📋 Commercial Lease Disputes Overview
Commercial lease disputes are governed primarily by the lease contract itself, not by the extensive statutory protections that apply to residential tenancies. Understanding your lease terms is critical, as courts will generally enforce commercial lease provisions as written.
Key Differences from Residential Leases
⚠ No 21-Day Security Deposit Rule
Unlike residential leases, there is no statutory deadline for returning commercial security deposits. Your lease controls.
🏠 Limited Habitability Rights
The implied warranty of habitability does not apply to commercial leases. Maintenance obligations are as specified in the lease.
📝 Lease Terms Control
Commercial leases can include terms that would be void in residential leases - confession of judgment, waiver of jury trial, etc.
⚖ Fewer Consumer Protections
Commercial tenants are presumed to be sophisticated parties. Courts enforce lease terms more strictly.
Common Commercial Lease Disputes
- CAM charges - Disputes over Common Area Maintenance calculations and pass-throughs
- Maintenance/repairs - Who is responsible for what repairs
- Security deposit - Return of deposit at lease end
- Rent disputes - Rent escalations, percentage rent, base rent disputes
- Assignment/subletting - Landlord's consent to transfer
- Renewal options - Disputes over option exercise and terms
- Build-out/TI allowance - Tenant improvement disputes
- Unlawful detainer - Eviction and defenses
⚠ Read Your Lease Carefully
Commercial lease disputes are almost entirely governed by your lease terms. Before taking any action, carefully review your lease, any amendments, and any written correspondence that may have modified the terms. Many disputes are resolved simply by reading the contract.
💰 CAM Charges Disputes
Common Area Maintenance (CAM) charges are one of the most frequent sources of commercial lease disputes. Tenants should understand what they are paying for and verify landlord calculations.
Common CAM Issues
| Issue | Description |
|---|---|
| Improper Inclusions | Landlord including costs not permitted under the lease (capital improvements, management fees above cap) |
| Calculation Errors | Math errors, wrong square footage, incorrect pro-rata share calculations |
| Missing Credits | Failure to credit insurance proceeds, vendor rebates, or other offsets |
| Double-Charging | Including costs that should be charged directly to another tenant |
| Lack of Documentation | Failure to provide supporting invoices and documentation upon request |
| Gross-Up Issues | Improper application of gross-up provisions when building not fully occupied |
Your Audit Rights
Most commercial leases include audit rights allowing tenants to review CAM records. Check your lease for:
- Time period to request an audit after receiving year-end reconciliation
- Who can conduct the audit (you, your accountant, or a third party)
- Access to original invoices and supporting documentation
- Threshold for landlord paying audit costs if overcharges are found
💡 Exercise Audit Rights Promptly
Most leases require you to request a CAM audit within 60-90 days of receiving the annual reconciliation. If you miss this window, you may waive your right to dispute the charges. Mark your calendar when you receive the reconciliation statement.
🔧 Maintenance Obligations
Unlike residential leases, commercial lease maintenance obligations are defined entirely by the lease itself. There is no implied warranty of habitability.
Common Lease Structures
🏢 Gross Lease
Landlord handles most operating expenses. Tenant pays flat rent. Landlord typically responsible for structural and common area maintenance.
🏠 Modified Gross
Base rent plus some operating expenses. Tenant may pay share of increases over a base year.
📈 Triple Net (NNN)
Tenant pays base rent plus property taxes, insurance, and maintenance (CAM). Most maintenance falls to tenant.
🛠 Absolute Net
Tenant responsible for everything including structural repairs. Most tenant-favorable lease type (for landlord).
Typical Maintenance Allocation
| Item | Usually Landlord | Usually Tenant |
|---|---|---|
| Roof (structural) | Yes (gross/mod) | Yes (NNN) |
| Foundation/structure | Yes (most leases) | Sometimes (NNN) |
| HVAC equipment | Sometimes | Usually tenant |
| Interior repairs | Rarely | Yes |
| Common area parking lot | Yes | Via CAM |
| Plumbing/electrical (in premises) | Rarely | Usually tenant |
⚠ Document Everything
When maintenance issues arise, document them immediately with dated photos and written notices to the landlord. If the landlord fails to make required repairs, you may have grounds for rent abatement, repair-and-deduct, or lease termination - but only if you can prove notice and opportunity to cure.
🔒 Security Deposit Rules
Commercial security deposits are NOT subject to the same rules as residential deposits. The 21-day return requirement (Civil Code 1950.5) applies only to residential tenancies.
Key Differences from Residential
- No statutory return deadline - Your lease sets the timeframe, not state law
- No itemized statement required - Unless your lease requires it
- No statutory penalties - For late return (unlike residential bad faith penalties)
- Interest - Not required unless lease or local law provides
- Amount - No statutory limit on commercial security deposit amounts
What Your Lease Should Address
| Provision | What to Look For |
|---|---|
| Return Timeline | How many days after lease termination must landlord return deposit? |
| Permitted Deductions | What can landlord deduct? Unpaid rent, repairs, cleaning, CAM? |
| Documentation | Must landlord provide itemized statement of deductions? |
| Condition of Premises | Return standard - broom clean, original condition, reasonable wear? |
| Holdover | Can deposit be applied to holdover rent? When? |
💡 Document Premises Condition
Take detailed photos and video when you take possession AND when you vacate. This documentation is your best defense against improper deductions. Do a joint walk-through with the landlord if possible and get their sign-off on the condition.
⚖ Unlawful Detainer Defense
If your landlord serves a notice to quit or files an unlawful detainer (eviction) action, you have limited time to respond. Commercial evictions move quickly.
Commercial Eviction Timeline
- 3-Day Notice - For non-payment of rent (3 days to pay or quit)
- 3-Day Notice - For breach of lease terms (may be curable or not)
- 30-Day Notice - For month-to-month tenancy termination
- 5 Days - To respond to unlawful detainer complaint after service
- Summary Proceeding - Trial typically within 20 days of filing
Common Defenses
⚖ Defective Notice
Notice did not comply with lease requirements or statutory requirements. Wrong address, wrong amount, insufficient time.
🔒 Waiver
Landlord accepted rent after breach or otherwise waived the default. Pattern of accepting late payments.
📝 Landlord Breach
Landlord's own material breach of the lease (failed to make required repairs, etc.) may excuse tenant performance.
💰 Retaliatory Eviction
Eviction in response to tenant exercising legal rights (though less protection than residential).
⚠ Act Immediately Upon Receiving Notice
Commercial evictions are summary proceedings. You have only 5 days to respond to an unlawful detainer complaint. Failure to respond results in a default judgment and immediate eviction. Consult an attorney immediately upon receiving any eviction notice.
🖩 Commercial Lease Dispute Damages Calculator
Use this interactive calculator to estimate potential damages in your case. Enter your information below to get an estimate of recoverable damages.
📈 Estimated Damages Breakdown
✅ Evidence Checklist
Gather these documents to support your commercial lease dispute:
📄 Lease Documents
- ✓ Original lease agreement
- ✓ All amendments and addenda
- ✓ Estoppel certificates
- ✓ Subordination agreements
💰 Financial Records
- ✓ Rent payment history
- ✓ CAM reconciliation statements
- ✓ Security deposit documentation
- ✓ Invoices for disputed charges
💬 Communications
- ✓ All correspondence with landlord
- ✓ Maintenance requests and responses
- ✓ Default/cure notices
- ✓ Emails and text messages
📷 Condition Documentation
- ✓ Move-in photos/video
- ✓ Current condition photos
- ✓ Maintenance issue photos
- ✓ Repair invoices and records
📝 Sample Demand Letters
Select your role to see appropriate sample letters:
Tenant Demand: CAM Overcharges
[DATE]
[LANDLORD NAME/COMPANY]
[ADDRESS]
Re: CAM Reconciliation Dispute - [PROPERTY ADDRESS]
Lease Date: [DATE]
Dear [LANDLORD]:
I am writing to dispute the [YEAR] CAM reconciliation statement dated [DATE]. Pursuant to Section [X] of our Lease, I am exercising my right to audit the CAM charges and request the following documentation within [X DAYS per lease]:
1. Copies of all invoices supporting the CAM charges
2. Documentation of the pro-rata calculation methodology
3. Breakdown of charges by category
4. [Other specific requests per your lease]
Specifically, I dispute the following charges:
- [Describe specific disputed charge and why it is improper]
- [Additional disputed charges]
Please provide the requested documentation and adjust the reconciliation accordingly. If this matter is not resolved within [X days], I reserve all rights under the Lease, including the right to pursue legal remedies.
Tenant Demand: Security Deposit Return
[DATE]
[LANDLORD NAME/COMPANY]
[ADDRESS]
Re: Demand for Return of Security Deposit
Former Premises: [ADDRESS]
Dear [LANDLORD]:
I vacated the premises at [ADDRESS] on [DATE], as required by the Lease. I paid a security deposit of $[AMOUNT] on [DATE].
Pursuant to Section [X] of the Lease, you are required to return the security deposit within [X days per lease] after lease termination. More than [X days] have passed and I have not received my deposit or any itemization of deductions.
The premises were left in [broom-clean condition / describe condition] in accordance with the Lease requirements. I have photographs documenting the condition at move-out.
I hereby demand return of the full security deposit of $[AMOUNT] within [10 days]. If you believe any deductions are warranted, provide an itemized statement with supporting documentation as required by the Lease.
Failure to respond will result in legal action to recover the deposit plus any damages available under the Lease and applicable law.
Landlord Demand: Unpaid Rent
[DATE]
[TENANT NAME/COMPANY]
[PREMISES ADDRESS]
Re: Demand for Payment of Past Due Rent
Premises: [ADDRESS]
Dear [TENANT]:
This letter serves as formal demand for payment of past due rent and other charges owed under your Lease dated [DATE].
As of the date of this letter, you owe the following amounts:
- Past due rent ([MONTHS]): $[AMOUNT]
- Late fees: $[AMOUNT]
- CAM charges: $[AMOUNT]
- [Other charges]: $[AMOUNT]
TOTAL DUE: $[TOTAL]
Pursuant to Section [X] of the Lease, you are in default of your payment obligations. Demand is hereby made for payment in full within [X days per lease cure period].
If payment is not received by [DATE], we will proceed with all remedies available under the Lease, including but not limited to termination of the Lease, acceleration of rent, and unlawful detainer proceedings. You will be responsible for all costs of collection, including attorney fees as provided in the Lease.
Landlord Demand: Lease Violation
[DATE]
[TENANT NAME/COMPANY]
[PREMISES ADDRESS]
Re: Notice of Lease Violation and Demand to Cure
Premises: [ADDRESS]
Dear [TENANT]:
This letter notifies you that you are in violation of your Lease dated [DATE]. The violation is as follows:
Violation: [Describe the specific lease provision violated and the facts constituting the violation. Example: "Section 8.1 of the Lease prohibits subletting without Landlord's prior written consent. You have sublet a portion of the Premises to [Name] without obtaining consent."]
Pursuant to Section [X] of the Lease, you have [X days per lease] to cure this violation. To cure, you must [describe what tenant must do to cure].
If you fail to cure this violation within the cure period, Landlord will exercise all remedies available under the Lease, including termination of the Lease and commencement of unlawful detainer proceedings.
Please contact [CONTACT] at [PHONE/EMAIL] to discuss compliance.
Need Legal Help?
Commercial lease disputes can be complex and high-stakes. Get a 30-minute strategy call with a commercial real estate attorney.
Book Consultation - $125California Resources
- CA Civil Code (Contracts): leginfo.legislature.ca.gov
- CA Code of Civil Procedure 1161-1179a: Unlawful detainer statutes
- State Bar Lawyer Referral: calbar.ca.gov
- California Courts Self-Help: courts.ca.gov/selfhelp-eviction.htm