Summarized from:

California Government Code Section 7060-7060.7

The Ellis Act allows a landlord to effectively “Go out of Business” and thereby evict a tenant for the purpose of removing residential property from the rental market. However before a landlord chooses to invoke the Ellis Act there are some important ramifications he or she needs to consider. The Ellis Act grants Rent Control Jurisdictions the power to exercise the following restraints over owners who have invoked the Act:

If the unit is placed back on the market within five (5) years it must be re-rented for the same price it was rented for when the unit was originally removed from the market.

If the unit was placed back on the rental market and re-rented within two (2) years, the owner may be liable to the former tenant for actual damages, and may be liable to both the tenant and the local jurisdiction for punitive damages.

If the owner chooses to place the unit back on the market within ten (10) years, the owner must offer the unit back to the original tenant if the tenant has expressed an interest in re-leasing the premises.

If the owner chooses to demolish the existing property and construct new units within five (5) years of invoking the Ellis Act, the new units will be subject to rent control.