Assemblymember Alex Lee Introduces Legislation to Deter Ellis Act Evictions by Property Speculators

For immediate release:

SACRAMENTO, CA - Assemblymember Alex Lee (D-San Jose) has introduced AB 854 to reform the Ellis Act and end the speculator eviction loophole by requiring a 5-year holding period before the Ellis Act can be invoked to evict tenants.

The Ellis Act is a 1985 California state law that allows landlords to evict residential tenants to exit the rental business. While the Act was originally intended to protect small mom and pop landlords who could no longer maintain their rental properties, the Ellis Act’s loopholes have been used to acquire rent control housing, evict tenants, and sell the property for a higher profit.

Due to a series of court decisions, the Act’s reach has been vastly expanded. Instead of requiring units to sit vacant, courts held that owners could convert the rental units to ownership. This led to speculators buying buildings and then "going out of the rental housing business" soon after. Eviction notices to long-term tenants and the permanent removal of affordable rental units followed.

Studies show that the vast majority of Ellis Act evictions transpire within the first five years of building purchases, indicating that these property owners have no intention of being in the rental business in the first place. In fact, there has been a trend of "Serial Evictors" who evict tenants from multiple buildings to convert the units to other uses, and then acquire new rental properties for the same purpose.

At 1155-1161 Alabama Street in San Francisco’s Mission District, the 1151 Alabama Development Group, LLC, headquartered in Wyoming, is utilizing the Ellis Act to evict five

Latino families which includes seniors with health problems that have been living in the units for 30-55 years. The company bought the property in November 2018 and issued Ellis notices the following March after failing to force the tenants out of their homes.

"The Ellis Act imposes immeasurable cruelty on some of our most vulnerable tenants," said Assemblymember Alex Lee (D-San Jose). "Especially during a pandemic, we cannot allow for our seniors and working families to be evicted and displaced from communities they’ve been part of for years."

Drew Hilton, who lives in Los Angeles’ Palms neighborhood, had his building sold for $1,570,000 on Aug 8, 2018, then sold again for $2,069,500 on November 6, 2020. Plans to "Ellis" the building soon followed the recent sale. Hilton notes, "I've lived here for 20 years. My wife and I have a 9-year-old in school; my dog is deaf and blind, so needless to say, I don't want to move. Rent in my neighborhood has gone cuckoo. I pay $2,000 for a 2-bedroom but across the street a 2-bedroom is $5000." Hilton’s new landlord denies the city’s Ellis Act moratorium exists, and threatens to invoke Ellis unless Hilton takes a buyout.

"While Ellis Act was originally intended to help small landlords exit the rental market, it is now used as a speculative tool that allows landlords to circumvent other eviction protections," said Assemblymember David Chiu (D-San Francisco). "We have to put in some common sense guardrails to protect tenants during this difficult time."

AB 854 seeks to end this revolving door of evictions. By imposing a 5-year holding period before the Ellis Act can be used, speculator abuse of the Ellis Act would be deterred, while the statutory right of long-term landlords to get out of the rental business would be preserved.

"Despite the historic gains we have made over the years, to build more affordable housing, we must also preserve existing affordable housing as we are losing affordable stock faster than we can replace it," said Assemblymember Bloom (D-Santa Monica). "Building more housing is important, especially as the state begins its recovery from the pandemic, families, seniors, disabled people and young working adults need housing stability. We should not be pushing them out of their homes, their communities, because of legal loopholes in the Ellis Act. This is contrary to the spirit of the Ellis Act when it was passed more than 30 years ago. AB 854 restores that spirit."

The bill is sponsored by the Tenderloin Housing Clinic and the Coalition for Economic Survival. Assemblymembers David Chiu (D-San Francisco), Richard Bloom (D-Santa Monica) and Phil Ting (D-San Francisco) are co-authors of the legislation.

Larry Gross, Executive Director of the Los Angeles-based tenants’ right group, Coalition for Economic Survival, stated, "The Ellis Act has been the number one tool used by developers that has resulted in large scale evictions, displacement and loss of rent controlled affordable housing in the City of Los Angeles. Over 27,000 rent controlled LA units have been destroyed by these developers’ speculators using the Ellis Act, most of them having only owned these properties for less than a year. AB 854 is needed to curb this harmful speculation that has only exasperated our existing affordable housing crisis."

Sarah Abdeshahian of the Tenderloin Housing Clinic echoed Gross, "THC attorneys are representing over 250 tenants facing Ellis Act evictions. Seniors and other long-term tenants should not lose their homes for speculator profits."

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Media Contact: Charlsie.Chang@asm.ca.gov