Double the trouble with two ominous bills being incubated in Sacramento

A pair of bills being incubated in the statehouse will curtail a landlord’s right to exit the real estate business and would establish a statewide rental database.

If you own a property, you should be able to move into it with your family, retire from the rental business when the day comes, or convert it to your heart's desire, but not under AB 854. If passed, landlords will have to stay in business forever and be severely restricted in what can be done with the property.

Of course, municipalities have a strong preference for landlords to keep providing housing, but the Ellis Act is one of the last bastions of owners’ rights by allowing landlords to walk away from their business. This fundamental right to use your property as you see fit continues to be under assault.

The chief architect of the law would eliminate the owner's prerogative to leave the rental business. It’s been said that the Ellis Act is a "speculative tool" to circumvent other eviction protections.

"The Ellis Act imposes immeasurable cruelty on some of our most vulnerable tenants," submits the chief architect of the bill, Assemblyman Alex Lee, D-San Jose. It is argued that the landlord’s right to exit the rental business inordinately displaces seniors, persons with disabilities, and Latino families.


Setting the record straight with the Ellis Act

At the risk of oversimplification, the Ellis Act, inked in 1986, essentially said that municipalities cannot compel landlords to stay in the rental business. Yet when the owner makes the decision to stop playing landlord and withdraw units from the market, tenants are not left out in the cold.

Outgoing residents enjoy a wide range of protections. Lengthy notices must be provided to tenants who are facing an Ellis Act eviction and substantial relocation payments are required to be paid out. If the tenant at risk of displacement is elderly or disabled, he or she will be entitled to even more of a financial cushion before being transitioned out.


This term “loophole” is widely used in the vernacular of tenants’ advocates.

Whenever a rental property owner asserts their rights under the law, it is inevitably called a loophole. Take, for instance, when a tenant is causing damage to the property or creating a nuisance to other tenants. In light of eviction moratoriums, the landlord’s ability to evict a problematic tenant during the pandemic is called a loophole.

The law clearly spells out that in egregious circumstances, a menacing tenant can be transitioned out of the unit and that protections should be reserved for renters with genuine financial hardship. Yet this, too, is called a loophole.

The same is said about the Ellis Act. But since the Ellis Act is the law of the land, we don’t see how there can be any loophole. It’s the law. With the law comes a whole host of statutory obligations on the part of the owner.


Is third time the charm for a proposal to establish a statewide rent registry?

If AB 1188 is passed, landlords who own or operate five or more rental dwellings would have to enter reams of information into a vast rent registry to be created and administered by cities and counties. An online portal would reveal sensitive details about the property owners, occupants, rent levels, vacancies, evictions, floorplans, and other aspects of the landlord's rental business.

Proposals to create a statewide rental registry have been defeated under the dome of the Capitol before, but one thing we can say about tenants' advocates is that they are a resilient bunch. If a proposal fails in the legislature or at the ballot box, it always seems to be reincarnated in some form or fashion.

For Assemblywoman Buffy Wicks, D-Oakland, it's a priority to collect real-time data on rental housing to track affordability and the treatment of tenants and ensure landlords are complying with the rules.

"It's really hard to get information about what's happening. It's hard for the tenants to do that. It's hard for journalists to do it, it's hard for lawmakers to do it. So that's why I think the rental registry is really important."

~ The Oakland lawmaker quoted on laist.

San Francisco didn't need any guidance from Sacramento lawmakers. The City has begun implementing its own rent registry that is slated to begin March 1, 2023, and will apply to property owners with more than 10 or more units. We made our case against San Francisco's new regulatory regime in this article.


The common denominator with both bills

Both AB 854 and AB 1188 presume that vulnerable tenants need extra layers of protections in a regulatory regime that is already cumbersome for owners and provides an abundance of mechanisms in place for a tenant to air out their grievances with a landlord.

Renters have increasingly become savvy about their rights and are aided by no shortage of tenants’ attorneys who are all too willing to right a wrong, often with free legal representation.

Indeed, some enterprising tenants’ attorneys are proactively suing  landlords who lack understanding of fair housing laws, the subject of our earlier article.


A few bad apples?

When there are exploitative landlords who increase rents beyond legal limits, neglect the property, or make unenforceable eviction threats, to name a few transgressions, there are existing guardrails in place to protect tenants. The answer to correct bad behavior is not to write even more laws and subject honest owners to more burdensome rules.

Bornstein Law has always said there are good landlords and bad landlords and, by the same token, good tenants and bad tenants. No one should be painted with a broad brush.