Los Angeles Commercial Real Estate Loans: ULA, Taxes & Retrofits

A Los Angeles commercial loan uses the same programs as the rest of the country — SBA 504, DSCR, bank, CMBS and bridge loans. What the city changes is a transfer tax that jumps above $5.4 million, a property tax set by your own price, and retrofit orders that can come with the building. California-wide rules — Prop 13, trustee-sale foreclosure, the deficiency rule and C-PACE law — are in the California guide.

Transfer taxes and the Measure ULA line

Every sale in the City of Los Angeles pays the county's $1.10 per $1,000 and the city's own $4.50 per $1,000 — about 0.56% of the price. Measure ULA adds a second city tax on larger sales: for sales closing after June 30, 2026, 4% of the whole price over $5,400,000 and 5.5% at $10,900,000 or more. The thresholds move with inflation each year, and the rate applies to the full price, not the amount over the line.

Example:

• $2,000,000 building: $2,000,000 × 0.56% = $11,200. No Measure ULA.
• $6,000,000 building: $6,000,000 × 0.56% = $33,600, plus ULA of $6,000,000 × 4% = $240,000 — $273,600.

The Office of Finance describes the tax as one on the privilege of selling. The seller customarily pays it, but the purchase contract and escrow instructions decide — spell ULA out separately, because at 4% it moves prices near the threshold. Two exemptions matter for commercial buyers: qualified affordable-housing organizations (LAMC 21.9.14) and 501(c)(3)s with an IRS determination letter at least ten years old and under $1 billion in assets.

Property tax: your price, plus a supplemental bill

A purchase resets the assessed value to the price (the Prop 13 rule), so the lender underwrites a tax of at least 1% of your price plus the voter-approved bonds for the parcel's tax rate area — at least $20,000 a year on a $2,000,000 building. The first year brings an extra bill: the Assessor reappraises as of the recording date and the county bills the difference for the rest of the fiscal year. A purchase recorded between January and May gets two supplemental bills, and they are mailed to the owner and generally aren't paid from escrow or the lender's impound account.

Retrofit orders and benchmarking

• Non-ductile concrete. Buildings permitted before 1977 on the City's list have 3 years from the order for a checklist, 10 years for plans and 25 years to finish.
• Soft-story wood frame. Pre-1978 buildings have 2 years for plans, 3.5 for permits and 7 to finish.
• Benchmarking. Private buildings over 20,000 sq ft report energy and water use every year and complete an audit or retro-commissioning every five years.

Lenders typically ask whether the building is on a retrofit list and where it stands. Open work belongs in the budget — as a construction or bridge component, or as C-PACE, which in California can finance seismic strengthening.

Operating costs lenders see

The City taxes commercial rent as a business: $1.27 per $1,000 of gross receipts from non-dwelling space, under one registration for all of an owner's City properties. On $300,000 of rent that is $381 a year — small, but it belongs in the operating statement a lender reads.

Where to start

For an owner-occupied building, SBA loans run through lenders, with the SBA's Los Angeles District Office in Glendale. For an investment property, compare a DSCR loan with a bank or permanent loan, and rebuild the seller's numbers with your reset property tax in the DSCR calculator. Start a commercial real estate loan request — one application, compared across our lender network.

Sources: LA County Registrar-Recorder (documentary transfer tax); City of Los Angeles Office of Finance (Measure ULA FAQ, business tax); LA County Assessor (change in ownership, supplemental assessment); LADBS (retrofit programs); LADWP (benchmarking); Los Angeles Housing Department (ULA exemptions); U.S. Small Business Administration. Checked 2026-09-29.