Bill Closing Ellis Act Loophole for San Francisco Clears First Committee

April 08, 2014

SACRAMENTO – Legislation that would help mitigate the negative impacts of a recent surge in Ellis Act evictions in San Francisco passed the Senate Transportation and Housing Committee today. Senate Bill 1439, authored by Senator Mark Leno, closes a loophole in the Ellis Act that allows speculators to buy rent-controlled buildings in San Francisco and immediately begin the process of evicting long-term renters.

“California’s Ellis Act was specifically designed to allow legitimate landlords a way out of the rental business, but in San Francisco this state law is being abused by speculators who never intend to be landlords,” said Senator Leno, D-San Francisco. “As a result, longtime tenants, many of them seniors, disabled people and low-income families, are being uprooted from their homes and communities. The five-year holding period in my bill would prevent these devastating evictions from forever changing the face of our diverse city.”

SB 1439 authorizes San Francisco to prohibit new property owners from invoking the Ellis Act to evict tenants for five years after the acquisition of a property, ensures that landlords can only activate their Ellis Act rights once, and creates penalties for violations of these new provisions. The bill is co-sponsored by San Francisco Mayor Edwin Lee and Tenants together. It’s also supported by numerous local businesses, labor groups, elected officials and statewide tenant advocates.

“Senator Leno’s bill gives us the critical tools we need to stop unchecked real estate speculators from taking advantage of longtime San Francisco renters,” said San Francisco Mayor Ed Lee. “Together, we have built a large coalition of tenants, labor and business leaders to fight this battle in Sacramento to keep working families and longtime San Franciscans in their homes.”

A new report from Tenants Together, California’s statewide organization for renters’ rights, reveals that most Ellis Act evictions in San Francisco have been initiated by investors, not landlords.

“It is clear that the Ellis Act is being used by speculators as more than 50 percent of the evictions are commenced within the first year of a property’s ownership, and nearly 80 percent started within the first five years,” said Dean Preston, Executive Director of Tenants Together. “Our research found that a third of all Ellis Act evictions come from investors who have entered and exited the rental business more than once, evicting residents from multiple buildings.”

Ellis Act evictions in San Francisco have tripled in the last year, and hundreds of properties were taken off the rental market. This spike in evictions has occurred simultaneously with huge increases in San Francisco property values and housing prices.

Enacted as state law in 1985, the Ellis Act allows landlords to evict tenants and quickly turn buildings into Tenancy In Common (TIC) units for resale on the market. In San Francisco, the units that are being cleared are often rent controlled and home to elderly, disabled and working class Californians. When these affordable rental units are removed from the market, they never return.

Senate Bill 1439 passed the committee with a 6-4 vote. It will be heard next in the Senate Judiciary Committee.

For media inquiries, contact Ali Bay at ali.bay@sen.ca.gov or (916) 651-4011.