Landlords, Tenants Battle Over Short-Term Vacation Rentals

This week the San Francisco Tenants Union organized a protest of apartment building conversions that it says violate the law.

The group placed bright green “warning” stickers on buildings where it said tenants were evicted using the Ellis Act, which provides for eviction of rental stabilized units if they are taken out of service. But the SFTU says these units were converted to short-term vacation rentals in violation of the law.

The stickers were designed to deter would-be vacationers and short-term residents.

The protesters again drew attention to the battle raging between rental owners and tenants as the city faces a housing shortage. With the divide between controlled rent and market rates so vast, apartment owners are looking at conversion as a means to shore up profits.

Also this week, the City Attorney and Supervisor issued a joint statement regarding pending lawsuits filed on behalf of property owners against new legislation that requires significant relocation penalties should rental property owners convert a property.

Lawyers from the Pacific Legal Foundation filed suit in United States District Court in San Francisco to invalidate the law, which they allege violates the U.S. Constitution’s takings and due process clauses, and also violates the state Ellis Act itself. On the same day, veteran real estate litigator Andrew M. Zacks sued the city and six individual tenants in San Francisco Superior Court to strike down the law.

The city officials say that the recently enacted city ordinance was designed to mitigate the potentially devastating financial impacts on tenants who are evicted under the state Ellis Act. This ordinance provides that when landlords make use of the Ellis Act to withdraw their residential units from the rental market, they must compensate the renters they evict with the difference between the tenant’s current rent and two years of rent at a comparable unit in San Francisco, as determined by the City Controller.

The City Attorney and Supervisor remain confident that the law will withstand judicial scrutiny.

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