Beginning January 1, 2025, the Commercial Tenant Protection Act introduces new protections in lease transactions for certain small businesses by requiring translation of documents, operating cost transparency and increased notice periods. Commercial landlords should be aware of these new requirements and how they impact leasing practices and tenant communications.

Protected Tenants Under the New Law
The law protects “Qualified Commercial Tenants” (QCTs), defined as: 
1. Microenterprises with 5 or fewer employees, lacking access to conventional financing;
2. Restaurants with fewer than 10 employees; and 
3. 501(c)(3) non-profits with fewer than 20 employees. 
It is very important for both landlords and tenants to know that these protections only apply if a tenant provides written attestation of its QCT status. Without this attestation, the law doesn’t
apply – even if a tenant might otherwise qualify as a QCT.

Key Changes for Leases to QCTs
Translation Requirements
For new leases or leases renewed after January 1, 2025, if the tenant provides a written self-attestation that it is a QCT, then before the lease or renewal is signed, the landlord must provide
the QCT a complete version of the lease or renewal translated into the language in which the negotiations occurred.  The law only requires this translation if the negotiations were conducted in Spanish, Chinese, Tagalog, Vietnamese, or Korean.  While certain elements like names, addresses, dates, and trademarks may remain in English, the translation must cover all terms and conditions. The English version remains legally binding, but failure to provide translations grants a QCT lease rescission rights. 
The landlord must also post notices about translation availability during negotiations in the applicable language, whether the negotiations with the QCT were written or oral. These notices must be clearly visible at the location where negotiations take place and must be in the same language as the negotiations. 

Operating Cost Pass-Throughs
For new leases or leases renewed after January 1, 2025, if a tenant provides a written self-attestation that it is a QCT, which can be provided every year, then the landlord cannot charge a
fee to recover building operating costs without complying with certain requirements:
·      Proportionally allocating building operating costs among tenants, which can be by size or usage
·      Providing documentation of building operating costs within 30 days of request by a QCT
·      Building operating costs must be limited to costs for the previous 18 months or anticipated for     the next 12 months 
·      Substantiating building operating costs
·      Clear tabulation showing tenant cost allocation methods
·      Documentation of calculation methodologies
·      Signed attestation that the documentation and costs are true and correct
Non-compliance with the requirements for charging QCTs a fee to recover building operating
costs can lead to the following:
·      Courts can award QCTs actual damages, reasonable attorney’s fees, punitive damages, and
up to treble damages 
·      Local authorities, including district attorneys, city attorneys, and county counsel, can seek injunctive relief
·      QCTs can use landlord’s violations as a defense in eviction cases

Notice Requirements and Timing
For month-to-month QCT tenancies created after January 1, 2025, a landlord must provide: 
·      30 days’ notice for rent increases of 10% or less; and
·      90 days’ notice for larger increases (calculated cumulatively over a 12-month period).
These requirements don’t apply to rent increases scheduled during a lease term but do apply
to month-to-month tenancies created after a lease expires.
Landlords must provide the following notice for termination of QCT tenancies:
·      60 days’ notice for QCT tenancies over 12 months; and 
·      30 days’ notice for shorter tenancies. 
QCTs must give notice for a period at least as long as their periodic tenancy. For public policy reasons, landlords and QCTs cannot waive these notice periods.

Open Questions and Interpretations
Several aspects of the law remain subject to interpretation. The new law is silent on how a
landlord can challenge a QCT’s self-attestations and doesn’t specify whether employee counts
for restaurants and non-profits are based on full-time or part-time workers. Additionally, the term “restaurant” is not defined which creates uncertainty for food service businesses that might not
fit traditional restaurant models, such as food trucks, ice cream shops, etc.
 

"I’ve had the privilege of working with Bryan for over 30 years, and his expertise in commercial real estate law is unmatched. His professionalism, meticulous attention to detail, and deep understanding of the field make him an invaluable partner. Whether handling my own properties or assisting clients I’ve referred to him, Bryan’s counsel has always led to outstanding results. I highly recommend him for any commercial real estate transaction—he truly sets the gold standard."

Carol Taubman

Mashian Law Group recently represented a client in a $20M+ acquisition of an office building in West Los Angeles.  The structure of the transaction was complex since the owner leased back the property and provided the financing for part of the purchase price. So, the loan and lease documents were inextricably intertwined.  The deal was also a “flip” where the transaction was assigned to MLG’s client.  The purchase contract, lease and loan documents all needed to be negotiated in a very short amount of time required by the owner.