In 1985, the State Legislature enacted the Ellis Act, which provides that no local government can compel a rental property owner to continue to offer their housing for rent. This law allows rental property owners to exit the business to avoid the potential for bankruptcy or to move into their own rental units.
Certain politicians and special Interest groups are gearing up to change the state Ellis Act and prevent rental property owners from selling their buildings, even if it means they go bankrupt.
In order to make sure that tenants are protected, the Ellis Act established clear procedures that municipalities could impose upon owners prior to withdrawing property from the rental market. Some of the requirements include relocation assistance to displaced tenants, specific notice periods, and deed restrictions on future use of the property. In San Francisco, there are strong protections in place for tenants, including:
An owner must pay each tenant $5,265, with a maximum of $15,795. In addition, an owner must pay each elderly (60 years or older) or disabled tenant $3,510. For a family with an elderly person, that amounts to at least $19,305.
A minimum of 120 days’ notice prior to eviction. If the tenant is at least 62 years of age or disabled and has lived in the unit for at least one year, the owner is required to give a one-year notice.
Once owners exercise their rights under the Ellis Act, those units cannot be re-rented again for at least 5 years. If they do, they must first offer the units to the departed tenants at the same rent. If those tenants don’t want to occupy, any new tenants must be charged the same rate of rent.