Commercial lease disputes are among the most common triggers for business litigation in California. According to data from the National Association of Realtors, the average commercial lease in Southern California runs 3–7 years with total rent obligations of $200,000–$2,000,000+ over the lease term. With that much money at stake, even minor disagreements over lease terms can escalate into expensive litigation.

Unlike residential tenants, commercial tenants in California have far fewer statutory protections. Most consumer protection statutes, rent control ordinances, and habitability requirements do not apply to commercial leases. The lease itself is the primary governing document, which makes the specific language of the contract critically important.

This guide covers the most common types of commercial lease disputes, the rights and remedies available to both tenants and landlords, and practical steps for resolving them.

Common Types of Commercial Lease Disputes

Rent disputes and CAM charges. Common Area Maintenance (CAM) charges—the tenant's share of operating expenses such as property taxes, insurance, maintenance, and utilities—are a frequent source of conflict. Disputes arise when landlords pass through expenses not authorized by the lease, fail to provide annual reconciliation statements, or include capital improvements in CAM charges that should be the landlord's responsibility. In triple-net (NNN) leases, tenants pay rent plus property taxes, insurance, and maintenance. The tenant's CAM obligation can increase significantly from year to year if the lease does not include a cap or audit right.

Landlord's failure to maintain the premises. While commercial tenants do not have the implied warranty of habitability that protects residential tenants, the landlord may still have maintenance obligations under the lease. If the lease assigns structural maintenance, roof repairs, or HVAC system maintenance to the landlord and the landlord fails to perform, the tenant may have claims for breach of contract and potentially constructive eviction.

Unlawful lockouts and self-help. Unlike residential leases, California law does not explicitly prohibit landlord self-help remedies (such as changing locks) in commercial leases unless the lease itself restricts it. However, many commercial leases do include provisions that require the landlord to use judicial process before retaking possession. If your lease prohibits self-help, a lockout is a breach of contract that may entitle you to damages and injunctive relief.

Lease assignment and subletting disputes. Most commercial leases require landlord consent before a tenant can assign the lease or sublet the premises. Under Cal. Civ. Code § 1995.260, if the lease includes a restriction on transfer, the landlord's consent cannot be unreasonably withheld unless the lease expressly provides otherwise. Disputes arise when landlords deny transfer requests without reasonable justification or impose unreasonable conditions.

Security deposit disputes. Commercial security deposits in California are not subject to the same statutory protections as residential deposits (Cal. Civ. Code § 1950.7 provides some protections, but is less prescriptive than the residential rules under § 1950.5). The lease terms largely govern the deposit, its permitted uses, and the timeline for return. Disputes commonly arise when landlords apply the deposit to disputed charges, such as alleged damage beyond normal wear and tear or unpaid CAM charges.

Early termination and lease breakage. When a business needs to close or relocate before the lease expires, the financial exposure can be substantial. Unless the lease includes an early termination clause, the tenant remains liable for rent through the end of the term. Under California law, the landlord has a duty to mitigate damages by making reasonable efforts to re-let the premises (Cal. Civ. Code § 1951.2). If the landlord fails to mitigate, the tenant's liability may be reduced.

Unlawful Detainer: The Commercial Eviction Process

If a commercial tenant defaults on rent, the landlord must follow California's unlawful detainer process (Cal. Code Civ. Proc. § 1161 et seq.) to recover possession. The process generally proceeds as follows:

Step 1: Three-Day Notice to Pay Rent or Quit. The landlord serves a written notice giving the tenant 3 days (excluding weekends and holidays) to pay the full amount of past-due rent or vacate the premises (§ 1161(2)). The notice must state the exact amount owed, the name and address where payment can be made, and the period for which the rent is owed. Defects in the notice can invalidate the entire eviction proceeding.

Step 2: Filing the Unlawful Detainer Complaint. If the tenant does not pay or vacate within the notice period, the landlord files an unlawful detainer complaint with the Superior Court. The tenant typically has 5 days to respond (compared to 30 days in an ordinary civil case), making this a fast-tracked proceeding.

Step 3: Trial. Unlawful detainer cases are set for trial within 20 days of the request for trial (§ 1170.5). In practice, the timeline is slightly longer, but commercial eviction trials in California are typically resolved within 30–60 days of filing.

Step 4: Writ of Possession. If the landlord prevails, the court issues a writ of possession, and the sheriff or marshal removes the tenant. The landlord may also recover past-due rent, holdover damages, and, if the lease so provides, attorney fees.

Remedies for Commercial Lease Disputes

Practical Steps for Resolving a Commercial Lease Dispute

Review the lease carefully. The lease is the controlling document. Before taking any action, identify the specific provisions that are at issue, any notice and cure requirements, the dispute resolution clause (many commercial leases require mediation or arbitration before litigation), and the attorney fees provision.

Send written notice of the issue. Document the problem in writing and give the other party an opportunity to cure. Many leases require written notice before a default can be declared, and failure to provide the required notice can waive your remedies.

Request a CAM audit. If you dispute CAM charges, check whether your lease includes an audit right. Many commercial leases allow the tenant to audit the landlord's operating expense records once per year. If the audit reveals overcharges exceeding a specified percentage (often 3–5%), the landlord typically must reimburse the audit costs.

Explore mediation. Commercial lease disputes are well-suited to mediation because both parties usually prefer to preserve the landlord-tenant relationship rather than engage in protracted litigation that could force the tenant out or leave the landlord with a vacant property.

Consult a business litigation attorney. Commercial lease disputes involve significant financial stakes and complex contract interpretation. An experienced attorney can evaluate your rights, negotiate on your behalf, and, if necessary, represent you in court or arbitration.

Statute of Limitations

Breach of a written commercial lease is subject to a 4-year statute of limitations (Cal. Code Civ. Proc. § 337). Breach of an oral lease has a 2-year limitation period (§ 339). The clock generally begins when the breach occurs, not when the damage is discovered, unless the breach was concealed.

Frequently Asked Questions

Q: Can a commercial landlord lock me out without going to court?

A: It depends on your lease. California does not have a blanket statutory prohibition on commercial landlord self-help (unlike residential leases). However, many commercial leases prohibit self-help, and if yours does, a lockout is a breach of contract. Even where self-help is technically permitted, it is risky—if done improperly, the landlord may be liable for trespass, conversion of the tenant's property, and business interruption damages.

Q: Can I withhold rent if the landlord won't make repairs?

A: Commercial tenants generally do not have the right to withhold rent under California law (the implied warranty of habitability does not apply to commercial leases). However, if the landlord's failure to maintain the premises constitutes a material breach of the lease, you may have a claim for constructive eviction or rent abatement. Withholding rent without legal justification can trigger an unlawful detainer action, so consult an attorney before doing so.

Q: My business is failing—can I break my commercial lease?

A: You can, but you will likely be liable for the remaining rent under the lease unless the lease includes an early termination provision. However, the landlord has a duty to mitigate damages by making reasonable efforts to re-let the space (Cal. Civ. Code § 1951.2). If the landlord successfully re-lets, your liability is reduced by the rent the new tenant pays. Negotiating a lease surrender or sublease is often a better option than simply abandoning the premises.

Q: How much does it cost to litigate a commercial lease dispute?

A: Costs depend on complexity. A straightforward unlawful detainer action may cost $5,000–$15,000 in attorney fees. A contested commercial lease dispute involving discovery, expert witnesses, and trial can cost $30,000–$150,000 or more. Most commercial leases include attorney fees provisions, meaning the prevailing party can recover their legal costs from the losing party.

Need help? Contact Kolmogorov Law, P.C. at (909) 235-6116 or visit the contact us page to schedule a consultation with our business litigation team in Irvine, California.