Business contracts, commercial leases and personal guarantees

Commercial leases

Leases for stores, offices and other business space are mostly governed by the lease itself. Residential rules such as the statewide rent cap and just-cause protections generally don’t apply. Commercial leases commonly address rent increases, shared operating costs, repairs, permitted uses, assignment and subletting, and what happens at the end of the term.

Since 2025, California has given certain small commercial tenants, such as some microenterprises, small restaurants and small nonprofits, additional protections, including notice before rent increases in month-to-month tenancies and rules about passing through building operating costs.

Personal guarantees

Landlords, lenders and suppliers often ask business owners to sign a personal guarantee. It makes the individual responsible for the business’s obligation if the business doesn’t pay, even when the business is an LLC or corporation. Guarantees can be limited in amount or time, or unlimited, depending on their wording.

Written agreements

Businesses commonly put important terms in writing: price, scope of work, payment timing, what happens if something goes wrong, and how disputes are resolved. Some contracts, such as those involving real estate or lasting more than a year, generally must be in writing to be enforced.

Disputes

Businesses can use small claims court for claims up to $6,250, or regular civil court for larger amounts. Many contracts require arbitration or mediation first.