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By Lookout Staff

December 19 -- A Santa Monica landlord has paid $100,000 to the Rent Control Board to settle a lawsuit that charged tenants were illegally evicted under a State law that allows property owners to get out of the rental business.

The lawsuit charged that S.M. Ocean Star, LLC -- which owns the Ocean Apartments at 423-429 Ocean Avenue -- withdrew one of the three residential rental buildings on the property from the rental market under the State Ellis Act in July 2004 and evicted tenants in four units.

The owner then illegally re-rented the units, the suit alleged.

Passed in 1986, the Ellis Act allows landlords to get out of the rental business, but restricts their future use of the property, rent officials said.

“The Rent Control Board is serious about pursuing landlords who abuse the Ellis Act,” said Michaelyn Jones, the Rent Board’s general counsel.

Under Ellis, the Rent Board can bring action for exemplary damages against an owner as a penalty for abusing the State law and “to serve as an example to other landlords that such abuses will not be tolerated,” Jones said.

Instead of facing the expense of litigation, the owner decided to settle with the Rent Control Board without admitting liability, Rent Board officials said.

Three of the evicted tenants are pursuing separate actions against the owner, board officials said.

In response to rent-controlled units being pulled off the market, the Ellis Act was amended in January 2003 so owners could not receive a market rate increase for five years after the property had been withdrawn.

The bill was amended after tenant advocates charged that landlords had found an easy way around a "loophole" in the Ellis Act that allows landlords to return to the rental business after leaving the building empty for two years.