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Ellis Act Loophole Puts CA’s Eviction Protections at Risk

In 2019, California enacted AB 1482, which provided statewide rent caps and eviction protections for tenants. It was an historic victory. But now landlords are misusing the state Ellis Act to circumvent these protections, applying what they see as a loophole in the law.

The loophole—included in Civil Code 1946.2 (b) (2) (B)—allows no-cause evictions on the grounds that the landlord is “withdrawing the residential real property from the rental market.” This language was designed to incorporate the Ellis Act, Government Code 7060 et seq, into the new state law.

But Civil Code 1946.2 does not reference the Ellis Act. As a result, landlords are using the “withdrawal” no-cause without meeting any of the Ellis Act’s procedural protections—or even its requirement that units be withdrawn from the rental market.

The Ellis Act is again playing havoc with tenant protections. Landlords in non-rent controlled cities are using the “withdrawal” no cause to evict tenants—undermining the goal of providing statewide tenant protections

I am not an alarmist but there’s good reason for alarm.

I would rule that landlords invoking the “withdrawal” provision must actually withdraw the units as required by the Ellis Act.

Encouraging Phony “Withdrawals”

Here’s the problem. Landlords lacking any basis to evict under Civil Code 1946 can displace tenants by claiming they are “withdrawing the residential real property from the rental market.” Because there is no need to prove a factual basis for such a claim, this becomes the go-to strategy for landlords in non-rent controlled cities to displace tenants.

Cities with local Ellis Act protections require the public filing of a notice of intent to withdraw units before tenants can be evicted. This allows city staff and displaced tenants to track compliance. But tenants in other cities—those Governor Newsom and the legislature sought to protect with Civil Code 1946—have no recourse.

As California Rural Legal Assistance attorney Leroy Gee describes, “the legislature needs to reference the Ellis Act and make sure that landlords cannot circumvent the protections by simply stating that they are withdrawing the property from the rental market just to get the tenants out and then putting the property back on the rental market without the penalties for lying about it.” Gee represents tenants in Madera County and has a list of clients who have faced eviction under the “withdrawal from the rental market” no cause.

Gee makes the critical point: Speculators using Civil Code 1946’s “withdrawal” provision to displace longterm tenants appear to be able to simply resume renting out units with no sanction.

That’s why we should all be alarmed.

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The “withdrawing the residential real property from the rental market” provision in Civil Code 1946 potentially renders irrelevant all other statewide just cause and no cause protections. All the protections we thought tenants in non-rent controlled jurisdictions were gaining can be readily circumvented by speculators claiming they are “withdrawing from the rental market.”

California’s legislature must act. Here’s how.

How to Protect Tenants

First, the most obvious solution is for the legislature to further restrict Ellis Act evictions. The best strategy short of outright appeal (which is not politically possible) is to limit the Ellis Act to those owning buildings for at least five years. This would block speculators from obtaining a virtually automatic eviction merely by using the “withdrawing the property from the rental market” no-cause eviction language in Civil Code 1946

Second, non-rent controlled cities must immediately enact the procedural protections allowed under the Ellis Act so they apply to CC 1946 evictions. This means a minimum 120 day notice period, relocation expenses, and a requirement that units are actually withdrawn from the rental market.

Third, the state should fund a right to counsel for no cause evictions. I’ve heard from a lot of legal aid attorneys like Leroy Gee representing tenants in these faux-Ellis evictions. But most working tenants are not eligible for free legal services and cannot afford to hire an attorney to defend against these cases.

Right to counsel in these cases is essential.

Can Courts Fix This?

If I were a judge interpreting Civil Code 1946 I would hold that a law passed to protect tenants did not intend to create a massive loophole for landlords. I would rule that landlords invoking the “withdrawal” provision must actually withdraw the units as required by the Ellis Act. In other words, landlords in cities lacking specific Ellis Act implementation requirements must establish that they will no longer be renting any units in the building covered by their Ellis eviction notice.

I have no doubt that David Chiu, who sponsored AB 1482 (codified in Civil Code 1946), Governor Newsom and other backers never imagined that a landlord could evict just by claiming in a notice that they were “withdrawing.” But there is a long history of judges making extremely distorted and legally wrong rulings on the Ellis Act. Had the courts not thrown out local laws passed to restrict Ellis evictions in Berkeley, San Francisco and other cities we would not be in this mess.

So a positive court interpretation cannot be counted upon. And it would likely take at least two years for an appellate ruling to resolve the issue.

randy shaw

Randy Shaw

Legislative action at the state and local level is needed now. Fortunately, a potential legislative fix to the new risks posed by the Ellis Act will be appearing soon. Assemblymember Alex Lee has introduced a spot bill in the code section of the Ellis Act that will be amended later this month

We will keep everyone posted.

Randy Shaw
Beyond Chron