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The Ellis Act: What You Need to Know

The Ellis Act: What You Need to Know

The Ellis Act: What You Need to Know

06Mar

The Ellis Act: What You Need to Know

Everyone in San Francisco seems to be talking about the Ellis Act these days. The rate of evictions continues to sky rocket and Ellis Act Evictions, in particular, have tripled in the past year.  People are protesting in the streets, at the State Capital, and law makers both local and on the State level are pushing for reform of the Ellis Act.

So, what is the "Ellis Act" really? In this month's newsletter, I answer some basic questions about the Ellis Act and it's impact on San Francisco.

What is the Ellis Act?
The Ellis Act is a California State law enacted in 1986 and codified as Govt. Code Sec. 7060 et seq, that allows owners of rental property to vacate an entire building of tenants and get "out of the rental business.”

Why is it "bad?"
The Ellis Act is being abused as a loophole to get around just cause eviction protections. The San Francisco Rent Ordinance contains a number of protections for tenants living in units covered by rent control and just cause, including rules about when landlords can evict tenants.  The Ellis Act provides owners with a "trump card" to these rules.

With rents in San Francisco now among the highest in the country, landlords have incentive to get rid of long-term tenants protected by rent control.  The Ellis Act - and/or the threat of implementing it - provides landlords with a way to evict tenants paying below market rent without having to make a large pay out or finding a just cause reason for eviction.

For a lot of people losing rent control means having to move out of the city.  The rent ordinance states that landlords utilizing the Ellis Act are only required to pay affected tenants a small relocation payment which in this market is a drop in the bucket. .  (presently payments are $5,261 per person with a cap of $15,783 per unit, with a small increases for disabled and elderly tenants).

Why am I only hearing about the Ellis Act now?
Ellis Act evictions (and Owner Move In Evictions) tend to correlate with spikes in the real estate market.  According to the Anti-Eviction Mapping Project, between 1992 and 1997, there were only 10 Ellis Act evictions in the city of San Francisco.  By comparison, between 1999 and 2000, during the first tech boom, there were 698 Ellis evictions.  Between 2011 and the crash of the Market in 2008, San Francisco averaged 220 Ellis evictions a year.  During the down period between 2008 and 2011, the number of Ellis evictions stagnated to some degree.  In the past three years that number has begun to steadily rise once again as rent and property values have soared.  From 2011 to 2012, the number of Ellis evictions almost doubled from 64 to 116.

When rents are high, landlords want to maximize profits.  The law prevents property owners from re-renting an Ellis'd building for up to five years.  However, there are only limited restrictions on their ability to sell the property, convert it into single family homes/mansions, or break up the property into tenancy's in common ("TICs") or condos. Things get quite complicated from there, so for purposes of explaining the law here, we won't go into it too deeply.

 116 evictions isn't that many for a city of over 700,000, why the big deal?

That number only reflects the number of Ellis evictions actually completed.  That is, this number does not take into account the number of buyouts as a result of the threat of an ellis eviction.   For every 1 Ellis eviction, there are 5 threatened Ellis evictions which result in a tenant move-out.  Because the laws (Ellis, SF Rent Ordinance, SF Condo Ordinance) place restrictions on the future use of buildings that have been "Ellis'd" landlords have great incentive to avoid utilizing the Ellis Act if it can be avoided.  Landlords instead use the threat of an Ellis eviction to compel tenants to accept a low offer to move out.  Because these are deals that are not recorded with the city, there is no record of the number of leveraged buy-outs stemming from the threat of eviction.

How does the Ellis Act Affect Me?
If you live in a San Francisco unit covered under the Rent Ordinance you are vulnerable. As rents and property values continue to rise, property owners have more incentive than ever to capitalize. Buildings tend to be more valuable vacant then occupied because it provides buyers with more flexibility, and housing in the city is at a premium. Unlike when an owner makes allegations of tenant wrong-doing as a basis for eviction, there is no real defense to an Ellis eviction in court if your landlord genuinely intends to follow the law.

What can I do about it?
Right now politicians across the state and nonprofit organizations and supporters are pushing for reform of the law.  In the past few weeks State Senator Mark Leno (D- San Francisco) and Assemblyman, Tom Ammiano (D- San Francisco), have each introduced bills aimed at curbing the tide of Ellis evictions.  If you want to help, call your representatives - either on the Board of Supervisors or at the state level and express your desire that they support Ellis reform.

If you find yourself targeted by the law, push back.  Contact an attorney who can help you explore your options before you concede defeat. There are numerous resources available to tenants throughout the Bay Area.  The best thing you can do is get informed.  Your landlord may not have your best interests in mind.

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