Ellis Act

On September 10, Mayor Daniel Lurie declared a rent emergency and announced six proposed ordinances backed by more than $30 million.

For owners, two matter most, a proposed 10% annual cap on banked rent increases for rent-controlled units and a 25% increase in Ellis Act relocation payments, roughly $3,000 per tenant.

These are proposals moving through the Board of Supervisors, not settled law, so track the legislative calendar rather than assume the terms as announced.

And one caveat on our own number.

There are live webinar and in-person seminar options available, and you can get details and register at Spidell.com. A California appeals court has dealt another blow to San Francisco's Proposition M, which levied a tax on owners of empty San Francisco apartments vacant for six months or more.

The first district court of appeal upheld a prior decision that prevents Proposition M from taking effect, stating that it conflicts with the Ellis Act, which is a 1985 state law that protects an owner's right not to offer residential property for rent.

San Francisco's Measure M was passed by voters in 2022, took effect in 2024, and was effective through 2053.

Otherwise known as the Empty Homes Tax, the measure levied an annual tax on owners of residential units that remain vacant for more than 182 days out of the year.

The measure cited tens of thousands of vacant residential units in San Francisco as of 2019 and limited the vacancy tax to buildings with more than two residential units.

The proceeds of the tax were to be used for affordable housing and low-income rent subsidies.

However, the Ellis Act prohibits any requirement for an owner to offer or to continue to offer accommodations in the property for rent or lease, which embodies a statewide policy that public entities cannot compel residential owners to remain landlords.

It grants property owners both the right to enter the rental market and the right to exit the rental market, plus the right to remain out of the market entirely.

And so, you know, pay or play.

An additional $3,000 to be paid to tenants displaced by the Ellis Act and other protective measures.

More than 1,000 eviction notices have been filed this year in San Fran, putting it on pace for the most in nearly a decade.

Rent increases and rent control departments would be capped at 10% per year.

So since rents are rising, there's a lot of landlords who might want to charge, especially tenants who have lived there for decades or are covered by rent control.

They may want to charge market rate rent to a new tenant, or they might want to pursue a no-fault eviction through the Ellis Act if they want to take the entirety, all of the properties units off the market or, say, move into the building.

So these landlords are allowed to offer tenants a buyout.

And I think the most that I saw, the people that I talked to, they accepted $100,000 to move out of their five bedroom.

They may want to charge market rate rent to a new tenant.

Or they might want to pursue a no-fault eviction through the Ellis Act if they want to take the entirety, all of the properties units off the market or, say, move into the building.

These landlords are... allowed to offer tenants a buyout.

And I think the most that I saw, the people that I talked to, they accepted $100,000 to move out of their five bedroom.

Um, and you know, we've seen that when tenants organize in their buildings, they can actually, um, prevent these kinds of no fault evictions.

They can stay housed for, for years.

Um, you know, the, the danger with a buyout is that it's an incredibly coercive process because of the Ellis act.

Um, the, you know, the leverage behind a buyout for a landlord is the threat of, of something worse, which is a no fault eviction that has, um, smaller relocation fees than what a tenant would get in a buyout.