Posted in Blog  
  on Dec 03, 2014

Rent Control Laws in Los Angeles

Los Angeles has more tenants protected under rent control than any other city in California. The city council passed the Los Angeles Rent Stabilization Ordinance in 1978, giving a handful of powerful rights to tenants and outlining complex eviction procedures for landlords. Later bills such as the Ellis Act have made it easier for a landlord to remove tenants in rent-controlled properties, but the issue remains controversial. Income property owners in Los Angeles should take care to understand the city's rent control laws, as this can help to avoid problems and potential lawsuits.

 

What Properties Are Subject to Rent Control?

All properties built before 1978 in the city of Los Angeles are subject to rent control if there are two or more units in the building. Single-family homes on a lot, properties built after 1978, and hotels where the occupancy is less than 60 days are not subject to the Rent Stabilization Ordinance. Some luxury rental units and government- or nonprofit-owned properties are also exempt from rent control laws.

 

What Does Rent Control Do?

Rent control is designed to give tenants protection from both dramatic rises in rent and arbitrary evictions. In Los Angeles, landlords can only increase the rent 5 percent per year, which means that after several years, the unit may rent for amounts considerably less than the market rate. A tenant in a rent-controlled unit can only be evicted for very specific reasons in Los Angeles, and the landlord has to prove his/her case in front of a judge. For some eviction reasons, such as major remodeling work or moving one's own family into the space, the landlord has to pay the tenant up to $5,000 in relocation costs.

 

How the Ellis Act Affects Rent-Controlled Properties

The California State Assembly passed the Ellis Act in 1985, which says that no local government can force rental property owners to keep their property on the rental market. This means that owners of rent-controlled properties can evict their tenants legally if they either convert the property to condo units or demolish it and build a new structure in its place. The amount of Ellis Act evictions has increased 40 percent from 2012 to 2013, according to an article in the Los Angeles Times. Under the Ellis Act, landlords still have to pay hefty relocation fees and give at least 120 days' notice. There are also future rental restrictions on the property that keep the units off the rental market for five years.

 

Challenges to the Ellis Act

The rise of Ellis Act evictions in Los Angeles has been met with a considerable backlash from housing rights activists and community groups. According to an article in Curbed LA, part of the reason for this is that more than 50 percent of the Ellis Act evictions in 2013 were conducted by landlords who had owned the property for less than a year. This shows that the Ellis Act eviction process on rent-controlled units is being used by investors trying flip properties, more than by landlords caught in a situation where they really need to convert or destroy the property to stay in business, which was the law's intended purpose. In response to the increase in Ellis Act evictions and the controversy it is causing, the State Assembly introduced bill AB 2405, which, if passed, would give municipalities such as Los Angeles the right to suspend Ellis Act evictions.


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