The Ellis Act enables California landlords to evict their tenants — when certain conditions are met. Recent media reports say the Ellis Act is being abused by greedy landlords. Is this true?
What is the Ellis Act?
Since 1985, the Ellis Act has given California landlords the option to evict their tenants in order to “go out of business,” or remove all of the rental units from the market in a building by either:
- demolishing the rental; or
- removing the units permanently from the rental market. [Calif. Government Code §7060-7060.7]
The purpose in evicting all tenants is usually to change the building’s use. For example, the landlord may choose to convert the building from rental units to condominiums. Or, they may wish to convert the rental units into a single family residence (SFR).
Named for the California Senator who introduced the bill, Jim Ellis, it was a direct response to a California Supreme Court case that required Santa Monica landlords apply for restrictive permits before being able to evict tenants due to a rental conversion or demolition. [Nash v. City of Santa Monica 37 Cal. 3d 97]
The eviction process
The process of evicting tenants under the Ellis Act varies slightly across California, as localities may have their own, stricter laws in place. The process is:
- Apply with the local government for an Ellis Act eviction. Submit proper documentation, which varies by city. [Gov C 7060.4(a)]
- Inform the tenants of the eviction. At soonest, the eviction may take place 120 days from the landlord notifying the local government agency via proper documentation of the Ellis Act eviction. When the tenant has lived there for at least one year and is 62 years of age or older, or is disabled, this period extends to a full year. [Gov C 7060.4(b)]
- Tenants who meet the requirements to stay in the property for one year need to inform the landlord of their intent to exercise this right within 60 days of the landlord’s notice to the local government agency. [Gov C 7060.4(b)]
Some local ordinances require landlords to pay tenants’ relocation fees. These fees vary by location.
When a landlord places the rental units back on the market within five years of an Ellis Act eviction, the units need to be offered at the same rate paid at the time of the eviction, plus reasonable annual increases as dictated by local rent control laws. [Gov C §7060.2(a)]
When a landlord puts the rental units back on the market within two years of an Ellis Act eviction — in violation of the original terms of the Ellis Act eviction — the tenants evicted may seek relief by:
- pursuing compensation from the landlord [Gov C 7060.2(b)(1)]; or
- notifying the local government housing agency to pursue compensation from the landlord. [Gov C 7060.2(b)(2)]
Further, the landlord who re-rents within two years of the Ellis Act eviction needs to first offer the unit back to the tenant who was evicted, at the same rent the tenant was paying at the time of the Ellis Act eviction, plus applicable increases as mandated by local rent control. The tenant who wants this opportunity needs to supply the landlord with their new address within 30 days of the eviction so the landlord can contact them if the unit is placed back on the rental market. [Gov C §7060.2(b)(3)]
On its surface, the Ellis Act appears as a straightforward law to protect landlords who want out of the rental business. However, reports of abuse of the Ellis Act have caused the media to pay attention in recent years, particularly as the number of Ellis Act evictions has increased rapidly across the state.
In San Francisco, tenants were evicted from 317 rental units via the Ellis Act in 2015. Most of these evictions took place near the Downtown area, including Chinatown and the Financial District, according to the anti-eviction mapping project.
In Los Angeles, tenants in 1,100 units were evicted through the Ellis Act in 2015, according to LA Curbed. This is up significantly from 725 in 2014 and 308 in 2013, according to the Los Angeles Times.
Los Angeles residents can check if their property has been subject to a past Ellis Act eviction here.
Sometimes, the landlord evicts the tenants under the Ellis Act and doesn’t give them the chance to re-rent the units when they are put back on the market. For instance, in violation of the law, landlords evict tenants from rent-controlled units and then post the units on short-term rental sites like Airbnb. Los Angeles City Attorney recently brought criminal charges against a landlord who did just that. The evicted tenants of these units are also suing the landlord.
Instances like these aren’t policed by local governments and it’s often up to the evicted tenants to sniff out any abuse of the Ellis Act. In the Los Feliz Ledger, multiple sources claim there is zero oversight of Ellis Act evictions, particularly in the five years following an eviction when the landlord still needs to abide by the law to not re-rent the units. Still, city councilmembers are hopeful that pending legislation in Los Angeles may curb the abuse.
The San Francisco Tenants Union claims landlords are circumventing the law by threatening tenants with an Ellis Act eviction without actually filing the required paperwork. Then, the tenants move out and the landlord is free to re-rent the property at a higher rate, sell or do whatever they wish without blowback from the tenants. Other times, landlords bribe tenants to leave quietly.
Several attempts have been made to change the Ellis Act, particularly as abuses have increased in recent years.
For example, California Senate Bill 364 proposes to limit Ellis Act evictions to landlords who have owned the property for at least five years. Small-scale landlords who own two or fewer properties comprising four or fewer residential units are exempt from the proposed law change. This has the potential to keep speculators from taking advantage of the Ellis Act to force out long-time tenants. Long-term and “mom and pop” landlords are still protected by the exemptions.
This change was rejected by committee in a six-to-five vote in 2015, but is being re-considered during the 2016 legislative session.
But opposed to the change is the California Association of Realtors (CAR), which claims it has to potential to decrease real estate investment. The six senators who voted down the bill in 2015 all received political donations from CAR, according to NBC Bay Area News.
Ellis Act evictions can be a useful tool for landlords who are legitimately looking to exit the rental business, and when done correctly, can be painless for both sides. However, efforts by local governments to crack down on abuse ought to make landlords cautious. Attempts to go around the law to make the process easier or to cheat the system are increasingly being spotted by tenants, media outlets and the government.
The rise in all of this subterfuge is likely due to the housing crisis hitting California, which has seen a shortage of rental housing for low- and middle-income households. This has caused the price of rents (and homes for sale) to skyrocket. In particular, renters living in San Francisco and Los Angeles now pay around half of their income on housing costs.
The real culprit is overly strict zoning regulations. Cities with the most restrictive land-use regulations have seen average rents rise three times more quickly than cities with the least restrictive regulations, according to a report by Zillow. More housing is what’s needed to stop landlords from abusing the Ellis Act, and to help tenants who are lawfully evicted under the Ellis Act find suitable replacement housing.
Landlords: seek the advice of a real estate attorney before attempting an Ellis Act eviction. Tenants may do likewise.