Today, AB 854 has crossed its first hurdle and passed out of the Assembly Housing and Community Development Committee. AB 854 reforms the Ellis Act and ends the revolving door of evictions by creating a 5-year holding period before the Ellis Act can be used to deter speculator abuse.
The Ellis Act is a 1985 California state law that allows landlords to evict residential tenants when exiting the rental business. While the Act was originally intended to protect small mom and pop landlords who could no longer maintain their rental properties, the Ellis Act’s loopholes have been used to acquire rent control housing, evict tenants, and sell the property for a higher profit.
“Property speculators have abused the Ellis Act to evict people and flip units for profit, which removes units from our affordable housing supply,” said Assemblymember Alex Lee (D-San Jose). “We must ensure people stay housed during the housing crisis, and especially during the pandemic.”
Studies show that the vast majority of Ellis Act evictions occur within the first five years of an owner purchasing a property, indicating that these property owners have no intention of being in the rental business in the first place. There has even been a trend of "serial evictors” who evict tenants from multiple buildings to convert the units to other uses such as condominiums and tenancies-in-common, and then acquire new rental properties for the same purpose.
By creating a 5-year holding period before the Ellis Act can be used, the statutory right of long-term landlords to get out of the rental business would continue to be preserved, while deterring speculator abuse. If the bill were to pass and be signed into law, anyone who has owned their property since 2018 can still Ellis a property if they wish to.
AB 854 would also only apply to the 21 rent-controlled jurisdictions in California, making up roughly 4% of all California jurisdictions.
"We will never be able to address our affordable housing and homeless crisis while the Ellis Act continually allows speculators and developers to destroy existing affordable housing and evict tenants, many who end up on our streets,” said Larry Gross, Executive Director of the Coalition on Economic Survival. “It is critical that AB 854 passes and is signed into law. It puts a 5-year hold on the ability for speculators to target affordable units to immediately evict and convert the units to high priced housing that is out of the reach of most Californians. AB 854 would stem the tide of this abuse by a simple and fair amendment to the Ellis Act.”
“This is the first time a bill to stop speculator evictions under the Ellis Act has gotten out of Assembly Housing,” said Randy Shaw, Executive Director of the Tenderloin Housing Clinic. “We thank the committee for taking a major step forward in responding to the state’s affordability crisis. We urge their colleagues to support AB 854 when it reaches the floor at month’s end.”