An appellate court Monday upheld important rights of San Francisco rental property owners under the state’s Ellis Act, a state law that allows property owners to leave the rental housing business.
The Ellis Act ensures a property owner’s ability to take a building off the rental market and convert the units to condominiums or single-family homes.
The First District Court of Appeal in San Francisco affirmed Monday that a 2014 ordinance passed by the San Francisco Board of Supervisors would have violated the Ellis Act.
In the 3-0 ruling, Justice Martin Jenkins said that the ordinance “prevents landowners from exercising their right to simply go out of business,” the San Francisco Chronicle reported.
The San Francisco ordinance would have prohibited owners of multi-unit buildings from combining units in a building for 10 years following an Ellis eviction or for five years following an owner-move-in eviction. It would have prevented families who own a building from creating a home that meets their needs.
In response to the ordinance, the San Francisco Apartment Association, which is a chapter of CAA, and two other organizations filed suit, claiming the legislation violates building owners’ rights under Ellis Act. A Superior Court judge agreed, as did the Court of Appeal on Monday.
Before the passage of the Ellis Act in 1985, rent-controlled cities — Santa Monica in particular — were forcing landlords to stay in business, even if they were losing money or experiencing other hardships. The Ellis Act has blocked this type of government intrusion, providing a veritable escape hatch for owners who can no longer thrive – or even survive — in rent-controlled communities.