Category Archives: Ellis Act

Ballinger v. City of Oakland: Pacific Legal Foundation Sues City of “Relocation Assistance Payments”

The Ballingers, a military couple, leased their single family home in Oakland when they were reassigned to Washington D.C. for service. Anticipating they would return to the Bay Area within a few years, they negotiated a term lease that would become a month-to-month tenancy around that time. However, after they leased their home (but before they had planned to move back in), the City of Oakland instituted a “relocation assistance payment” regulation, requiring them to pay their tenants in order to terminate the tenancy and move back in.

The Pacific Legal Foundation represents the Ballingers in their lawsuit against Oakland, alleging that the ordinance constitutes a taking/exaction of private property and that it violates their rights under the Ellis Act.

However, relocation assistance payments that are reasonable have been upheld as consistent with the Ellis Act (cities are actually allowed to mitigate the adverse impacts of Ellis Act displacement, provided the payments do not impose a “prohibitive price“).

That said, the case law interpreting the mitigation payments addresses the Ellis Act only, not the 5th Amendment, so there may be something to the claim that taking money from a landlord to give to a tenant in exchange for allowing the landlord to retake possession of her property is an unconstitutional “taking”. And PLF may have to focus on the constitutional claims, rather than violations of state law, as their clients actually performed an “owner move-in” eviction rather than an Ellis Act eviction.

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Los Angeles Times Reports on Tenant Choices in Return of Ellis-Withdrawn Building to Rental Market

The Los Angeles Times reports on the decisions of tenants, displaced by the Ellis Act, to return to their former units later re-offered for rent.

While the Ellis Act is colloquially described as “going out of the rental business”, it actually sets the standards for cities to implement rules on withdrawing from the market and going back into business later. For instance, a displaced tenant may be re-offered their former unit if rented within ten years of withdrawal, and within five years, they benefit from their old rent-controlled rental rate.

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Legal Q & A: How Expensive Is an Ellis Act Eviction?

A. An Ellis Act eviction will cost a fair amount of money, time and your patience. Let’s start with the basics: the Ellis Act is a state law that requires cities to allow landlords to stop being landlords – specifically by withdrawing their property from the residential rental market. A landlord who withdraws their property can terminate tenancies. This requires an “eviction notice” and a handful of other documents, the validity of which are often measured with exacting standards. Landlords should hire qualified counsel to do this work. The first expense will therefore be your legal fees and tasks associated with preparing for a successful Ellis. These will vary with the size of your building, the quality of paperwork in the management file, and possibly the need to obtain insurance, adjust record title or even refinance with a suitable lender.
Continue reading Legal Q & A: How Expensive Is an Ellis Act Eviction?

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SF Chronicle Reports on Court of Appeal Reversal of Ellis Act Judgment for Property Owner so Jury Can Hear Evidence of Alleged “Sham Transfer” to Co-Owner

Update: Division Five has certified Coyne v. De Leo for publication.

The San Francisco Chronicle reports on a recent unpublished ruling from Division Five of the First District Court of Appeal, reversing a judgment in favor of an Ellis Act-invoking landlord, on the basis that the trial court improperly excluded evidence of a “sham transfer”.

The Ellis Act requires property owners to withdraw all “accommodations” (i.e., residential rental units) from the market and to terminate all such tenancies. A landlord may not terminate some accommodations and leave others. (This is a common sense rule that allows a landlord to “go out of business” but not to evade rent control by evicting low-paying tenants and keep the market rate ones.)

In Coyne v. De Leo, the owner (Coyne) invoked the Ellis Act on a four-unit building with a single “tenant”. Other units were occupied by family members and friends – including one friend, Maria Esclamado, who was a former tenant until Coyne made her an owner so that she could participate in the Ellis withdrawal and remain in her home.

The tenant (De Leo) wanted to introduce evidence about this “transfer of ownership” to the jury. He argued that the transfer – with seller financing, a monthly payment conspicuously similar to the former “rent” payment, and an eventual “quitclaim deed” back to Coyne when she moved – was suspicious.

The Chronicle quoted Coyne’s attorney, Justin Goodman, as saying that Esclamado “received title to the property and had all the benefits of title” while “Martin (Coyne) took all the risks”, predicting that Coyne would prevail at a retrial even with the evidence that was previously barred.

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How Long Does an Ellis Act Eviction Take?

The short answer is that it takes 120 days to terminate a tenancy, unless the tenant is at least 62 years old or is “disabled” (as defined by the Ellis Act and housing discrimination law), in which case, it takes a year.

The longer answer:
In general, month-to-month tenancies in California can be terminated on thirty days’ notice. Residential tenancies older than a year require sixty days instead. This is still true for any non-fault-based eviction in a city with eviction control. However, in 1999, the Ellis Act was amended so that tenants receive at least 120 days notice, with the option to extend. And, if at least one tenant claims an extension, the landlord can extend the withdrawal date of every other unit to match. (In other words, the landlord can “go out of business” as to the entire building at the same time.)

Of course, this just answers the question of how much notice your tenant receives before their tenancy is terminated. In San Francisco, the Ellis Act has become more of a political issue than a legal one. (Ellis-displaced tenants receive priority affordable housing, and they have received city-funded legal defense long before the passing of Proposition F.) More often than not, tenants hold over after their tenancies are terminated, aiming to defeat the eviction lawsuit and preserve their tenancy. Sometimes they are successful.
Even when the landlord is successful, they should expect to add five months of intense litigation to their timeline to recover possession.

Preparing for an Ellis Act eviction may require a review of the history of the tenancy (including changes in occupancy), clarification of the form of record ownership, changes in insurance coverage, and even refinancing, if the lender won’t allow Ellis evictions. In other words, the best time to start this process was yesterday. The second best time is right now.

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Will a “Protected Tenant” Prevent Me from Using the Ellis Act in San Francisco?

No, it will only delay your efforts by about eight months. The concept of a “protected tenant” has nothing to do with the Ellis Act. The term comes from one of San Francisco’s other just causes for eviction – the “owner/relative move-in eviction”. Cities may regulate the substantive grounds for eviction of residential tenants, but for constitutional reasons, they must allow at least some mechanism for an owner to live in their own home (or else the tenant’s permanent physical occupation is a “taking” in violation of the Fifth Amendment).

However, San Francisco has been given significant leeway in preventing certain kinds of tenants from being the subject of owner move-in evictions (the most recent being the expanded eviction protection for “educators”, who may not be evicted during a school term). The OMI/RMI statute has evergreen protections as well. For instance, if a tenant is elderly (60+) or disabled, and has lived there for ten years, they cannot generally be the subject of an OMI/RMI. (A tenant also earns this protection if they are “catastrophically ill” and have lived there for only five.)

Now, these provisions do not apply if the landlord only owns one unit in the building (e.g., a condominium) or where the landlord already lives in the building, and each other unit is occupied by a “protected tenant”, and the landlord wants to relative move-in their 60+ relative. (The landlord (or their listing broker) will commonly serve a special form of estoppel certificate asking about a tenant’s protected status. Failure to respond will actually prevent the tenant from raising the defense.)

The Ellis Act, on the other hand, is the only substantive ground for eviction regulated at the state level, and it provides landlords the “unfettered right” to go out of business. Tenants who are at least 62 or are disabled and who have lived in their rental units for at least a year may make a one time claim of extension of the termination date of their tenancy (from 120 days to a full year from the initial filling of paperwork).

While there are no absolute defenses to the Ellis Act, the road to going out of business remains perilous. Especially where it may take a full year to test your paperwork, there is no substitute for qualified counsel.

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Small Property Owners of San Francisco v. City and County of San Francisco (2018) – Cities May Not Impose Land Use Penalties on Property Owners Who Have Invoked the Ellis Act

“By imposing a 10-year waiting period on alterations to non-conforming units where property owners have exercised their Ellis Act rights, the ordinance penalizes property owners who leave the rental market. The ordinance does not regulate the particulars of the remodeling of a nonconforming unit, but rather prohibits any such changes for a period of 10 years after the property owner exits the rental business. By imposing such a prohibition on property owners who have left the rental market, the ordinance challenged here improperly enters the field of substantive eviction controls over such property owners.”

In SPOSFI v. CCSF (2018), the Small Property Owners of San Francisco challenged San Francisco Ordinance 286-13. Prior to that ordinance, Section 181 of the Planning Code prohibited the “enlargement, alteration or reconstruction” of nonconforming units. (These are legally constructed units in buildings that were “down-zoned” after the fact. As this is essentially a “math” problem, a property owner would designate the particular unit in the property that gets the “nonconforming” designation.)

Ordinance 286-13, however, allowed such modifications within the existing building envelop, so long as residential use was principally permitted in the zoning district and the owner had not performed a non-fault eviction at the property. The owner could not make any changes for a period of ten years following a non-fault eviction.
Continue reading Small Property Owners of San Francisco v. City and County of San Francisco (2018) – Cities May Not Impose Land Use Penalties on Property Owners Who Have Invoked the Ellis Act

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SocketSite.com Reports on Ten Years of SF Eviction Notice Statistics: Ellis Act Is Up for 2017

SocketSite.com reports the ten-year trend of eviction notices filed with the San Francisco Rent Board. The trend for 2017 is a decrease across the board, with one exception – the Ellis Act.

SocketSite doesn’t express an opinion on the cause for the trend (at least until you get to the comment’s section). However, a recent decline in breach/nuisance evictions may be attributable to the 2015 Jane Kim Amendment (which heightened both the pleading standard and the substantive threshold for a landlord to prevail here). The recent decline in OMI/RMI evictions may be because of the uncertainty of the “educator” amendment or the more stringent enforcement of fraudulent owner move-in evictions. Ellis Act evictions may be up in recent years (compared to 2013) following a dip during the uncertainty created by the “Campos I” and “Campos II” enhanced relocation assistance payment legislation.

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City of West Hollywood v. Kihagi (Unpublished) – Application of Ellis Act Constraints in the Context of Settlement Agreements

[UPDATE: This case was certified for publication on 10/26/17.]

Infamous landlord Anne Kihagi tested the limits of Ellis Act re-rental constraints, as illustrated in the latest appellate decision chronicling her exploits, City of West Hollywood v. Kihagi. While withdrawing an 8-unit, rent controlled property in West Hollywood from the rental market, Kihagi harassed one of the tenants, prompting the City of West Hollywood to prosecute, leading to a settlement agreement governing the application of the Ellis Act.

For purposes of the Ellis Act, the property featured several “classes” of rental units: four were unoccupied, four were occupied, and one of the occupied units claimed an extension of the withdrawal date (as tenants who are disabled or at least 62 are entitled to do). The Ellis Act uses a floating definition for the “date of withdrawal”, which could be as early as the landlord files the notice of intent or as late as the extended termination of tenancy. Further, while the Ellis Act imposes vacancy control constraints for five years and requires a “first right of refusal” for ten, these restrictions do not appear to apply to rental units that are unoccupied at the time of withdrawal. (For those, arguably only a two year re-rental restriction applies – or perhaps even no restrictions at all.)

Despite entering a settlement agreement with potentially more restrictive terms, Kihagi re-rented units after the five-year vacancy control restrictions would have expired under the Ellis Act. The Court of Appeal first noted that landlords’ agreements to waive rights under the Ellis Act are void, citing Embassy LLC v. City of Santa Monica (2010) 185 Cal.App.4th 771, 777, but ultimately determined that Kihagi had re-rented outside of the Ellis Act constraints.

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