How a Restaurants Business Hired a Lawyer to Review a Commercial Lease Agreement in California (July 2022)

Can a landlord increase the rent during the term of a commercial lease agreement?

I am a small business owner who recently signed a commercial lease agreement for a retail space. The lease specifies a fixed monthly rent for the duration of the lease term, which is three years. However, I have received a notice from the landlord stating that they intend to increase the rent by 20% starting from the second year of the lease. This sudden increase is unexpected and would significantly impact my business's profitability. I want to know if the landlord has the legal right to increase the rent during the term of the lease agreement, and if so, what options do I have to negotiate or challenge this increase?

Laura H.

Answered Jun 7, 2024

One of the primary benefits of a lease, from a tenant's perspective, is that it allows them to stay in a property for a set time at a guaranteed rental rate. The landlord is bound by the amount agreed to in the lease and cannot legally raise it without the tenant's consent. They cannot force a tenant to consent by threatening eviction. Some commercial leases include a clause that requires the tenant to pay a portion of property taxes, utilities to the landlord, or other amounts that are not fixed at the time of signing. That could result in an increase before the lease ends. Read the document carefully to see if it has such a clause.