State CRE Guide

California Commercial Real Estate Loans: Taxes, Prop 13 & C-PACE

What changes for a commercial property loan in California: city transfer taxes, a Prop 13 reset at purchase, trustee-sale foreclosure and the largest C-PACE market.

By BestLoanUSA Updated October 22, 2026 3 min read

California at a glance for commercial property loans
What	California
County documentary transfer tax	$1.10 per $1,000 of the price, in every county. Charter cities can add their own transfer tax on top. ^[1]
Los Angeles Measure ULA	4% of the whole price on sales over $5.4 million, 5.5% at $10.9 million or more — commercial included (thresholds from July 1, 2026). ^[2]
Property tax after a purchase	A sale resets the assessed value to the price; the general levy is capped at 1% of that value, plus voter-approved bonds, rising at most 2% a year. ^[3]
Foreclosure process	Usually non-judicial: a trustee sale under the deed of trust's power of sale, outside the courts. ^[4]
Deficiency after a trustee sale	None. After a sale under the power of sale, the lender can't get a deficiency judgment on the note. ^[5]
C-PACE law and programs	AB 811 (2008) contractual assessments: energy, water, renewable and seismic improvements. CSCDA Open PACE is the most widely adopted program. ^[6]
C-PACE volume	$2.63 billion across 181 projects, all-time through 2024 — the largest state market by dollars. ^[7]

Checked 2026-10-22; sources are listed at the end of the page. Rates and rules change — your title company and closing attorney confirm the figures for a specific deal.

Financing a property in California? Compare lenders for your deal →

California borrowers use the same commercial loan programs as every other state — SBA 504, DSCR loans, bridge loans, bank, CMBS and life-company permanent loans. What California changes is the transfer tax layered by city, a property tax that resets to your purchase price, a foreclosure process that runs outside the courts, and the deepest C-PACE market in the country.

Transfer taxes: county, then city

Every California county charges a documentary transfer tax of $1.10 per $1,000 of the price. Charter cities can add their own tax on top, and some add a great deal — so the city the building sits in matters as much as the county.

Example: a $2,000,000 building bought with a $1,400,000 loan. County transfer tax: $2,000,000 ÷ $1,000 × $1.10 = $2,200. Any city tax comes on top; ask your escrow officer for the city's rate before you sign the purchase agreement. California has no mortgage recording tax, so the $1,400,000 loan adds recording fees, not a percentage tax — unlike New York or Florida.

In the City of Los Angeles, Measure ULA adds a tax on larger sales of any property type: 4% of the whole price on sales over $5.4 million, and 5.5% at $10.9 million or more (thresholds effective July 1, 2026, adjusted each year). It is charged on the full price, not the amount above the threshold, so a sale just over the line costs far more than one just under it.

Prop 13: the price becomes the tax base

When a property changes hands, its assessed value resets to the purchase price. The general property tax is capped at 1% of that value, plus voter-approved bond levies, and the assessed value can rise no more than 2% a year while you own it.

For the loan, that means the lender underwrites the property's taxes at your price, not the seller's. On the $2,000,000 example, the general levy alone is at least $20,000 a year before local bonds. A seller who has owned for decades may show operating statements with a much lower tax line; lenders re-underwrite it at the new assessment, which lowers net operating income and, with it, the loan a given DSCR supports. Rebuild the seller's numbers with the reset tax before you set your offer — the DSCR calculator shows the effect.

Trustee sales and the deficiency rule

Most California commercial loans are secured by a deed of trust with a power of sale. On default, the lender can foreclose through a trustee sale, outside the courts. The trade-off is set by statute: after a sale under the power of sale, the lender can't obtain a deficiency judgment on the note, whatever the sale brings.

That rule shapes the paperwork. Because the note itself can't produce a deficiency after a trustee sale, lenders lean on separate protections — personal or completion guaranties and the carve-outs in them. A non-recourse loan with narrow carve-outs limits your exposure; a full-recourse guaranty can put it back. Read the guaranty as carefully as the note.

C-PACE in California

California's PACE law (AB 811, 2008) lets cities and counties finance energy-efficiency, renewable-energy, water-conservation and seismic-strengthening improvements through a voluntary contractual assessment on the property. Seismic work is the California-specific item: a retrofit a lender or insurer asks for can be financed this way.

By the C-PACE Alliance's 2024 national data, California is the largest C-PACE market in the country: $2.63 billion across 181 projects since the program began, with by far the largest average project. There is no single statewide administrator; CSCDA Open PACE is the most widely adopted program, and counties can run their own alongside it. The existing mortgage lender's consent is part of any C-PACE closing, because the assessment is collected with property taxes. C-PACE Desk, a BestLoanUSA site, tracks California programs and capital providers.

Where to start

Pick the program — SBA 504 for an owner-occupied building, a DSCR or permanent loan for an income property, a bridge loan for a transition — then build the budget with the county and city transfer taxes and the reset property tax. For financing that isn't tied to real estate, the California business loan guide covers SBA offices and lenders by region.

Ready to compare? Start a commercial real estate loan request — one application, compared across our lender network.

💡 BestLoanUSA compares bank, SBA, DSCR and bridge lenders for California commercial property. See how it works — no hard credit pull to start.

Sources: Cal. Rev. & Tax. Code §11911; City of Los Angeles Office of Finance, Measure ULA; Prop. 13 (Santa Clara County Assessor); Cal. Civ. Code §2924; Cal. Code Civ. Proc. §580d; Streets & Highways Code ch. 29 (AB 811) and CSCDA; C-PACE Alliance, 2024 National C-PACE Program Volume Data (via C-PACE Desk, checked 2026-09-05).

The bottom line

In California the purchase price keeps working after closing: it sets the property-tax base the lender will underwrite for as long as you own the building. Budget the county and city transfer taxes, model the tax at 1% of the price plus local bonds, and read the guaranty — a trustee sale ends the lender's claim on the note, so the guaranty is where your personal exposure lives.

Commercial property by metro area in California

The state rules above apply everywhere in California. These are the local ones — county and city taxes, building mandates and programs — that change the numbers in its largest markets.

Los Angeles Los Angeles County

City transfer tax: The City of Los Angeles charges its own $4.50 per $1,000 (0.45%), so a sale in the city pays about 0.56% with the county’s $1.10 — before any Measure ULA tax. ^[8]
Energy benchmarking: Private buildings over 20,000 sq ft must report energy and water use every year and complete an audit or retro-commissioning every five years (EBEWE). ^[9]
Seismic retrofits: City ordinances (2015) require retrofits of pre-1978 wood-frame soft-story and pre-1977 non-ductile concrete buildings; lenders ask whether a building is on the LADBS list and where it stands. ^[10]

Full Los Angeles commercial real estate loan guide →

San Francisco City and County of San Francisco

Transfer tax: San Francisco’s own tiered tax runs from 0.5% on sales up to $250,000 to 5.5% at $10 million and 6% at $25 million or more, charged on the full price. ^[11]
Commercial Rents Tax: Landlords pay an extra 3.5% gross-receipts tax on commercial rents (1% on warehouse) once SF gross receipts pass $2,325,000 (2025) — an owner cost that lowers NOI. ^[12]
Energy performance: Non-residential buildings of 10,000 sq ft or more report energy use every year by April 1 and need an energy audit every five years. ^[13]

Oakland and Berkeley Alameda County

Oakland transfer tax: On top of the county’s $1.10 per $1,000: 1% up to $300,000, 1.5% to $2 million, 1.75% to $5 million and 2.5% above $5 million (Measure X, 2018). ^[14]
Berkeley transfer tax: 1.5%, or 2.5% on higher-value sales; Measure W raises it to 3% at $1.9 million and 3.5% at $3.0 million from January 1, 2027, with thresholds indexed yearly. ^[15]
Soft-story retrofit: Oakland requires seismic retrofits of pre-1991 wood-frame buildings with 5+ units and a soft first story (Municipal Code ch. 15.27). ^[16]

San Jose Santa Clara County

Measure E transfer tax: Since July 1, 2020, San Jose’s Measure E adds a transfer tax on sales above a threshold — $2.3 million since the July 1, 2025 inflation adjustment: 0.75% up to $5 million, 1% up to $10 million, 1.5% above, charged on the full price. ^[17]
Building performance: Non-residential and multifamily buildings of 20,000 sq ft or more report energy and water use every year and must meet efficiency standards on a rolling five-year cycle or make improvements. ^[18]

Commercial loan rates and terms in California

Rates and leverage come from the lender, the property and the borrower, so they are the same national ranges in California as elsewhere — what changes here are the closing costs and rules in the table above. Typical terms as of September 2026:

Program	Rate	Max LTV / LTC	Term
Bank / credit union	6.5–8%	65–75% (80% multifamily)	5–10 yr
SBA 504	6.25–7.25%	Up to 90%	10–25 yr
SBA 7(a)	8.5–11.5%	Up to 90%	Up to 25 yr
DSCR	6.75–8.75%	Up to 75–80%	5–30 yr
CMBS	7–8%	Up to 75%	5–10 yr
Bridge	6.25–8.25%	65–80%	12–36 mo
Construction	6.75–10.5%	65–80% LTC	12–24 mo

How each range is built: commercial real estate loan rates by type.

California commercial real estate loan FAQ

What are commercial mortgage rates in California?

Commercial lenders price a loan on the property and the borrower rather than the state, so California rates follow national ranges: about 6.5–8% for a bank loan, 6.25–7.25% for SBA 504, 6.75–8.75% for a DSCR loan and 6.25–8.25% for a bank or debt-fund bridge loan (benchmarks as of September 2026).

How much down payment do I need for a commercial property in California?

Typically 25–35% for a bank loan and 20–25% for a DSCR loan. An owner-occupied building can qualify for SBA 504 with 10% down (15% for a business under two years old or a special-purpose building, 20% if both).

What transfer tax applies to a commercial sale in California?

Every county charges $1.10 per $1,000 of the price. Charter cities can add their own tax, and Los Angeles adds Measure ULA on larger sales of any property type (4% over $5.4 million, 5.5% at $10.9 million or more, from July 1, 2026).

How does Prop 13 affect a commercial property loan?

A sale resets the assessed value to the price, so the property tax — 1% of that value plus voter-approved bonds — is underwritten at your price, not the seller’s. A higher tax line lowers the NOI and the loan a given DSCR supports.

Can a California lender get a deficiency after a trustee sale?

No. After a sale under the deed of trust’s power of sale, the lender can’t obtain a deficiency judgment on the note (Cal. Code Civ. Proc. §580d). Guaranties are where your personal exposure sits.

Sources

Checked 2026-10-22.