What is it?
On the books since 1986, the Ellis Act allows California landlords to evict tenants in order to go out of business and remove units from the rental market, usually with the intent of selling them.
The law prohibits local governments from forcing rental property owners to continue offering their housing for rent. However, it does allow local governments to impose a variety of requirements on such property owners, which can include providing tenant relocation assistance, giving specific notice periods and having deed restrictions on future use of the property. For example, a city could require an owner who re-rents “Ellised” property within a certain period of time to first offer it to any displaced former tenants, at the original rental rates.
There is little comprehensive data on Ellis Act evictions statewide. But in cities like San Francisco, with high rents and strict local rent control laws, Ellis Act evictions often go up during periods when home sales increase. That was the case during the dot-com boom that ended in 2000 and again during the housing bubble that peaked in 2005. Ellis Act evictions are up again now as the city’s real estate market recovers from the recession and as the tech boom spurs demand for housing.
The chart below, by San Francisco’s Dan Grover, shows Ellis Act evictions in the city since 1998, comparing rates with all no-fault evictions (including Ellis but also those due to capital improvements, demolition, owner move-in or substantial rehabilitation) during the same period. The chart also shows all for-cause evictions, in which tenants violated rental agreements. The chart (also available in a larger version) is overlaid with San Francisco median home price rates. Use the drop-down menus to change the variables, and mouse over the bars to see eviction numbers by year.
Last week, San Francisco’s budget analyst issued a report on the number of Ellis Act evictions in the city by neighborhood (among other housing displacement issues). The report found that “while Ellis Act evictions have occurred in many neighborhoods over the last five years, approximately 64.1 percent of them occurred in” seven neighborhoods, which also saw increases in assessed property values and home prices: Inner Mission, Russian Hill/Polk Gulch, Castro/Eureka Valley, Outer Richmond, Inner Richmond, North Beach, Haight Ashbury/Western Addition.
The following map uses data from the report on Ellis Act evictions in most (but not all) San Francisco neighborhoods from 2009 to 2013.
Adopted in direct response to a 1984 California Supreme Court decision, the Ellis Act was a backlash to strict local rent control laws.
In 1979, following a wave of condominium conversions in Santa Monica that removed many rental units from the market, voters adopted a measure meant to preserve the city’s remaining rental housing stock. It required that landlords who sought to exit the rental market first obtain a permit that could only be issued if a strict set of conditions were met. Among them, landlords were required to prove that the unit in question was not occupied by a person of low or moderate income and to demonstrate that the unit’s removal from the rental market would not adversely affect the city’s housing supply.
Jerome Nash, a 17-year-old student whose mother had bought him a $260,000 rental property in Santa Monica before the ordinance was adopted, sought to get out of the rental business and demolish the building. He initially applied for a permit to do so, but ended up suing the city to circumvent the process. In court documents, he’s quoted as stating:
“There is only one thing I want to do, and that is to evict the group of ingrates inhabiting my units, tear down the building, and hold on to the land until I can sell it at a price which will not mean a ruinous loss on my investment.”
Nash prevailed in trial court and on appeal. But his case was ultimately dismissed by California’s Supreme Court in 1984, which ruled in Nash v. City of Santa Monica that the burdens imposed on Nash’s rights as a landlord were minimal and that they necessarily served the city’s greater goal in protecting its scarce stock of rental housing.
A year later, however, the state Legislature stepped in. Responding to the Nash decision, Sen. Jim Ellis, a Republican from San Diego, introduced a bill to prohibit any public entity from “compel[ling] the owners of any residential real property to offer, or continue to offer, accommodations in the property for rent or lease.” The bill, now known as the Ellis Act, was passed and signed into law.
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