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Thinking About Leaving the Rental Business? Read This First
Say you've owned a pre-1995 fourplex near downtown Santa Barbara for twenty years. Rents are frozen, a permanent cap is on the way, and you're starting to wonder if it's time to take the building off the rental market altogether. That's exactly what the Ellis Act allows. But in 2026, the path out looks very different than it did a year ago.
The City of Santa Barbara has added new local rules to Ellis Act withdrawals alongside its temporary rent freeze and the upcoming permanent rent stabilization program. These rules change how you exit, how long you have to stay out, and how you must treat tenants along the way.
At Mission City Property Management, we help owners across Santa Barbara and the South Coast stay compliant as local rental laws shift. Below, we break down the Ellis Act basics, the new city rules, and what to do before you make a move.
Key Takeaways
All or nothing: Santa Barbara owners must withdraw every rental unit on a property at once, not just one or two apartments.
Five-year lockout: Withdrawn property can't be used for residential rentals for five years after the last tenant eviction.
Notices go out together: Termination notices must be served to all tenants at the same time, though move-out dates can vary.
Timing is tied to rent control: The Ellis Act changes arrived with the rent freeze, and the permanent ordinance is now moving toward a 2027 start.
Mistakes are expensive: Relocation duties, notice rules, and state protections all apply, so plan carefully before you act.
The Ellis Act in Plain Terms
The Ellis Act is a 1985 California law (Government Code Section 7060 and following) that lets property owners go out of the residential rental business. Cities can't force you to keep renting. They can, however, set rules for how you leave.
For Santa Barbara owners, the right to exit still exists, but the local process is now stricter.
Who Uses the Ellis Act
Owners typically turn to the Ellis Act when they plan to sell a building vacant, convert it to another use, redevelop, or simply stop being a landlord. It's a "no-fault" termination, meaning tenants haven't done anything wrong.
What State Law Already Requires
Even before the city's changes, state law set a baseline. Owners generally must file a notice of intent with the local agency and give tenants at least 120 days before withdrawal takes effect. Tenants who are 62 or older, or who have a disability, and who have lived in the unit for at least a year can often extend that to one year.
State law also limits what you can do if you return the units to the rental market later, including offering the units back to displaced tenants in some cases.
What Changed Locally in 2026
On January 27, 2026, the Santa Barbara City Council adopted a temporary rent increase moratorium together with amendments to its Just Cause Eviction rules. Both took effect February 26, 2026. The amendments added new requirements for owners who permanently remove units from the rental market.
You can read the city's summary on its Temporary Rent Increase Moratorium FAQ page or review the full Ordinance No. 2026-6206.
Full-Property Withdrawal Is Mandatory
You cannot withdraw some units and keep renting others. Under the city's rules, an owner may not remove fewer than all of the rental units on a property.
If you hoped to clear one apartment for a family member while keeping the rest rented, the Ellis Act isn't the right tool. An owner move-in, with its own requirements, may fit better.
A Five-Year Ban on Re-Renting
Once withdrawn, the property can't be used for residential rentals for five years after the last tenant eviction. That's a long runway with no rental income.
Before you commit, run the numbers. Can you carry the mortgage, taxes, insurance, and upkeep for five years if your sale or redevelopment plan stalls? Our accounting and financial reporting can help you see your property's true cash position before deciding.
All Tenants Get Notice at the Same Time
Termination notices must go out to all tenants concurrently. The eviction dates in those notices can vary to line up with each tenant's lease end date, but the notices themselves must be served together.
Serving tenants one at a time as leases expire is no longer an option.
When the New Rules Apply
The restrictions apply to any termination or recovery of possession that wasn't fully completed before February 26, 2026. If you started an Ellis Act process before that date but didn't finish it, the new rules likely apply to you. The city notes the changes don't replace existing requirements under Santa Barbara Municipal Code Chapter 26.50.
Relocation, Notice, and Tenant Protections
Ellis Act withdrawals are no-fault terminations, so the city's Just Cause rules and state law both come into play. That usually means relocation assistance for displaced tenants, strict notice language, and careful documentation.
Relocation Assistance
No-fault terminations typically require the owner to provide relocation assistance. The amount and form depend on the governing ordinance and the tenant's circumstances. Get this right before notices are served, since a flawed payment or notice can give tenants a defense in court.
Anti-Harassment Expectations
Pressuring tenants to leave early by cutting services or delaying repairs creates legal exposure. Keep every communication professional and in writing.
Why Documentation Matters
If a tenant challenges the withdrawal, the burden is on you to show you followed every step. Our eviction and lease protection services are built to keep records clean and processes compliant.
How This Fits With Santa Barbara Rent Control
The Ellis Act amendments didn't arrive alone. They were adopted alongside the city's rent freeze, which holds covered rents at December 16, 2025 levels through December 31, 2026, or until a permanent program begins. For background, see our post on Santa Barbara's rent freeze ordinance.
The permanent program is moving quickly. The council reviewed public comments on the draft rent stabilization ordinance and companion Just Cause and Ellis Act amendments on July 28, 2026. On September 22, 2026, it was scheduled to introduce the ordinance establishing the permanent Rent Stabilization and Rental Registry programs. Track official updates on the City of Santa Barbara Rent Stabilization page.
Does Location Matter?
Yes. These are City of Santa Barbara rules. Properties in Goleta, Carpinteria, Montecito, or unincorporated Santa Barbara County follow state law and their own local rules instead. Confirm your jurisdiction before assuming either set applies.
Smart Steps Before You Withdraw
The Ellis Act is a permanent-feeling decision with a five-year tail. Before you act:
Confirm coverage. Check your property's jurisdiction, age, and unit count.
Model the five-year gap. Plan for costs with no rental income.
Compare alternatives. Selling occupied, holding and managing under the new cap, or an owner move-in may fit better.
Talk to a real estate attorney. Ellis Act filings are technical, and errors can reset the clock.
If you own an apartment building or duplex, our multi-family property management team can help you weigh whether holding the property under the new rules still makes sense.
Frequently Asked Questions
Can I use the Ellis Act to remove just one unit in Santa Barbara?
No. The city's rules require owners to withdraw all rental units on a property. Partial withdrawals aren't allowed.
How long must I wait to rent the property again after an Ellis Act withdrawal?
Under Santa Barbara's rules, a withdrawn property can't be used for residential rentals for five years following the date of the last tenant eviction.
Do these rules apply in Goleta or Carpinteria?
No. They apply only within the City of Santa Barbara. Other South Coast communities follow state law and their own local ordinances, so check your property's exact location.
Protect Your Investment With Confident, Compliant Decisions
Santa Barbara's Ellis Act changes don't take away your right to exit the rental business, but they make the process slower, stricter, and less forgiving. Knowing the rules before you act protects both your finances and your reputation.
Mission City Property Management helps South Coast owners navigate rent control, compliance, and big portfolio decisions with clarity. Call us at 805.319.7000 or contact us to schedule a consultation and talk through the best path for your property.
