The Ellis Act, adopted in 1985, establishes limits on how cities can regulate the way landlords leave the rental business in cities with Rent Stabilization and/or Just Cause Ordinances.

San Jose is the only jurisdiction in Santa Clara County with a local Ellis Act ordinance. As of mid-2020, the city is in the process of amending its ordinance.

Key Terms in State Law:

  • Noticing requirements– These establish an eviction timeline for tenants and requires landlord to engage tenants throughout the eviction process.
  • Relocation assistance– This most often takes the form of monetary benefits to evicted tenants to assist them with transitioning to new housing.
  • Right of return– If a landlord chooses to return units to the rental market, original tenants have the right to return to their units.
  • Re-control– Requires that any new apartments built on site by the owner be subject to rent control. Seen as a return to the rental market, even when the original building is demolished.

Components of the Ellis Act:

  • Landlords interested in removing units from the rental market must remove all units at the same time.
  • Landlords are restricted from re-renting units, unless the units are re-rented at the last rent charged, for a period of 5 years.
  • A building is considered withdrawn from the rental market 120 days after a “Notice of Intent to Withdraw” is submitted to the city.
  • Eviction notices cannot expire before the 120-day intent period concludes.
  • Within a 15-day period after an eviction notice has been submitted, landlords must provide information to tenants regarding re-occupancy and relocation assistance rights.
  • Senior or disabled tenants must be provided a one-year notice period.

Those most at risk for displacement are often long-term renters, disproportionally those of low-income who are disabled, elderly, households of color, and/or families with children. When tenants are forced to move for no-fault eviction reasons, accessing funds to secure new housing quickly is critical but often challenging, forcing many to live in sub-standard conditions or move out of the area. While the Ellis Act is an attempt to open up opportunities for landlords, it has also led to speculation and has been considered a loophole in rent control.  The Ellis Act is considered a just cause for eviction and speculators take advantage of this by purchasing rent-controlled apartment complexes, evicting tenants, and converting the apartments to higher-priced for-sale condos.

To limit speculation, cities can establish ordinances that place restrictions on a landlord’s ability to go out of business. These ordinances lay out the process a landlord must follow to remove their units from the rental market.

 

SV@Home’s Position on Local Ellis Act Ordinances

Relocation Benefits

Some developers pay generous benefits to tenants evicted under the Ellis Act. However, it is in a city’s best interest to establish a baseline expectation for all projects.

  • Moving costs should be made available to all tenants without regard to current income.
  • Relocation payments should be provided to lower- and moderate-income households.
    • Set at a base amount of first and last month’s rent plus security deposit
    • Provide for a larger sum for vulnerable populations, including older, people with disabilities, and families with children, who face additional hurdles in finding new housing they can afford

Right of Return

Right of Return provisions create an opportunity for displaced persons to return to their neighborhoods after properties are improved and released again for rental occupancy. Requiring that an ordinance include these provisions limits a landlord’s capacity to evict rent controlled residents and immediately flip the property to market-rate rents. This provision is explicitly enumerated and common in other California cities with Ellis Act Ordinances.

  • Within a period of 5 years, if a landlord chooses to return the property to the rental market, they must provide an opportunity to the previous tenants to return at the same rent they paid when relocated.

Re-Control

Re-control decreases future displacement risks for households who rent the new rent-controlled units by restricting rent increases per the local rent stabilization ordinance.

  • When a building is demolished and rebuilt as market-rate rental property, a fixed percent of the new units – generally 100% — or at minimum a 1:1 replacement of units in the original building, should be subject to re-control.

Creating Affordable Housing

An ordinance may allow replacement of some or all lost units with deed restricted affordable units.

  • This provides a property owner with an alternative compliance option if they choose, rather than re-control. This option creates new affordable housing opportunities, encourages development at higher densities, and can tie to other policies, including inclusionary housing ordinances.

Additional Resources

San Francisco Tenants Union- Ellis Act Evictions

Ellis Act: State Law Restricting Change in Use of Rental Property

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