The Ellis Act, section 7060-7060.7 of the California legal code, was enacted in 1985 [1]. This law was implemented to protect landlords from being forced by the government to remain in the rental property business [2]. It gives landlords the right to evict tenants so they may “go out of business” [3] as long as they sell their building or redesign its use [4]. In recent years, the Ellis Act has been largely publicized due to increasing rent prices in California [5]. The law puts into question who is responsible for California’s housing crisis; citizens (such as the landlords) or the government (in this case both state and local). Many feel the law has been abused by landlords who convert their rental units into more expensive condominiums or sell the units only to purchase new buildings to rent because it leaves many people without homes [6]. Although reform is highly sought after, officials have been careful in reshaping the law for fear of violating landlord’s rights to dispose of their property as they see fit [7]. Public opinion is that landlords should assist in deterring the housing crisis as part of their civic duty, but lobbyists calling for reform fail to address the business aspect of landlord’s decision making [8]. The Ellis Act has given landlords an undisputable right, to sell their property and change their profession, but in doing so it has left Californians in a housing crisis.
The Ellis Act was implemented directly in response to Nash v. City of Santa Monica (1984) [9]. The court in Nash sought to determine whether it was legal for Santa Monica City to prevent an owner from evicting his tenants and demolishing his apartment building [10]. As Justice J. Grodin, of the California Supreme Court, so eloquently stated, “As is so often the case in constitutional litigation, the issues appear different depending upon one’s perspective.” [11]. In the plaintiff’s view the problem was that the City was restricting his right to “go out of business”, while in the City’s view they were just following the protocol of land use regulation to protect the little housing available during a scarce housing period. The case was decided in favor of the City, because to the court the burdens imposed on Nash’s liberty were minimal and in their view the City was rightfully protecting its limited housing supply [12].
Today large cities like San Francisco and Los Angeles have extensive Ellis Act laws, while many other municipalities have small laws either referencing the act or upholding it [13]. For example, in San Francisco landlords must file a petition to withdraw their rental unit from the market with the city’s Rent Board before any evictions can occur. These petitions typically last 120 days, after which, if there are still tenants in the building the landlord must refile the petition. This requirement is useful because although regular tenants are only given a 120-day notice, disabled and elderly tenants (over 62 years old) must be given a minimum one-year notice, forcing some landlords to have to refile up to three times [14]. Forcing landlords to refile multiple times can help tenants keep their homes because it allows for a “cooling off time” during which a landlord might change his mind about going out of the rental-property business. For an eviction to remain legal under the Ellis Act the landlord must have evicted all residents and removed all units in the building from the rental market [15]. In addition, all tenants must be informed of the eviction at the same time by being given a notice explaining their rights [16].
Anyone who violates the act (as per city ordinances) is subject to civil and criminal charges [17]. The problem with this is that, although evictions under the Ellis Act continue to grow each year (rates went from 98 to 317 between 2014 and 2015), [18] there is not much enforcement or follow up to check if evictions are being done legally [19]. Since the only way landlords are brought to justice under this act is if a report has been filed it is expected that evicted tenants track what their landlord does with the building after their eviction. If the building, still owned by the same person, goes back into the market as a rental unit, within a five-year period, tenants can go to San Francisco’s Rent Board and press charges against their old landlord [20]. Landlords found to be violating the Ellis Act must cover attorney’s fees and may pay up to triple the loss of rent control to each person evicted [21].
Tenants are recommended to keep track of the building they were evicted from because with websites like Airbnb, which allows renters to lease their place short term to tourists, some landlords have begun evicting tenants only to go rent to sites such as this one [22]. Unfortunately, Ellis Act evictions disproportionately affect working-class families in gentrified neighborhoods who have little access to legal resources or time to pursue legal action. Landlords also chose to evict lower income individuals (who are predominantly African-American and Latino [23]) in favor of affluent (often single) residents [24]. Other landlords use people’s lack of legal knowledge to scare tenants by giving them preemptive notices. The notices inform tenants of the landlords plans to file for an Ellis Eviction. Sometimes tenants misunderstand these notices and leave the unit before they are legally evicted allowing landlords to re-rent at higher prices without petitioning for an Ellis Act eviction [25].
In San Francisco, the Ellis Act was effective for about 15 years, with few evictions occurring under its mandate, but when the Dot-Com boom hit rates of evictions under the Ellis Act rose and have continued to rise as Silicon’s Valley’s technological business expansion continues [26]. This rise in evictions has become a source of debate in the Bay Area because on the one hand there are landlords who feel going out of business is a natural liberty and on the other there are tenants who feel the act is being abused by landlords looking to raise rents [27]. In response, the City of San Francisco implemented a new amendment to Section 37.9 (1980), specifically portion E which went into effect in May of 2015. This addition states that if a landlord seeks to remove rental property they must pay for relocation services and/or provide relocation assistance [28]. Regardless of the reform more and more landlords are taking advantage of the low level of enforcement of the Ellis Act (since 2006 evictions have more than doubled and continue to grow in numbers [29]), and so groups supporting tenants’ rights like the San Francisco Tenants’ Union are seeking additional reform that addresses the use of these websites and stricter enforcement of the Ellis Act [30].
Among the politicians that support reform are David Chiu [31] and senator Mark Leno [32]. In 2014 Senate Bill 1439 was brought to California Legislature by Senator Leno proposing to add Section 7060.8 to the government code already in place. SB 1439 sought to implement additional restrictions on landlords by adding a five year “holding period” which would require a landlord to own the property for at least five years before being able to evict under the Ellis Act [33]. Today these reformers rally behind SB 364, a similar bill, which like its predecessor (which fell short of being passed by one vote in the Assembly Housing Committee) [34] seeks to implement the five year “holding period” [35]. In addition, SB 364 would also limit landlords to using their Ellis Act rights once [36]. If this bill were passed it would protect tenants from real-estate speculators who make a business out of Ellis Act evictions. (Speculators buy buildings, report they are going out of business under the Ellis Act, and then repeat the whole cycle all over again [37].)
The Ellis Act was initially enacted to protect landlords from City ordinances which unlawfully forced them to stay in business [38], but today it does much more than that. The Ellis Act is used by landlords and real-estate speculators to cheat the system [39] and unfortunately those most severely affected by this are working class families and the working poor who can barely stay financially afloat in a city which continues to raise its rent as more and more tech companies move into the area [40]. Sites such as the Anti-Eviction Mapping Project help us see the growing rates of Ellis Act evictions and illustrate the growing homeless rates following an eviction. Just looking at the 2015 data we can see that there were 317 evicted units reported under the Ellis Act[41], making it evident reforms supporting more affordable housing projects are necessary in San Francisco, especially if the city is to continue to respect landlords’ rights to go out of business, while at the same time taking care of its residents.
Reform is not easy since most changes to the law could potentially infringe on citizens’ rights (landlords right to sell vs. people’s right to housing). In fact, although many tenants and landlords go to court, changes surrounding the law are mostly due to city ordinances being reformed because courts have made little legal change. To avoid infringing anyone’s rights incentives for landlords who chose to stay in business at lower rental prices should be considered. We must remember that, in addition to their civic responsibilities, landlords also have rights as business people who make a living from their property. Though the Ellis Act directly deals with landlord-tenant rights, the problem of civic responsibilities vs. personal rights has been poorly addressed; the controversy surrounding this law will continue until reform changes this.
[1] Ellis Act 1985, Section 7060-7060.7
[2] Nash v. City of Santa Monica (October 25, 1984).
[3] Ellis Act Evictions. (2016, May). Retrieved September 19, 2016, from https://www.sftu.org/ellis/
[4] Ellis Act 1985, Section 7060-7060.7
[5] Cosco, J. (2014, July 22). A 30-Year-Old Law Is Creating A Crisis In San Francisco. Retrieved September 22, 2016, from http://www.businessinsid er.com/ellis-act-ruining-san-francisco-2014-7
[6] Ellis Act Evictions (n.d.). Retrieved October 28, 2016, from http://www.antievictionmappingproject.net/ellis.html
[7] Nash v. City of Santa Monica. (n.d.). Retrieved December 3, 2016, from http://scocal.stanford.edu/opinion/nash-v-city-santa-monica-28399
[8] Protect the Ellis Act: A Landlord’s Ability to Exit the Rental Housing Business. (n.d.). Retrieved September 19, 2016, from http://www.preservetheellisact.org/
[9] Gullickson, T. (2005, February 17). New Study Calls For Ellis Act Reform. Retrieved September 21, 2016, from http://www.beyondchron.o rg/new-study-calls-for-ellis-act-reform/
[10] Nash v. City of Santa Monica. (n.d.). Retrieved December 3, 2016, from http://scocal.stanford.edu/opinion/nash-v-city-santa-monica-28399
[11] Nash v. City of Santa Monica (October 25, 1984).
[12] Nash v. City of Santa Monica. (n.d.). Retrieved December 3, 2016, from http://scocal.stanford.edu/opinion/nash-v-city-santa-monica-28399
[13] Local Resource Directory. (n.d.). Retrieved December 1, 2016, from http://www.tenantstogether.org/updates/rent-control-wins-richmond-and-mountain-view
[14] Ellis Act Evictions. (2016, May). Retrieved September 19, 2016, from https://www.sftu.org/ellis/
[15] Ellis Act 1985, Section 7060-7060.7
[16] Ellis Act Evictions. (2016, May). Retrieved September 19, 2016, from https://www.sftu.org/ellis/
[17] Fact Sheet 4 – Eviction Issues. (2010, April). Retrieved September 22, 2016, from http://sfrb.org/fact-sheet-4-eviction-issues
[18] Ellis Act Evictions (n.d.). Retrieved October 28, 2016, from http://www.antievictionmappingproject.net/ellis.html
[19] Lagos, M. (2014, December 29). S.F. fails to follow up after evictions. Retrieved November 2, 2016, from http://www.sfgate.com/bayarea/ article/S-F-fails-to-follow-up-after-rent-control-5984153.php
[20] Ellis Act Evictions. (2016, May). Retrieved September 19, 2016, from https://www.sftu.org/ellis/
[21] Lagos, M. (2014, December 29). S.F. fails to follow up after evictions. Retrieved November 2, 2016, from http://www.sfgate.com/bayarea/ article/S-F-fails-to-follow-up-after-rent-control-5984153.php
[22] Barnard, C. (2014, July 29). San Francisco renters push for crackdown on illegal vacation rentals. Retrieved November 4, 2016, from http://abc7 news.com/home/sf-renters-push-for-crackdown-on-illegal-vacation-rentals/227435/
[23] U.S. Census Bureau, 2010.
[24] Cosco, J. (2014, July 22). A 30-Year-Old Law Is Creating A Crisis In San Francisco. Retrieved September 22, 2016, from http://www.businessinsid er.com/ellis-act-ruining-san-francisco-2014-7
[25] Ellis Act Evictions. (2016, May). Retrieved September 19, 2016, from https://www.sftu.org/ellis/
[26] Gullickson, T. (2005, February 17). New Study Calls For Ellis Act Reform. Retrieved September 21, 2016, from http://www.beyondchron.o rg/new-study-calls-for-ellis-act-reform/
[27] Evictions 1980, Section 37.9 Retrieved September 16, 2016 from http://sfrb.org/section-379-evictions
[28] Senator Leno Introduces New Effort to Close Ellis Act Loophole for San Francisco. (2015, February 24). Retrieved November 1, 2016, from http://sd11.senate.ca.gov/news/2015-02-24-senator-leno-introduces-new-effort-close-ellis-act-loophole-san-francisco
[29] Ellis Act Evictions (n.d.). Retrieved October 28, 2016, from http://www.antievictionmappingproject.net/ellis.html
[30] Barnard, C. (2014, July 29). San Francisco renters push for crackdown on illegal vacation rentals. Retrieved November 4, 2016, from http://abc7news.com/home/sf-renters-push-for-crackdown-on-illegal-vacation-rentals/227435/
[31] Former Supervisor David Chiu – District 3. (n.d.). Retrieved November 1, 2016, from http://sfbos.org/former-supervisor-david-chiu-district-3
[32] Senator Leno Introduces New Effort to Close Ellis Act Loophole for San Francisco. (2015,February 24). Retrieved November 1, 2016, from http://sd11.senate.ca.gov/news/2015-02-24-senator-leno-introduces-new-effort-close-ellis-act-loophole-san-francisco
[33] Residential Real Property: Withdrawal of Accommodations, S. 1439, California Legislature Reg. Sess.
[34] Senator Leno Introduces New Effort to Close Ellis Act Loophole for San Francisco. (2015,February 24). Retrieved November 1, 2016, from http://sd11.senate.ca.gov/news/2015-02-24-senator-leno-introduces-new-effort-close-ellis-act-loophole-san-francisco
[35] Residential Real Property: Withdrawal of Accommodations, S. 1439, California Legislature Reg. Sess.
[36] Senator Leno Introduces New Effort to Close Ellis Act Loophole for San Francisco. (2015,February 24). Retrieved November 1, 2016, from http://sd11.senate.ca.gov/ news/2015-02-24-senator-leno-introduces-new-effort-close-ellis-act-loophole-san-francisco
[37] Gullickson, T. (2005, February 17). New Study Calls For Ellis Act Reform. Retrieved September 21, 2016,from http://www.beyondchron.org/ new-study-calls-for-ellis-actreform/
[38] Nash v. City of Santa Monica (October 25, 1984).
[39] Gullickson, T. (2005, February 17). New Study Calls For Ellis Act Reform. Retrieved September 21, 2016, fromhttp://www.beyondchron.org/ new-study-calls-for-ellis-act-reform/
[40] Cosco, J. (2014, July 22). A 30-Year-Old Law Is Creating A Crisis In San Francisco. Retrieved September 22, 2016,from http://www.businessinside r.com/ ellis-act-ruining-sanfrancisco2014-7
[41] Ellis Act Evictions (n.d.). Retrieved October 28, 2016, from http://www.antievictionmappingproject.net/ellis.html
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