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Much has been written about the Ellis Act -- that it is the mother of all gentrifiers, a law which is ruining San Francisco, but what actually is this law all about? Here is a guide to help you understand the Ellis Act and what it means for local landlords.
1) It was established so that landlords can go out of business.
Far from being an anti-tenant law, California State Legislature passed the Ellis Act in 1986 to solve a much more mundane problem: How can a landlord take his property out of business short of selling their property? Up to the year the legislation passed, many landlords were forced to go out of business and lose their property when facing bankruptcy. The Ellis Act allows landlords who intended to demolish their property find an easy, somewhat cheap way to relocate tenants to create better a housing situation. It’s only been in recent years that Landlords stopped using the law as justification to meet city health codes and instead turn profits in California's booming condo market.
2) It contains major loopholes in the landlord’s favor.
The main source of controversy, landlords in San Francisco have used Ellis Act loopholes, such as it having no time provisions or requirements for landlords to have owned building. This lack of requirements allows many landlords to buy properties in San Francisco on speculation, creating the most recent uptick in evictions.
3) Downtown Santa Monica has already been hit.
While San Franciscans are the acts most vocal opponents, Downtown Santa Monica has already been hit, and there is evidence that the trend is moving deeper into the west side, where the crunch for condos is creating huge gains for select former landlords. Please refer to the graph which was originally published by Curbed LA, posted below to see the percentage of rent controlled units in Santa Monica.
Graph courtesy of Curbed LA
4) Los Angeles’ rent control provisions supercede the Ellis Act
While much of the controversy in Los Angeles centers in the westside, Los Angeles’ tenants are also subject to the Ellis Act, as it is state legislation. However, Los Angeles has some of the most restrictive rental control laws in the nation. Accordingly, after a landlord applies the Ellis Act to kick out a rent control tenant, any housing subject to the act will continue to be rent controlled up to 5 years after the fact, even if the landlord chooses demolition. That of course applies, only if the building stays in the rental market. However, Los Angeles has another loophole: It is very difficult to get the correct approval for a new structure for any property, much less one built many, many years ago. That's why many downtown landlords steer clear of the act altogether.
If you or anyone you know is facing an eviction as result of the Ellis Act, or wants to remove rent control tenants in Santa Monica, please seek an attorney. If you don’t want to be stranded on Ellis Act island, then give the Rad Firm a call.
