UNDERSTANDING THE ELLIS ACT: ALLOWING LANDLORDS THE UNCONDITIONAL RIGHT TO EVICT TENANTS AND “GO OUT OF BUSINESS”
Real Estate > Featured Articles > UNDERSTANDING THE ELLIS ACT: ALLOWING LANDLORDS THE UNCONDITIONAL RIGHT TO EVICT TENANTS AND “GO OUT OF BUSINESS”
The Ellis Act, named after former Republican State Senator James Ellis of San Diego, was adopted by the California Legislature in 1985 as a push-back to the California Supreme Court’s Nash vs. The City of Santa Monica ruling that municipalities could prevent landlords from evicting tenants to ‘go out of business’ in order to withdraw their property from the rental market.
The law, backed by powerful real estate interests, allows for landlords to evict renters without any of the reasons usually required for ‘just cause’, like nonpayment of rent or property damage – as long as the owner removes all of the units from the rental market.
As the Bay Area housing crisis continues to drive up the market rate for rental units, landlords and developers are increasingly implementing the Ellis Act to evict tenants living in rent-controlled buildings, with the goal of either building a new structure on the site, or converting apartment buildings to TICs or condos.
Statistics from the San Francisco Residential Rent Stabilization and Arbitration Board indicate that Ellis Act evictions are inching upwards over time, fueled by real estate speculators wishing to cash out on a hot market.
San Francisco Ellis Act evictions over the past 5 years
Compensation required by the City of San Francisco for those affected by the Ellis Act include $6,985 per tenant, with an additional $4,656 per disabled or elderly tenant, capped at $20,955 per unit. The owner must also pay former tenants reasonable relocation costs. The Ellis Act has withstood numerous local legal as well as legislative challenges. A proposed San Francisco ordinance, for example, was struck down that would have required landlords to pay the difference between the tenant’s previous rent and a 2-year apartment rental based upon current market rates, up to a maximum of $50,000.
To ‘Ellis’ a building two simultaneous actions must be taken by a landlord: 1) evict the tenants, which requires a 120-day notice (with the exception of seniors 62 years and up and disabled tenants, who must receive a one-year notice of eviction), and 2) legally remove the building from the market by filing a ‘Notice of Intent to Withdraw Units’. After the mandated waiting period has passed the landlord records with the County Recorder a memorandum summarizing the Notice of Intent. Once the building has been legally withdrawn from the market the owner can initiate Unlawful Detainer procedures if necessary. The Rent Board then records the Ellis constraints with the County Recorder within 30 days of the withdrawal.
There are vacancy rent control restrictions, however, on the re-rental of units. For a period of five years, regardless of who the units are re-rented to, the maximum rent that can be charged is the same rent that the evicted tenant in the unit was paying under rent control.
Tenants who fight the Ellis eviction win surprisingly often. Tenants who don’t often drag out eviction proceedings for well over a year and get into a position where they can settle on their own terms.
Tenants in seeking advice are encouraged to contact the non-profit organization San Francisco Tenant’s Union at www.sftu.org. The organization asks that tenants become members of Tenant’s Union or make a donation, however no one is turned away for lack of funds.
All data, including all measurements and calculations of area, is obtained from various sources and has not been, and will not be, verified by San Francisco Examiner.
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