Ellis Act evictions are nothing new. The state law was enacted in 1985 as a means for landlords to “go out of business” and clear a building of tenants in the process. Landlords are required to pay compensation to each tenant, to a maximum of some $17,700 per unit.
But in the frenzy that is the San Francisco housing market, the law has been widely abused. A landlord who has sat on a house in the Mission District for decades and watched its value skyrocket in the last five years might decide to cash out — and a buyer, usually someone experienced in real estate, comes along to take the building off his hands.
The new landlord then uses the Ellis Act to evict tenants, often just months after the sale. Danny Sun, for instance, waited eight months to file eviction notices at 2820 Folsom St.
Once tenants are evicted, the landlord can remodel the building and sell it as a tenants-in-common, a homeownership arrangement that’s required because the Ellis Act takes the property off the rental market. The landlord makes his profit, and walks away.
From March 2015 to February 2016, there were 154 Ellis Act eviction filings in San Francisco, a small portion of the 2,376 total eviction filings that year but a 36 percent increase from the 113 the year before.
From July 1985 to October 2015, there were 1,477 Ellis Act evictions filed with the Rent Board, affecting 5,387 units.
The Mission District has been the San Francisco neighborhood with the most Ellis Act evictions filed since 2010.
“But in the frenzy that is the San Francisco housing market, the law has been widely abused. A landlord who has sat on a house in the Mission District for decades and watched its value skyrocket in the last five years might decide to cash out — and a buyer, usually someone experienced in real estate, comes along to take the building off his hands.”
Seems that the Ellis Act is not being “abused” at all but rather serving exactly the purpose it was intended for — allowing landlords to cash out.
Sometimes it not even to cash out. I have seen situations are the low rent does not even cover the operating expenses, and so there will be a lifetime subsidy to the tenant unless you get out – either Ellis, or sell and let the new owner Ellis the building. I think if there was a way to adjust the rent to something closer to reasonable, owners wouldn’t be forced to use the Ellis provision.