Ellis Act

The Ellis Act is a law in the U.S. state of California which says that landlords have the unconditional right to evict tenants to “go out of business.” For an Ellis eviction, the landlord must remove all of the units in the building from the rental market, i.e., the landlord must evict all the tenants and cannot single out one tenant (for example, with low rent) and/or remove just one unit out of several from the rental market. The Ellis Act is included in the just causes for eviction under the Rent Ordinance as Section 37.9(a)13).

Ellis Act evictions generally are used to change the use of the building. Most Ellis evictions are used to convert rental units to condominiums. If an Ellis eviction is intended to convert the apartments to condos they are referred to as “Condo & TIC Conversions.” When Ellis evictions are used to convert multi-unit buildings into large single family homes, they are referred to as “Mergers & Demolitions.” The act is named after Republican State Senator (1981-1988) James "Jim" L Ellis, a former representative of San Diego.

The Ellis Act "was adopted by the California Legislature in 1985 after the California Supreme Court ruled that landlords do not have the right to evict tenants to go out of the business of being a landlord".

Municipalities can regulate the Ellis Act eviction process to some extent. Those that do typically restrict the property from use as a rental property for a period of time and require that it go back under rent control provisions if it is returned to the rental market.

• San Francisco requires compensation of at least $5,894 and up per tenant to more than $18,000 per unit (as of March 2016) depending upon various factors like age, disability, and whether a unit has school-aged children occupying the targeted unit. An amendment to the Ellis Act for San Francisco County is pending in the California State Legislature. SB1439, if enacted would require new property owners to wait five years before evicting the current tenants.
• Santa Monica requires an owner get a re-occupation permit before the building can be used for any purpose following Ellis Act evictions.
• Los Angeles applies rent control provisions to units built on the same property up to five years later.

Tenant groups in San Francisco and Los Angeles claim that California landlords commonly misuse the Ellis Act "to bypass rent control" and cash-in during peak housing market periods by managing rent-stabilized properties to vacancy, after which they might demolish buildings to build pricey condominiums, retenant newly vacated units at top-market rents, or resell buildings at much higher prices than they bought once they are no longer value-encumbered by the presence of long-term, rent-stabilized tenants.