In 1986 the California Legislature passed the Ellis Act. The legislation was designed to allow property owners in rent controlled jurisdictions to withdraw their unit from the rental market if they chose to no longer be in the rental business or they wished to occupy the property themselves. Certain restrictions were included to prevent owners from using the Ellis Act to merely remove an undesirable tenant or to maneuver around the controlled rental rate.
Removing a tenant by using the Ellis Act is not a swift or inexpensive remedy. The Ellis Act requires a 120 day notice of intent to withdraw the unit from residential housing use. The property owner is required to pay relocation or "displacement" costs to the tenant. A minimum one year notice to withdraw the unit is required if the resident of the unit is over 62 years old or disabled. Additional restrictions are in place for owners who wish to reinstate the unit as a rental property down the line. Certain limitations and costs imposed can differ in each jurisdiction. Clearly, anyone contemplating using the Ellis Act to remove a tenant and take their property off the rental market should consult an experienced attorney.
In the meantime, Senator Mark Leno has proposed amendments to the Ellis Act in a pending bill, SB 1439, that is being considered by the legislature at this time. This change would apply only to San Francisco City and County. However, property owners are concerned that any change in one county could open the door to additional proposed restrictions throughout the state.
Senator Leno has proposed the following amendments;
An owner cannot file a notice to withdraw their unit from the rental market unless all owners have been owners of record for at least five continuous years. Each person with ownership interest must be identified. If an owner files a notice to withdraw their unit from the rental market, and subsequently ฝากขายคอนโด acquires a new rental property with 10 years of that filing, the owner cannot withdraw the new property by use of the Ellis Act. This would include any person with an ownership interest in the first property.
Supporters of SB 1439 allege that more than 300 units were taken off the rental market. During what time frame or how many were due to Ellis Act evictions is not clear in their statement. According to the most recent U.S. Census, the County of San Francisco has 214,979 renter-occupied units. 300 units out of 215 thousand units hardly seems an abuse of the legislation.
Those who oppose SB 1439 have a long list of concerns, such as limiting the use of the Ellis Act to one property; local government forcing owners to stay in the rental business and discouraging investment in rental housing. This bill could adversely influence the market value of tenant occupied property. Two identical properties, one owner occupied and one tenant occupied, could have dramatically different market values.
While it's a noble cause to preserve long-term, low-cost housing, this bill will diminish the desire to invest in rental housing properties in San Francisco County.
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