Senate Bill 1103 (SB 1103), known as the Commercial Tenant Protection Act of 2024, is a new law that provides protections for certain small businesses, including nonprofits. Specifically, the SB 1103 extends protections to “qualified commercial tenants” which includes among other businesses, private nonprofit organizations that qualify under section 501(c)(3) of the Internal Revenue Code and that have fewer than twenty (20) employees. In order to take advantage of the protections provided by SB 1103, a 501(c)(3) nonprofit with less than twenty (20) employees must provide its landlord a written notice that it is a “qualified commercial tenant” and a self-attestation regarding how many employees it has. Depending on the length of the lease at issue, a nonprofit may need to provide this notice to its landlord when SB 1103 becomes effective on January 1, 2025, or with new leases, before signing the lease, and annually thereafter.
There are a number of new protections. For example, SB 1103 now requires a landlord of a commercial real property to serve a qualified commercial tenant with a 30-day notice for a rent increase of 10% of less or 90-day notice for rent increases in excess of 10%. A rental increase cannot go into effect until the required notice is properly served and the required notice period has expired. There are similar notice protections in SB 1103, such as notice provisions relating to giving advance notice to a qualified commercial tenant prior to terminating a lease. Other types of protections, including things such as a requirement that landlords to translate the lease for qualified commercial tenants that negotiate primarily in Spanish, Chinese, Tagalog, Vietnamese, or Korean.
Nonprofits with smaller workforces and renting commercial property are encouraged to review the provisions of SB 1103 to evaluate if and how they might take advantage of the protections provided by SB 1103.
(SB 1103 amends sections 827, 1632, and 1946.1 of, and adds section 1950.9 to, the Civil Code.)