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.
A pair of bills by San Francisco lawmakers would severely undercut the Ellis Act, which allows property owners to quit the rental housing business.
Assembly Bill 2405 by Tom Ammiano would leave contested Ellis Act court filings stuck in the court system for years. It also would make Ellis Act records confidential and tie permission to invoke the act to local housing affordability.
Senate Bill 1439 by Mark Leno would bar property owners from using the Ellis Act until they’ve owned a property for at least five consecutive years. Moreover, it would prohibit a property owner from using the act on more than one property.
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.