Rent is one of the biggest expenses for any business. If you have a lease for your business property in California, you may wonder if your landlord can increase the rent before your lease ends. Understanding your rights and the rules of your lease can help you avoid surprises and keep your business finances stable.
Fixed-term leases protect against rent hikes
Most commercial leases are fixed-term, meaning they last for a specific period, like one year or several years. If you have a fixed-term lease, your landlord cannot raise the rent in the middle of that lease. The rent amount stays the same until the lease ends, unless the lease itself includes a clause that allows for rent adjustments. Always check the details of your lease agreement to see if there are any rent escalation clauses.
Rent escalation clauses
A rent escalation clause is a part of the lease that allows the landlord to raise the rent during the lease term under certain conditions. These clauses often depend on factors like inflation or property taxes. If your lease has a rent escalation clause, the landlord must follow its specific terms. Make sure you understand these clauses before signing any lease, so you know what to expect if your rent increases.
Month-to-month leases allow for changes
If you have a month-to-month lease for your business, your landlord can raise the rent, but they must give you written notice. In California, landlords need to provide at least 30 days’ notice if they plan to increase rent by 10% or less. For larger increases, they must give at least 90 days’ notice. Month-to-month leases are more flexible, but they come with less stability in rent costs.
Staying informed to avoid surprises
By understanding your lease terms and any rent escalation clauses, you can plan ahead and protect your business from unexpected rent changes.