AB 2364: Rental control: withdraw from accommodation.

Existing law, commonly known as the Ellis Act, generally prohibits public entities from adopting any statute, ordinance, or regulation, or taking any administrative action, to compel the owner of residential real property to offer or to continue to offer accommodations, as defined, in the property for rent or lease. Existing law qualifies this prohibition by, among other things, permitting a public entity for which rent control is in effect to require an owner who offers accommodations for rent or lease again within 10 years after they are withdrawn to first offer them to a tenant or lessee displaced by that withdrawal if that tenant or lessee makes a request in writing within 30 days after the owner has notified the public entity of an intention to offer the accommodations again. Existing law, for tenancies commenced during either the 5-year period after any notice of intent to withdraw accommodations is filed or within the 5-year period after the accommodations are withdrawn, requires accommodations to be offered and rented or leased at the lawful rent in effect at the time any notice of intent to withdraw the accommodations is filed, plus annual adjustments, as specified. Existing law sets forth various provisions that govern an owner who offers an accommodation for rent or lease again within 2 years of the date the accommodations were withdrawn from rent or lease. An owner who fails to comply with these requirements is liable for punitive damages not to exceed an amount equal to 6 months of rent.

This bill would revise the circumstances under which an owner may be required to offer accommodations to displaced tenants and lessees to eliminate the requirement that the request be made in writing within 30 days of notification, as described above, and would instead make the offer contingent on the tenant or lessee advising the owner of a desire to consider an offer. The bill also would require that the rental agreement or lease to be offered be the same as that in effect at the time of the displacement. The bill would extend the time period during which the various provisions govern an owner who offers an accommodation for rent or lease again after the accommodations were withdrawn from rent or lease from 2 years to 5 years, and would reduce the time that an action may be brought under these provisions to one year from 3 years of the date when the withdrawn accommodations are offered again for rent or lease. The bill would eliminate the limit on punitive damages.

Existing law declares the intent of the Legislature, in enacting the Ellis Act, to supersede any holding or portion of any holding in Nash v. City of Santa Monica (37 Cal.3d 97) to the extent that the holding, or a portion of the holding, conflicts with the act by permitting landlords to go out of business, but provides specified instances where its provisions are not intended to apply, including not allowing an owner to withdraw from rent or lease less than all of the accommodations, as specified.

This bill would additionally include permitting an owner to return less than all of the accommodations to the rental market within the items these provisions are not intended to allow.