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Governor Signs Santa Monica Lawmaker's Bill That Closes Ellis "Loopholes"

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By Jorge Casuso

October 8, 2019 -- A bill sponsored by Santa Monica Assemblymember Richard Bloom that closes loopholes in the State Ellis Act was signed into law by Governor Gavin Newsom on Tuesday.

AB 1399 -- part of a package of tenant protection measures signed by the Governor -- places conditions and restrictions on landlords who evict tenants in order to exit the rental market under the 1985 Ellis Act.

Bloom is also the principal co-author of AB 1482, which creates a rent cap and provides “just cause” eviction protections statewide.

“The housing crisis has left tenants increasingly vulnerable in the face of rapidly escalating housing costs,” Bloom said in a statement Tuesday.

The package of bills, the former Santa Monica mayor said, represents "the most substantial tenant protections passed in decades."

AB 1399 closes "abusive loopholes" in order to "avoid unscrupulous use of the bill simply to evict tenants and re-rent one or more units for more money," Bloom said.

The new law prohibits owners who remove their units under the Ellis Act to offer the tenants the equivalent of as much as six months rent in lieu of offering them the opportunity to re-rent their former unit.

AB 1399 also restricts when owners can re-enter the market and at what price they can re-rent units when they re-enter, according to Bloom's office.

With California rents escalating, some landlords have been withdrawing individual units from the market, then "returning them in a piecemeal manner to avoid the Ellis Act’s restrictions and to evade rent control," Bloom's office said.

The bill requires that all units in a building be removed simultaneously.

AB 1399 clarifies that "the date on which the accommodations are deemed to have been withdrawn from the rental market is the date on which the final tenancy among all tenants is terminated."

The bill was introduced by Bloom one year after a similar bill he sponsored failed on the assembly floor last year.

The Ellis Act was a reaction to the passage of rent control by voters in Santa Monica and a dozen other California communities where many small landlords were struggling under restrictive rent caps.

The law gives rental property owners the right to exit the rental housing market under certain conditions and restrictions.

Since its enactment, the Ellis Act has been used to withdraw 3,042 units from the the Santa Monica market, according to a 2017 report by the Santa Monica Rent Control Board.

Bloom estimates that the Los Angeles area has lost more than 20,000 rent-controlled units since 2001, “with tens of thousands of tenants evicted in the process.”

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