April 26, 2007
California Senate Bill 464: Additional Ellis Act Restrictions?
We’re still poring over proposed California Senate Bill 464, but if Local Impact is correct, the bill “would amend the Ellis Act so that only property owners who have owned for at least 5 years would be able to invoke the Ellis Act to evict tenants.”
The amendment would apply to those who “acquired ownership of the property on or after March 27, 2007” and also “extends from 120 days to one year the time period given to a tenant to vacate a rental property being "Ellised" . . . when the property owner's date of withdrawal from the rental market has already been extended to one year by reason of a qualified elderly or disabled tenant exercising his/her right to the extended date of withdrawal.” The Senate is scheduled to vote on the bill today.
Love it or hate it, you should at least know about it.
∙ California Senate Bill (SB) 464: Amended Bill Text [ca.gov]
∙ Learn More: Ellis Act reform! [Local Impact]
First Published: April 26, 2007 4:15 AM
Comments from "Plugged In" Readers
Does anyone see the Governor signing it?
Posted by: Henry at April 26, 2007 9:24 AM
Sorry to grammar-nazi, but it's "poring."
I'm not sure how I feel about this bill yet, but even if it's a good idea it seems like a bit of backwash from the late90s bubble finally making it to the table.
[Soon-to-be-ex-Editor's Note: Good catch. And no need to apologize.]
Posted by: EH at April 26, 2007 9:48 AM
Very interesting. This is aimed squarely at rent control cities as property owners elsewhere just serve eviction notices. In SF but I think the major legislation change was last year when any new Ellis Act properties are penalized 10 years before they can enter the condo lottery. From what I can see in the market, adding the 10 year penalty phase to a possible 5-10 year condo lottery wait makes Ellis Acting a building a losing financial proposition and hence it looks to have effectively stopped these evictions. But if this passes, that will be the silver bullet to pretty much end Ellis Act evictions in SF.
Posted by: Anon at April 26, 2007 11:19 AM
Maybe this is a naive question, but how will this bill stop any more Ellis Act evictions than under the laws that exist now?
The existing owner can Ellis Act evict everyone in the building instead of the new owner. Most existing owners owned for more than 5 years before selling. So why would this bill stop any more evictions than the current 10 year condo penalty?
Sure the costs go up for the existing owners, but so does the selling price, so what difference could it possibly make?
Posted by: tipster at April 26, 2007 11:47 AM
With this brilliant piece of legislation, I have to believe any owner of a building of 5+ years will just invoke the Ellis Act and empty out the building to increase the value before selling the property. Or, we'll see new owners turn into slum lords until they can unload their property. Supporters may view it as a strong impediment to eviction but it's only prolonging the inevitable and will further drive up prices. Cleary, it hasn't worked in SF so now trying to impose it on the entire State will suddenly produce miraculous results? Just another artificial tenant protection guaranteed to price potential homeowners out of the marketplace.
As well, I'd say flat property values have stemmed evictions in SF rather than any legislation from the board of supervisors. Plus, a lot of people don't care if their TIC unit won't be eligible for condo conversion when banks are offering individual TIC loans.
Posted by: rut at April 26, 2007 1:34 PM
This legislation, if passed, would be a disaster. Especially for contractors who do us a service by picking up old, beat up, crappy buildings with lifelong tenants, emptying them, remodeling, and selling as TICs (condos if lucky)to the hundreds of buyers missing out on property after property. The bottom line is that property owners have less rights than their tenants. That is just plain wrong. That is if you have an interest in real estate. If you have an interest in tenancies and your rights as a tenant getting stronger, you should be doing back-flips.
Posted by: sfnewsletter at April 26, 2007 1:55 PM
"Especially for contractors who do us a service by picking up old, beat up, crappy buildings with lifelong tenants, emptying them"
These "lifelong tenants" are people, the last time I checked. You make it sound like they're a disposable commodity.
Posted by: anonymous at April 26, 2007 3:45 PM
Tenants are actually a form of parasitic organism, much like the lamprey. They feed on the ruling class and clog the streets with their bicycles. It's not all bad news, though-- in certain neighborhoods they can be harvested and used to temporarily support the loans on poorly executed condo developments until the sale market improves.
Posted by: DarnTenants at April 26, 2007 5:10 PM
That is not the intention at all. We understand these are people. What we don't understand is how these people have more rights than the people that own the buildings in which they reside. Nine times out of ten the developers and landlords offer to buy them out with pretty substantial amounts of money that would more than cover their costs for relocating plus a couple years worth of rent, because contrary to popular belief, Ellis Acting is not the be all end all, and not what developers strive to do.
Most of the time tenants will take the money and run, but there are many, many a tenant that feel it is their God given right to be in, and remain in a property that is not theirs. If someone is Ill and not able to be relocated that is a different thing, and usually developers and landlords are sympathetic and work with them, and usually, the reasonable tenants cooperate and move.
Think of it this way. If you and a family member wanted to buy a property, and you found the perfect one that happened to be tenant occupied, assuming you'd live in one unit, the family member in the other, wouldn't you like to both be able to move in? Not possible if you have a protected tenant. You'd only be able to vacate one unit. Then what do you do? I think you'd probably Ellis Act it to get yourself in there, because you'd think, "I own this place, I should be able to move in." Right?
Furthermore, Ellising a building takes it off the rental market and that hurts the future of the property, should it not be able to sell in the future as TICs, you can't very well sell the whole building to an investor, as he/she wouldn't be able to rent it, and if they did, they'd have to offer that nicely remodeled swanky pad to that protected tenant at their previous rent. Sound like fun?
Posted by: sfnewsletter at April 26, 2007 5:49 PM
It seems to me that Mark Leno proposed something very similar just a few years ago that didn't even make it out of committee. And even if it passes, Arnold (a former landlord himself, I gather) will veto it in a heartbeat
Posted by: zzzzzzz at April 27, 2007 4:07 PM