California Commercial Lease Agreement: Template Guide

A commercial lease sets the terms for a business to occupy office, retail, industrial or mixed-use space. Unlike residential leases, California commercial leases are shaped mostly by negotiation and the words on the page, not by a long list of statutory protections. That makes careful drafting essential for both sides.

This page outlines our original California commercial lease template and the rules to check. It is a general template, not legal advice. Commercial leases involve significant money and risk, so have a California attorney review the lease before anyone signs.

What it is

A commercial lease grants a business the right to use specific premises for a defined term. It covers rent and how it grows, who pays operating costs, what the tenant may do in the space, who builds and maintains what, insurance, and what happens if either side defaults. Terms often run 3 to 10 years, with renewal options.

The template supports gross, modified gross and net structures. If operating costs are passed through, it includes common area maintenance terms and an annual reconciliation. For background, see our commercial lease guide.

California rules to know

Check these well-known items against current law:

• CASp disclosure. California requires commercial landlords to state in the lease whether the premises have been inspected by a Certified Access Specialist. If they have not, the lease must include specific language about the tenant’s right to request an inspection and how costs of any repairs are allocated.
• Protections for qualified small tenants. Since 2025, California law gives certain small commercial tenants, such as microenterprises, small restaurants and small nonprofits, added protections. These include notice requirements for rent increases on shorter tenancies and limits on how building operating costs can be passed through. Confirm whether your tenant qualifies and what the lease must say.
• Local rules. Some cities regulate commercial tenancies, signage or permitted uses. Confirm that the space has the right zoning and certificate of occupancy for the tenant’s use.
• Security deposits. Commercial deposits follow different rules than residential deposits, including return timelines. Confirm them before drafting.

What you cannot include

Commercial parties have broad freedom to contract, but some terms are risky or unenforceable:

• Clauses that let the landlord lock out a tenant or seize property without following legal procedures
• Operating expense pass-throughs that violate rules for qualified small tenants
• Penalties that are not a reasonable estimate of actual damages
• Use clauses that conflict with zoning or occupancy rules
• Vague expense definitions that invite disputes

How to fill it out

1. Use correct legal names for each entity and confirm who is authorized to sign.
2. Describe the premises with suite number, square footage and the measurement method.
3. Set the term, commencement date, renewal options and holdover terms.
4. Build the rent schedule, including escalations and any free rent.
5. Choose the expense structure and list included and excluded costs, the tenant’s pro rata share and audit rights.
6. Define the permitted use and any exclusives.
7. Spell out improvements, including any tenant improvement allowance and who manages construction.
8. Set insurance limits, indemnities and any personal guaranty.
9. Attach the CASp statement and other disclosures, then sign.

eSignature

Commercial leases often pass through several drafts. Once terms are final, TenantLoop eSignature lets each authorized signer sign online, and the executed lease is stored with the tenant record. TenantLoop also supports commercial leases with CAM, so rent, recurring charges and reconciliations can be tracked in one place.

Bottom line

A good California commercial lease is specific about money, use, improvements and risk, and includes the CASp disclosure. Check whether newer small tenant protections apply, confirm local requirements, and have a California attorney review the final lease. This outline gives you a clear structure to start from.