Updated on September 29, 2025

Commercial leases in California often involve complex terms and high financial stakes. For property owners and landlords, these agreements are critical to ensuring steady income and maintaining property value. Unfortunately, commercial lease fraud in California is a growing concern, and spotting potential red flags early can help landlords avoid costly disputes and litigation.

What Is Commercial Lease Fraud?

Commercial lease fraud occurs when a party intentionally misrepresents or falsifies information during a leasing transaction. Unlike simple lease disputes, fraud involves deliberate deception—whether through forged documents, fake tenants, or inflated income statements, to mislead landlords and investors.

Common Types of Commercial Lease Fraud in California

1. Fake or Inflated Tenant Occupancy
Some properties are marketed as fully leased when, in fact, the tenants do not exist or their leases are fabricated. This misrepresentation makes the property appear more profitable than it really is.  We have had cases where the seller of a commercial property allegedly made up a tenant to show income that was not actually present for the property.

2. Falsified Rent Rolls or Income Statements
Landlords may encounter fraudulent rent rolls showing higher rental income than what is actually being collected, artificially inflating the property’s value.   This occurs because one method to value commercial property is to value it based on the income the property generates.

3. Fraudulent Lease Terms
Fraudsters may alter lease documents to include unenforceable clauses or to misrepresent key terms such as rent, renewal options, or tenant obligations.   We have seen everything from made up options to fake amendments.

4. Forged Signatures and Identity Theft
In some cases, fraudsters create sham leases with forged tenant signatures, leaving property owners with unenforceable agreements.

Red Flags to Watch For

Detecting commercial lease fraud early can save property owners from significant losses. Some warning signs include:

• Pressure to finalize a lease without adequate time for review.

• Incomplete or inconsistent tenant documentation.

• Lease terms that seem unusually favorable or don’t follow California norms.

• Conflicting financial records or unverifiable income claims.

• Tenants unwilling to provide standard business or credit information.

How Property Owners Can Protect Themselves

There are steps landlords can take to safeguard against lease fraud:

• Conduct Due Diligence: Verify tenant backgrounds, credit reports, and business licenses.

• Review Tenant Records Independently: Don’t rely solely on documents provided by brokers or third parties.

• Engage a Real Estate Attorney: Have leases reviewed by counsel before execution.

• Keep Clear Documentation: Preserve all written communications and drafts of lease agreements.

What to Do If You Suspect Commercial Lease Fraud

If you believe a lease has been falsified or misrepresented, act quickly:

• Gather and preserve all lease-related documents.

• Avoid entering into further agreements until the issue is resolved.

• Consult with an experienced real estate litigation attorney to review your options.

• Potential remedies may include rescission of the lease, recovery of damages, or pursuing fraud claims in court.

FAQs About Commercial Lease Fraud in California

1. How is commercial lease fraud different from a lease dispute?
Fraud involves intentional misrepresentation or falsification, while disputes typically arise from disagreements over valid lease terms.

2. Can fraudulent lease documents affect title to a property?
Yes. In some cases, fraudulent leases or recorded documents can cloud title and require legal action to clear ownership records.  Some commercial leases are recorded.  Or, in some instances the tenant may have to get the landlord’s cooperation to record things agains the property to allow them to do business.

3. What remedies are available to landlords who discover fraud?
Options may include rescinding the lease, seeking damages, or filing a lawsuit for fraud.

4. Does title insurance cover commercial lease fraud?
Not likely unless there was something that the title company failed to pick up on recorded title .

5. Should I hire an attorney before signing a commercial lease?
Yes. An attorney can identify potential risks in the agreement and ensure compliance with California law.

Final Thoughts

Commercial lease fraud in California can expose property owners to major financial risks. By performing careful due diligence and consulting with legal professionals, landlords can reduce the chance of falling victim to fraudulent practices. If you suspect that you’ve encountered commercial lease fraud, the attorneys at Schorr Law have extensive experience in handling complex real estate fraud cases and can help protect your interests.

Contact Us

If you suspect commercial lease fraud or need guidance on a potentially fraudulent lease in California, the attorneys at Schorr Law are here to help. Our experienced team can review your lease, identify risks, and guide you through legal remedies to protect your property and investments. To schedule a consultation, you can call our office at (866) 999 2990, email us at info@schorr-law.com, or submit a request through our online contact form. We are committed to helping California property owners safeguard their rights and recover from fraudulent transactions.