Sacramento Patches Loopholes in Ellis Act with AB 1399

On Thursday, September 5, the California State Assembly approved AB 1399, Assemblymember Richard Bloom’s (D-Santa Monica) measure to close loopholes in the Ellis Act that have allowed some landlords to displace tenants and raise the price of rent control units. Though misuse of the Ellis Act has existed for decades, the current housing crisis has exacerbated the problem.

“The housing crisis has left tenants increasingly vulnerable in the face of rapidly escalating housing costs,” said Assemblymember Bloom. “Though insulated from some of these price increases, tenants in rent control units are at risk of displacement by landlords who want to exploit loopholes to raise rents to market prices. AB 1399 protects these tenants and prevents the loss of affordable housing in cities with rent control.”

The Ellis Act gives rental property owners the right to exit the rental housing market, but also places conditions and restrictions on landlords who evict tenants in order to exit the market. These conditions include a requirement to notify tenants 120 days prior to withdrawing a unit, with a longer 1 year notification requirement for tenants who are disabled or above the age of 62. The Act also restricts when owners can re-enter the market, what price they can re-rent units at when they re-enter, and requires that all units in a building be removed simultaneously. As the housing crisis has driven up the market rate for rental units, landlords are increasingly subverting the Ellis Act and using it to evict tenants living in rent control units. These landlords often withdraw individual units from the rental market and return them in a piecemeal manner to avoid the Act’s restrictions and to evade rent control. In the Los Angeles area alone, over 20,000 rent-stabilized units have been removed from the rental market since 2001, with tens of thousands of tenants evicted in the process.

AB 1399 clarifies the Ellis Act by setting one withdrawal date for a property; by clarifying that the date on which the accommodations are deemed to have been withdrawn from the rental market is the date on which the final tenancy among all tenants is terminated, and clarifies that owners may not pay prior tenants liquidated damages in lieu of offering them the opportunity to re-rent their former unit.

The bill is supported by a number of organizations, including the City of West Hollywood, which has long been a champion of affordable housing.

“West Hollywood is very pleased to see AB 1399 by Assemblymember Richard Bloom approved by the Legislature” said West Hollywood Mayor John D’Amico. “The City of West Hollywood has long advocated for fair housing and tenant-related laws. AB 1399 will prevent abusive practices by those landlords who look to take advantage of legal loopholes to evict tenants from their homes. We commend Assemblymember Richard Bloom for his relentless efforts and urge Governor Gavin Newsome to sign this bill into law” added Mayor D’Amico.

“For too long, ambiguities in the Ellis Act have allowed some landlords to evict tenants simply for higher profits. AB 1399 will give renters more protection against such practices,” said Assemblymember Bloom.

AB 1399 now heads to the Governor’s office for his signature.

Guy Strahl

The Actors' Gang

1 Comment

  1. This will be a terrible blow to rental housing throughout the region, including Culver City. So many providers will leave the business and others will not direct their capital to multifamilty housing rental in Culver City and elsewhere. This is a loser for rental housing. Why would someone invest if they can’t get out? No liquidity.

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