Landlord Crybabies <i>Forced</i> To Ellis Because Landlording Became So Unpleasant
Last month the San Francisco Business Times published a reprehensible editorial, “Tenant activists exacerbate rental housing crisis.” They were reacting to the occupation of an empty building in the Mission by Homes Not Jails on April 4.
This is what riled me up: “Aided by reliable mouthpieces on the board of supervisors, they’ve helped make it so unpleasant over the years to be a landlord in San Francisco that owners of several hundred rental units each year invoke a nuclear option known as the Ellis Act and detonate their rental business by evicting all their tenants.”
I’m sorry, but if being a landlord is so unpleasant, why don’t you just sell your building without evicting the tenants?
Essentially that was the question the California Supreme Court posed in Nash v. City of Santa Monica in 1984. “Nash was a 17-year-old student when, approximately a year before the rent and demolition controls were enacted, his mother obtained on his behalf a $260,000 apartment building in Santa Monica. He soon became disenchanted, however, with operating rental housing: ‘There is only one thing I want to do, and that is to evict the group of ingrates inhabiting my units, tear down the building, and hold on to the land until I can sell it at a price which will not mean a ruinous loss on my investment.'” The Court ruled that there was nothing unconstitutional about rent control or demolition control that protected tenants. They reasoned that Nash was getting a fair return on his “investment” and that he could sell the building if he wanted to get out of the landlord business.
That’s when the landlord lobby really started to scream. In 1985 they persuaded their friends in the legislature to pass the so-called Ellis Act to supersede the ruling in Nash to allow landlords to evict all their tenants before they exited the landlord business. The rest is history.
As we all know now, for the last decade, the Ellis Act has been used by speculators who enter the landlord business for five minutes to evict long-term tenants, seniors and the disabled in order to sell units as TICs (tenancies in common.) We also know that those speculators were fueled by a flood of monopoly money from banking geniuses who were later bailed out by taxpayers.
Now the bubble has burst and (big surprise) Ellis evictions dropped 78% in the last year in San Francisco. The Business Times editorial noted this, “But in whatever number, they [Ellis evictions] are a symptom of the dysfunction in the San Francisco rental market and not a cause. Basically, there’s little incentive to remain a landlord in San Francisco — and every incentive to try to get yourself out.” Of course most of the landlords who used Ellis evictions were never in the landlord business and those who were didn’t get out until they saw an opportunity for obscene profit.
If the Business Times cannot recognize that vacant buildings are not a cause of dysfunction in the rental market, what can they see? Not much. The editorial also excuses scofflaw landlords because, “[Rent control] contribute[s] to blight by discouraging landlords from maintaining and upgrading their units.” They misstate the law claiming, “That the owner of the property would in fact be breaking the law by offering it again for rent was apparently lost on the protesters.” In fact, the landlord can re-rent but he would be required to offer the unit to the original renter at the rent-controlled price.
That’s the point. Landlords start to cry like babies when they can’t get exactly what they want, when they want it. “Unpleasant” translates to “I can’t get as rich as I want to as fast as I want to” and “I don’t want to spend the money to maintain my building.” Sob, sob. They also clinch their fists and threaten, “But given that the owner of property ultimately controls whether it remains on the rental market at all, learning at the least to live with them [landlords with their power to Ellis evict at will] would be in everyone’s interests — including, most notably, their [tenant activists] own.”
Unfortunately that threat will remain bone-chilling real until the Ellis Act is either repealed or amended to require that landlords actually be in the business for five or so years until they can get out. And occupying vacant buildings is a laudable method to remind us that, like Jerome Nash, landlords will go to any extreme, including refusing to re-rent units in vacant buildings, to force tenants to bend to their will.