Investment Property Ellis Act Disclosure

[Carlos Lez]

I am doing 2 refinances (duplex and triplex) both are not rent controlled and one acquisition, all in Santa Clara County. First Republic bank is asking me to sign the following statement;

"

Do you have any present intent to re-purpose the use of the Property by withdrawing any units from the residential

housing market pursuant to California Government Code Section 7060-7060.7, commonly known as the Ellis Act,

or is the Property currently under any Ellis Act restrictions?"

My questions are;

1) how will these properties be encumbered if I sign this disclosure. Am I waiving any rights under the Ellis Act by signing this? I for the near future have no intention to take these off the rental stock anytime soon. I certainly wish to retire sometime and don't want to be saddled with this.

2) Can I invoke the Ellis Act anytime in the future? Since it says this disclosure is "present intent"? Also, if I refinance with another lender in the future does the same pledge hold?

3) If I sell these properties, will the new owner be subject to the restrictions that arise from waiving this right,

[Carlos Lez]

Originally posted by @Grant Schroeder:

@Carlos Lez This is definitely a little strange from FRB. Is this a conventional loan or a portfolio loan? FRB keeps a lot of loans they originate on their own books.

My understanding is that FRB loans are portfolio loans. At one point around 5-6 years back, they were subject to protests after which they have started requiring borrowers to sign it.

My only question is does it hurt me in anyway? Attorneys in this area require a $2,500 retainer to interpret this statement!  Go figure.