Office Lease Agreement
(Short Form) (Pro-Landlord) (CA)

Summary

This template is a short form office lease agreement that may be used to lease office space in a multi-tenanted building in California. It is a modified gross lease and favors the landlord. This template includes practical guidance, drafting notes, and alternate and optional clauses. This template is intended for use in preexisting space that does not require any renovations. It is drafted as a modified gross lease under which the tenant pays its proportionate share of the increases in real estate taxes and operating expenses above those expenses incurred in a base year. For a template of an office lease detailing a more complex transaction, see Office Lease Agreement (Long Form) (CA). Beginning January 1, 2025, landlords of commercial property must adhere to new laws applicable to "qualified commercial tenants." A "qualified commercial tenant" is defined as a commercial tenant that is a microenterprise (Cal. Bus. & Prof. Code § 18000(a)); a restaurant with fewer than 10 employees; or a nonprofit organization (any private, nonprofit organization that qualifies under I.R.C. § 501(c)(3)) with fewer than 20 employees. Cal. Civ. Code § 827; Cal. Civ. Code § 1946.1; Cal. Civ. Code § 1950.9; and Cal. Civ. Code § 1632. To qualify as a "qualified commercial tenant," the tenant must also provide the landlord within the previous 12 months, a written notice that the tenant is a qualified commercial tenant and a self-attestation stating the number of employees at such time the protections under the statute comes into play. Cal. Civ. Code § 827(b)(7)(D); Cal. Civ. Code § 1946.1(k)(4)(B); Cal. Civ. Code § 1950.9(h)(5); and Cal. Civ. Code § 1632(m)(4)(B). Unless the tenancy is from week to week, month to month, or other period less than a month, the tenant must provide the notice and self-attestation before or upon execution of the lease, and annually thereafter. Cal. Civ. Code § 827(b)(7)(D)(ii); Cal. Civ. Code § 1946.1(k)(4)(B)(ii); Cal. Civ. Code § 1950.9(h)(5); and Cal. Civ. Code § 1632(m)(4). • Rent increase: a landlord must provide a qualified commercial tenant with 90 days advance written notice for rent increases greater than 10% of the rental amount charged to the tenant at any time during the 12 months preceding the effective date of the increase (subject to Cal. Code Civ. Proc. § 1013 if served by mail). Cal. Civ. Code § 827. • Termination of tenancy: a landlord terminating the tenancy of a qualified commercial tenant must provide at least 60 days prior notice (30 days notice if the qualified commercial tenant has occupied the property for less than one year). Cal. Civ. Code § 1946.1(b). • Building operating costs: a landlord may not charge a qualified commercial tenant any building operating costs (Cal. Civ. Code § 1950.9(h)(1)) until the landlord provides the qualified commercial tenant supporting documentation (Cal. Civ. Code § 1950.9(h)(6)) and all of the following apply: (1) The building operating costs are allocated proportionately per tenant, by square footage, or another method supported with 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 provided the prospective qualified commercial tenant a notice stating that the tenant may inspect supporting documentation of building operating costs upon written request pursuant to paragraph (4) below. (4) Within 30 days of a written request, the landlord provided 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 or expenses for which a third party, tenant, or insurance reimbursed the landlord. Cal. Civ. Code § 1950.9(a) and (b). A 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 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. Cal. Civ. Code § 1950.9(c). If a landlord violates Cal. Civ. Code § 1950.9, a qualified commercial tenant in an action for an unlawful detainer, ejectment, or other action to recover possession based on a failure to pay building operating costs, may raise as an affirmative defense that the landlord violated this statute. In addition to actual damages, the landlord may be liable for reasonable attorney's fees and costs, three times the amount of actual damages, and punitive damages. The district attorney, city attorney, or county counsel in the jurisdiction in which the commercial real property is located may also seek injunctive relief based on a violation of this section. Any waiver of right of Cal. Civ. Code § 1950.9(g) by a qualified commercial tenant shall be void as against public policy. • Lease translation: a landlord who negotiates with a prospective qualified commercial tenant primarily in Spanish, Chinese, Tagalog, Vietnamese, or Korean must provide a translated contract in the language used to negotiate the contract to the prospect qualified commercial tenant and any other person who will be signing the contract prior to its execution. Cal. Civ. Code § 1632(b)(8). For more on office leases, see Office Leasing Resource Kit (CA), Office Lease Agreements, Commercial Real Estate Leasing (CA), and Commercial Leases (CA).