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SB 1103 Would Impose New Limits on Commercial Rent Increases  

state legislative priorities

State Senator Menjivar recently introduced Senate Bill 1103, which would set new requirements for landlords renting to small businesses and non-profits, effectively acting as a form of rent control for commercial properties.   

Senate Bill 1103: Explained

The bill has been amended multiple times. Key points as it stands now are:  

  • Limits on Recovering Costs: Landlords can't raise rent enough to cover increased operating expenses like utilities, maintenance, and taxes. 
  • Unfair Tenant Definition: Protections are based only on number of employees, favoring larger businesses over smaller ones. 
  • Self-Reporting Issues: Tenants can lie about their employee count without verification, making it easy to abuse the system. 
  • Burdensome Notices: Requiring 30 and 90-day notices for rent increases makes it hard for landlords to respond quickly to cost changes. 
  • Overbearing Regulations: Applying residential lease rules to commercial leases ignores the unique needs of businesses. 

Problem with the Bill

The proposed bill aims to apply residential lease conditions to commercial leases, which is inappropriate given the inherent differences between the two.  

Commercial leases are complex, multi-year agreements involving extensive negotiations between knowledgeable parties, tailored to specific business needs.  

Imposing a one-size-fits-all approach from residential leases could disrupt the industry and inadvertently harm the businesses the bill intends to assist. 

Stay Connected

SB 1103 passed the State Senate by a narrow majority, and it’s heading to the Assembly next.

This bill demonstrates how the priorities of elected officials can affect the commercial real estate industry and landlords' freedom to negotiate with tenants.

We need capable politicians elected to power who will create and defend laws essential for our industry. Please help support our Political Action Committee, by sponsoring and attending our BOMA at the Bowl event on September 13th.

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