McGuire Real Estate
ablakeley at mcguire.com
Penned by Senator Sheila Kuehl (who also brought us the recent “60-day notice to vacate” requirement to landlords whose tenants have been installed longer than 1 year), SB 464 would “amend the Ellis Act (the State law that allows rental property owners to go out of the rental business) by limiting its application to the owner of any residential real property who has owned the property for five years. In addition, SB 464 would allow a public entity to require that if any tenant is at least 62 years of age or disabled, and has lived in his or her accommodations for at least one year prior to the date of delivery to the public entity of the notice of intent to withdraw pursuant to the Act, the date of withdrawal of the accommodations to be extended to one year after the date of delivery of the notice”( – San Francisco Association of Realtors). If passed, the new legislation would apply to all buildings purchase on or after March 27, 2007.
The creation of SB 464 appears born from an understanding that owning a multi-unit building is exclusively for the purpose of becoming a landlord and renting units to tenants. Although this may have historically been the reason to purchase multi-unit properties, the continuing demand for more affordable ownership options has grown the Tenancy In Common (TIC) market, which shares the same inventory pool. The result is a new generation of multi-unit building purchasers, who have absolutely no intention of becoming landlords or retaining all units as rentals, rather, they are people attempting to stop being renters and start being homeowners the most affordable way possible in a very expensive city.
So what does this all mean? If SB 464 passes, purchasers of multi-unit buildings must wait a minimum of 5 years before they can use the building for any other purpose than a rental property. This will naturally force seekers of possible TIC properties, who often immediately use the Ellis Act to "get out of the rental business," out of the market, and limit the already meager affordable ownership inventory in
Additionally, the market value of multi-unit buildings will most likely go down, because any possible upside of converting the rentals into sellable units (which is often built into the price) won’t become viable to the purchaser for 5 years. Conversely, stalling the Ellis Act rights of owners on multi-unit buildings will drive demand up even further for single family homes and condominiums… making affordable ownership opportunities less available… and creating… you guessed it….more tenants.
For the health of affordable real estate in
State Capitol, Room 4048
Sacramento, CA 95814
Phone: (916) 651-4008
Fax: (916) 327-2186
Email (click "Contact Senator Yee" at left):http://plancsanfrancisco.c.topica.com/maagkNWabydXFbsMeQGeaeQDag/
Joseph S. Simitian
State Capitol, Room 2080
Sacramento, CA 95814
Phone: (916) 651-4011
Fax: (916) 323-4529
Email (click "send an email” at left): http://plancsanfrancisco.c.topica.com/maagkNWabydXGbsMeQGeaeQDag/