution of the contract or agreement, shall also be deemed in compliance with the requirements of subdivision (b) with regard to the original contract or agreement.
(1) “Regulation M” and “Regulation Z” mean any rule, regulation, or interpretation promulgated by the Board of Governors of the Federal Reserve System and any interpretation or approval issued by an official or employee duly authorized by the board to issue interpretations or approvals dealing with, respectively, consumer leasing or consumer lending, pursuant to the Federal Truth in Lending Act, as amended (15 U.S.C. Sec. 1601 et seq.).
(2) As used in this section, “supervised financial organization” means a bank, savings association as defined in Section 5102 of the Financial Code, credit union, or holding company, affiliate, or subsidiary thereof, or a person subject to Article 7 (commencing with Section 10240) of Chapter 3 of Part 1 of Division 4 of the Business and Professions Code, or Division 7 (commencing with Section 18000) or Division 9 (commencing with Section 22000) of the Financial Code.
(f) At the time and place where a contract or agreement described in paragraph (1) or (2) of subdivision (b) is executed, a notice in any of the languages specified in subdivision (b) in which the contract or agreement was negotiated shall be conspicuously displayed to the effect that the person described in subdivision (b) is required to provide a contract or agreement in the language in which the contract or agreement was negotiated, or a translation of the disclosures required by law in the language in which the contract or agreement was negotiated, as the case may be. If a person described in subdivision (b) does business at more than one location or branch, the requirements of this section shall apply only with respect to the location or branch at which the language in which the contract or agreement was negotiated is used.
(g) (1) The term “contract” or “agreement,” as used in this section, means the document creating the rights and obligations of the parties and includes any subsequent document making substantial changes in the rights and obligations of the parties. The term “contract” or “agreement” does not include any subsequent documents authorized or contemplated by the original document such as periodic statements, sales slips or invoices representing purchases made pursuant to a credit card agreement, a retail installment contract or account or other revolving sales or loan account, memoranda of purchases in an add-on sale, or refinancing of a purchase as provided by, or pursuant to, the original document.
(2) The term “contract” or “agreement” does not include a home improvement contract as defined in Sections 7151.2 and 7159 of the Business and Professions Code, nor does it include plans, specifications, description of work to be done and materials to be used, or collateral security taken or to be taken for the retail buyer’s obligation contained in a contract for the installation of goods by a contractor licensed pursuant to Chapter 9 (commencing with Section 7000) of Division 3 of the Business and Professions Code, if the home improvement contract or installation contract is otherwise a part of a contract described in subdivision (b).
(3) Matters ordinarily incorporated by reference in contracts or agreements as described in paragraph (3) of subdivision (b), including, but not limited to, rules and regulations governing a tenancy and inventories of furnishings to be provided by the person described in subdivision (b), are not included in the term “contract” or “agreement.”
(h) (1) This section does not apply to a person engaged in a trade or business who negotiates primarily in a language other than English, as described by subdivision (b), if the party with whom that person is negotiating is a buyer of goods or services, or receives a loan or extension of credit, or enters an agreement obligating that party as a tenant, lessee, or sublessee, or similarly obligates the party by contract or lease, and the party negotiates the terms of the contract, lease, or other obligation through the party’s own interpreter.
(2) As used in this subdivision, “the party’s own interpreter” means a person who is not a minor and who is able to speak fluently and read with full understanding both the English language and any of the languages specified in subdivision (b) in which the contract, lease, or other obligation was negotiated, and who is not employed by, or whose service is not made available through, the person engaged in the trade or business.
(3) This subdivision does not apply to a contract or agreement described in paragraph (8) of subdivision (b).
(i) Notwithstanding subdivision (b), a translation may retain the following elements of the executed English-language contract or agreement without translation: names and titles of individuals and other persons, addresses, brand names, trade names, trademarks, registered service marks, full or abbreviated designations of the make and model of goods or services, alphanumeric codes, numerals, dollar amounts expressed in numerals, dates, and individual words or expressions having no generally accepted non-English translation. It is permissible, but not required, that this translation be signed.
(j) The terms of the contract or agreement that is executed in the English language shall determine the rights and obligations of the parties. However, the translation of the contract or the disclosures required by subdivision (e) in any of the languages specified in subdivision (b) in which the contract or agreement was negotiated shall be admissible in evidence only to show that no contract was entered into because of a substantial difference in the material terms and conditions of the contract and the translation.
(k) (1) Upon a failure to comply with the provisions of this section, the person aggrieved may rescind the contract or agreement in the manner provided by this chapter. If the contract for a consumer credit sale or consumer lease that has been sold and assigned to a financial institution is rescinded pursuant to this subdivision, the consumer shall make restitution to and have restitution made by the person with whom the consumer made the contract and shall give notice of rescission to the assignee. Notwithstanding that the contract was assigned without recourse, the assignment shall be deemed rescinded, and the assignor shall promptly repurchase the contract from the assignee.
(2) Notwithstanding paragraph (1), only a tenant may rescind a contract described in paragraph (8) of subdivision (b) pursuant to this subdivision.
SEC. 3.
Section 1946.1 of the Civil Code is amended to read:
1946.1.
(a) Notwithstanding Section 1946, a hiring of residential real property or commercial real property by a qualified commercial tenant for a term not specified by the parties, is deemed to be renewed as stated in Section 1945, at the end of the term implied by law unless one of the parties gives written notice to the other of the party’s intention to terminate the tenancy, as provided in this section.
(b) An owner of a residential dwelling or commercial real property hired by a qualified commercial tenant giving notice pursuant to this section shall give notice at least 60 days prior to the proposed date of termination. A tenant giving notice pursuant to this section shall give notice for a period at least as long as the term of the periodic tenancy prior to the proposed date of termination.
(c) Notwithstanding subdivision (b), an owner of a residential dwelling or commercial real property hired by a qualified commercial tenant giving notice pursuant to this section shall give notice at least 30 days prior to the proposed date of termination if a tenant or resident has resided in the dwelling or occupied the property for less than one year.
(d) Notwithstanding subdivision (b), an owner of commercial real property hired by a qualified commercial tenant giving notice pursuant to this section shall give notice at least 90 days prior to the proposed date of termination if a tenant has occupied the property for three or more years.
(e) Notwithstanding subdivision (b), an owner of a residential dwelling giving notice pursuant to this section shall give notice at least 30 days prior to the proposed date of termination if all of the following apply:
(1) The dwelling or unit is alienable separate from the title to any other dwelling unit.
(2) The owner has contracted to sell the dwelling or unit to a bona fide purchaser for value, and has established an escrow with a title insurer or an underwritten title company, as defined in Sections 12340.4 and 12340.5 of the Insurance Code, respectively, a licensed escrow agent, as defined in Sections 17004 and 17200 of the Financial Code, or a licensed real estate broker, as defined in Section 10131 of the Business and Professions Code.
(3) The purchaser is a natural person or persons.
(4) The notice is given no more than 120 days after the escrow has been established.
(5) Notice was not previously given to the tenant pursuant to this section.
(6) The purchaser in good faith intends to reside in the property for at least one full year after the termination of the tenancy.
(f) After an owner has given notice of the owner’s intention to terminate the tenancy pursuant to this section, a tenant may also give notice of the owner’s intention to terminate the tenancy pursuant to this section, provided that the tenant’s notice is for a period at least as long as the term of the periodic tenancy and the proposed date of termination occurs before the owner’s proposed date of termination.
(g) The notices required by this section shall be given in the manner prescribed in Section 1162 of the Code of Civil Procedure or by sending a copy by certified or registered mail.
(h) This section may not be construed to affect the authority of a public entity that otherwise exists to regulate or monitor the basis for eviction.
(i) A notice given by an owner pursuant to this section shall contain, in substantially the same form, the following:
“State law permits former tenants to reclaim abandoned personal property left at the former address of the tenant, subject to certain conditions. You may or may not be able to reclaim property without incurring additional costs, depending on the cost of storing the property and the length of time before it is reclaimed. In general, these costs will be lower the sooner you contact your former landlord after being notified that property belonging to you was left behind after you moved out.”
(j) For the purposes of this section, the following definitions apply:
(1) “Commercial real property” means all real property in this state, except dwelling units subject to this chapter, mobilehomes as defined in Section 798.3, and recreational vehicles as defined in Section 799.29.
(2) “Microenterprise” has the same meaning as that term is defined in subdivision (a) of Section 18000 of the Business and Professions Code.
(3) “Nonprofit organization” means any private, nonprofit organization that qualifies under Section 501(c)(3) of the United States Internal Revenue Code of 1986.
(4) “Qualified commercial tenant” means a tenant of commercial real property that is a microenterprise, a restaurant with fewer than 2510 employees, or a nonprofit organization with fewer than 5020 employees. A qualified commercial tenant shall provide a landlord a self-attestation regarding the number of employees.A landlord shall provide notice of the rights created under subdivisions (b)-(d) of this Section when serving commercial tenants with a notice to terminate their tenancy. Before or upon execution of the lease, a qualified commercial tenant shall provide a landlord a notice that they are a qualified commercial tenant under the provisions of Civil Code Section 1946.1 and a self-attestation regarding the number of employees in order to be afforded the notice periods provided by subdivisions (b)-(d) of this section. For periodic or month-to-month leases, the qualified commercial tenant shall provide the landlord notice that they are a qualified commercial tenant under this Section, along with a self-attestation regarding their number of employees, and at such time as such required notice and attestation is provided, the protections under subdivision (b) shall take effect.
SEC. 4.
Section 1950.7 of the Civil Code is amended to read:
1950.7.
(a) A payment or deposit of money the primary function of which is to secure the performance of a rental agreement for other than residential property or any part of the agreement, other than a payment or deposit, including an advance payment of rent, made to secure the execution of a rental agreement, shall be governed by the provisions of this section. With respect to residential property, the provisions of Section 1950.5 shall prevail.
(b) (1) A landlord shall not demand or receive a payment or deposit of money from a qualified commercial tenant, however denominated, in an amount or value in excess of an amount equal to one month’s rent, in addition to rent for the first month paid on or before initial occupancy.
(2) This subdivision does not apply to a payment or deposit of money requested by a landlord before January 1, 2025.
(3) For the purposes of this subdivision, the following definitions apply:
(A) “Commercial real property” means all real property in this state, except dwelling units subject to this chapter, mobilehomes as defined in Section 798.3, and recreational vehicles as defined in Section 799.29.
(B) “Microenterprise” has the same meaning as that term is defined in subdivision (a) of Section 18000 of the Business and Professions Code.
(C) “Nonprofit organization” means any private, nonprofit organization that qualifies under Section 501(c)(3) of the United States Internal Revenue Code of 1986.
(D) “Qualified commercial tenant” means a tenant of commercial real property that is a microenterprise, a restaurant with fewer than 25 employees, or a nonprofit organization with fewer than 50 employees. A qualified commercial tenant shall provide a landlord with a self-attestation regarding the number of employees.
(c) The payment or deposit of money shall be held by the landlord for the tenant who is party to the agreement. The claim of a tenant to the payment or deposit shall be prior to the claim of any creditor of the landlord, except a trustee in bankruptcy.
(d) The landlord may claim of the payment or deposit only those amounts as are reasonably necessary to remedy tenant defaults in the payment of rent, to repair damages to the premises caused by the tenant, or to clean the premises upon termination of the tenancy, if the payment or deposit is made for any or all of those specific purposes.
(1) If the claim of the landlord upon the payment or deposit is only for defaults in the payment of rent and the security deposit equals no more than one month’s rent plus a deposit amount clearly described as the payment of the last month’s rent, then any remaining portion of the payment or deposit shall be returned to the tenant at a time as may be mutually agreed upon by landlord and tenant, but in no event later than 30 days from the date the landlord receives possession of the premises.
(2) If the claim of the landlord upon the payment or deposit is only for defaults in the payment of rent and the security deposit exceeds the amount of one month’s rent plus a deposit amount clearly described as the payment of the last month’s rent, then any remaining portion of the payment or deposit in excess of an amount equal to one month’s rent shall be returned to the tenant no later than two weeks after the date the landlord receives possession of the premises, with the remainder to be returned or accounted for within 30 days from the date the landlord receives possession of the premises.
(3) If the claim of the landlord upon the payment or deposit includes amounts reasonably necessary to repair damages to the premises caused by the tenant or to clean the premises, then any remaining portion of the payment or deposit shall be returned to the tenant at a time as may be mutually agreed upon by landlord and tenant, but in no event later than 30 days from the date the landlord receives possession of the premises.
(e) Upon termination of the landlord’s interest in the unit in question, whether by sale, assignment, death, appointment of receiver or otherwise, the landlord or the landlord’s agent shall, within a reasonable time, do one of the following acts, either of which shall relieve the landlord of further liability with respect to the payment or deposit:
(1) Transfer the portion of the payment or deposit remaining after any lawful deductions made under subdivision (d) to the landlord’s successor in interest, and thereafter notify the tenant by personal delivery or certified mail of the transfer, of any claims made against the payment or deposit, and of the transferee’s name and address. If the notice to the tenant is made by personal delivery, the tenant shall acknowledge receipt of the notice and sign the tenant’s name on the landlord’s copy of the notice.
(2) Return the portion of the payment or deposit remaining after any lawful deductions made under subdivision (d) to the tenant.
(f) Upon receipt of any portion of the payment or deposit under paragraph (1) of subdivision (e), the transferee shall have all of the rights and obligations of a landlord holding the payment or deposit with respect to the payment or deposit.
(g) The bad faith retention by a landlord or transferee of a payment or deposit or any portion thereof, in violation of this section, may subject the landlord or the transferee to damages not to exceed two hundred dollars ($200), in addition to any actual damages.
SEC. 54.
Section 1950.9 1950.8 is added to of the Civil Code, is amended to read:
1950.9.1950.8
(a) A landlord may increase a qualified commercial tenant’s rent to recover building operating costs only if all of the following apply:
(a) This section applies only to commercial leases and nonresidential tenancies of real property.
(b) It shall be unlawful for any person to require, demand, or cause to make payable any payment of money, including, but not limited to, “key money,” however denominated, or the lessor’s attorney’s fees reasonably incurred in preparing the lease or rental agreement, as a condition of initiating, continuing, or renewing a lease or rental agreement, unless the amount of payment is stated in the written lease or rental agreement.
(c) Any person who requires, demands, or causes to make payable any payment in violation of subdivision (a), shall be subject to civil penalty of three times the amount of actual damages proximately suffered by the person seeking to obtain the lease or rental of real property, and the person so damaged shall be entitled to an award of costs, including reasonable attorney’s fees, reasonable incurred in connection with obtaining the civil penalty.
(d) Nothing in this section shall prohibit the advance payment of rent, if the amount and character of the payment are clearly stated in a written lease or rental agreement.
(e) Nothing in this section shall prohibit any person from charging a reasonable amount for the purpose of conducting reasonable business activity in connection with initiating, continuing, or renewing a lease or rental agreement for nonresidential real property, including, but not limited to, verifying creditworthiness or qualifications of any person seeking to initiate, continue, or renew a lease or rental agreement for any use other than residential use, or cleaning fees, reasonably incurred in connection with the hiring of the real property.
(f)(1) Nothing in this section shall prohibit a person from increasing a tenant’s rent for nonresidential real property in order to recover building operating costs incurred on behalf of the tenant, if the right to the rent, the method of calculating the increase, and the period of time covered by the increase is stated in the lease or rental agreement.
(2) Notwithstanding the above, Qualified Commercial Tenants may only be charged operating costs, also known as common area maintenance fees, if:
(A1) The costs are limited to maintenance, a repair by the landlord that is not required by the lease, landscaping, security, trash, disposal, or insurance. or repairs that the landlord is not responsible for under the lease, landscaping, security, trash, disposal, or insurance.
(B2) The costs were not paid by the tenant directly to a third party. The costs do not include any expenses paid by the tenant directly to third parties, or as to which the landlord is otherwise reimbursed by any third party, other tenant, or by insurance proceeds.
(C3) A third party, a tenant, or insurance did not reimburse the landlord for the costs.
(C4) The costs are allocated proportionately per tenant, by square footage, or another method as substantiated through supporting documentation provided by the landlord to the tenant.
(D5) The landlord notifies the tenant of the costs, and the costs were incurred within 18 months of the notification.The costs were incurred 18 months or less from when the Qualified Commercial Tenant is notified of such costs.
(E6) The landlord provides the tenant supporting documentation proving that operating costs have been incurred, or are reasonably expected to be incurred within the next 12 months, as follows:
(iA) Thirty days before the rent increase if the rent increase is less than 10 percent of the rent charged within the 12-month period before the increase.
(iiB) Ninety days before the rent increase if the rent increase is 10 percent or more of the rent charged within the 12-month period before the increase.“Supporting Documentation” proving these operating costs have been incurred, or are reasonably expected to be incurred within the next 12 months, is provided to the Qualified Commercial Tenant, upon request by the qualified commercial tenant, 30 days before the tenant is required to pay for these costs and 90 days before the tenant is required to pay for these costs if the cost increase is 10 percent or more of the amount charged to the tenant for operating costs at any time during the 12 month period before the effective date of the increase. The Landlord shall notify qualified commercial tenant of their right to request supporting documentation.
(b3) In an action for an unlawful detainer, ejectment, or other action to recover possession, a qualified commercial tenant may raise, as an affirmative defense, that the landlord violated this section.A landlord’s failure to comply with subdivision (f) may serve as an affirmative defense in an unlawful detainer, ejectment, or other action to recover possession based on the qualified commercial tenant’s failure to pay operating cost charges.
(c4) A landlord who violates this section shall be subject to a civil penalty of three times the amount of actual damages proximately suffered by the qualified commercial tenant, and the qualified commercial tenant shall be entitled to an award of costs, including reasonable attorney’s fees, reasonably incurred in connection with obtaining the civil penalty.A Qualified Commercial Tenant may institute civil proceedings and seek remedies as outlined in subdivision (c) against a landlord violating any of the provisions of subdivision (f).
(d5) Any waiver of a right under this section by a qualified commercial tenant shall be void as a matter of public policy.The rights under this section cannot be waived and any such waiver shall be deemed unenforceable.
(e6) For the purposes of this section, the following definitions apply:
(1) “Microenterprise” has the same meaning as that term is defined in subdivision (a) of Section 18000 of the Business and Professions Code.
(2) “Nonprofit organization” means any private nonprofit organization that qualifies under Section 501(c)(3) of the United States Internal Revenue Code of 1986.
(3) “Qualified commercial tenant” means a tenant of commercial real property that is a microenterprise, a restaurant with fewer than 2510 employees, or a nonprofit organization with fewer than 5020 employees. A qualified commercial tenant shall provide a landlord a notice that they are a qualified commercial tenant under the provisions of Civil Code Section 1950.8 andwith a self-attestation regarding the number of employees prior to or at the execution of the lease. For periodic or month-to-month leases, the qualified commercial tenant shall provide the landlord notice that they are a qualified commercial tenant under this Section, along with a self-attestation regarding the number of employees, and at such time as such notice and attestation is provided, the protections under subdivision (b) shall take effect.
(4) “Supporting documentation” means a dated and itemized quote, contract, receipt, or invoice from a licensed contractor or a provider of services that includes, but is not limited to, both of the following:
(A) A tabulation showing how the costs are allocated among tenants in compliance with paragraph (4)(2) of subdivision (af).
(B) A signed and dated attestation by the landlord that the documentation and costs are true and correct.
California Office of the Small Business Advocate, The State of Diverse Businesses in California (Jun. 2023), Executive Summary, available at https://business.ca.gov/californias-minority-owned-small-businesses-contribute-192-8-billion-in-economic-output-and-support-over-2-5-million-jobs-annually-new-report-shows/. ↑
Small Business Majority, Survey: smallest businesses face a looming rent crisis (May 20, 2021), available at https://smallbusinessmajority.org/our-research/survey-smallest-businesses-face-looming-rent-crisis. ↑
Kevin Stein et al, Disrupting Displacement Financing in Oakland and Beyond, California Reinvestment Coalition (Jun. 2018), p. 24. ↑
Small Business Majority, Scientific Opinion Poll: Small businesses continue to face closures in 2021 (Jan. 27, 2021), available at ↑
Id. ↑
Stein et al, supra note 2. ↑
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