Hearings set for bills that would restrict landlords’ ability to exit business

The Legislature has scheduled hearings this month on a pair of bills that target the Ellis Act, landmark legislation that protects a property owner’s right to exit the rental housing business.

The Ellis Act, passed in 1985, provides an important safety valve for landlords operating in rent controlled jurisdictions.

Before the Ellis Act in 1985, cities could force landlords to continue renting out their properties, even if they were losing money. Preserving the Ellis Act is particularly important today, as some lawmakers are attempting to bring back extreme versions of rent control and take away exemptions for newer apartment buildings.

The bills in question, AB 423 by Assemblyman Rob Bonta, D-Oakland, and AB 982by Assemblyman Richmond Bloom, D-Santa Monica, are scheduled for hearings in the Housing and Community Development Committee on April 5 and April 19, respectively.

AB 423 would exempt residential hotels in Oakland from the Ellis Act, prohibiting them from closing their buildings. Already exempted are San Francisco, Los Angeles, and San Diego.

In a letter to Bonta, the California Apartment Association and allied groups object to requiring owners of residential hotels in Oakland to stay in business despite business hardships or the inability to meet future code mandates for capital improvements.

“We have witnessed owners in these situations struggle with fire sprinkler installations, seismic safety upgrades and other retrofits that are mandated for older housing,” the letter says. “Unless the city can provide funding to assist, we anticipate some of these buildings will struggle to keep the building viable for tenants.”

The other proposal, AB 982, would expand the number of tenants who are entitled to receive a year’s notice from the landlord before the landlord closes the building as allowed under the Ellis Act.

At this point, tenants who have lived in the building for at least one year and who are at least 62 years of age or are disabled are entitled to a year’s notice from the landlord before the building is closed. Other tenants are entitled to a 120-day notice.

AB 982 would extend the one-year notice requirement to all tenants, regardless of age or disability.

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