Under the Ellis Act, a landlord must simultaneously evict the tenants and legally remove the building from the rental market. However, the Ellis Act does not prevent landlords from returning to the rental business after evicting its tenants; it only requires the landlords to pay a penalty depending on how long the property was vacant. If the apartments are allowed to be re-rented after the property comes back onto the market, the units must be kept at the same rent the evicted tenants paid for a five-year period. In conjunction with the Costa Hawkins Act, which resets rents to market rate when a rent controlled unit is vacated, landlords may evoke the Ellis Act, leave the rental units vacant for five years, then return to profitability when the units are allowed to come back to market rate.

If the units are to be re-rented within a ten-year period, evicted tenants are granted the “First Right to Return”, meaning that they must be offered the unit first and only charged the rent at the time of eviction for the first five years, followed by market rate rent for the next five years. The First Right to Return binds all current and future owners, even if the building is demolished and new units are constructed on the property. An exemption to this rule is if the units are converted to “ownership units” (e.g., condominiums), in which case the units may be re-rented at market rate without a waiting period or First Right to Return.