CA AB 968 helps buyers of flipped real estate in California by requiring transparency in the work that has been done, as well as who it was done by.
House flipping has become a prevalent trend across California, with many investors capitalizing on quick turnarounds and lucrative profits. However, this rapid-fire approach often is precipitated by subpar renovations conducted by unlicensed contractors or without the necessary building permits. This poses significant risks for buyers and sellers alike, be it poor quality work to potential legal and financial liabilities.
Current laws lack robust disclosure requirements, which can leave buyers vulnerable to purchasing flipped properties with hidden issues. The state of California recognized these challenges and has introduced a new bill to resolve this issue.
What is California AB 968?
California Assembly Bill 968 (AB 968) addresses the common pitfalls associated with unpermitted renovations and unlicensed contracting in the house flipping industry. This California flipper law layer of disclosures required for single-family residential property sales took effect on July 1, 2024.
AB 968 tackles common problems in the California house flipping industry by aiming to curb unpermitted renovations and the use of unlicensed contractors. It places new disclosure requirements on home sellers who have owned the property for less than 18 months. AB 968 compels sellers to reveal information about renovations and repairs. This includes disclosures of details of all work, contractor identification for accountability, and permit verification.
Key Provisions of AB 968:
- Disclosure Obligations: Sellers of single-family residential properties in California who are within 18 months of purchase must disclose all renovations completed by contractors, including room additions, structural modifications, alterations, or repairs, during the seller’s ownership.
- Contractor Accountability: AB 968 mandates home sellers in California to provide the name and contact information of contractors responsible for the renovations. This transparency fosters accountability and ensures buyers have recourse in case of issues or disputes.
- Permit Verification: Sellers must furnish copies of permits obtained for renovations. If permits are unavailable, sellers must provide the contractor’s information for buyers to verify permit status independently. This requirement enhances due diligence and minimizes risks associated with unpermitted work.
By enhancing transparency and accountability, AB 968 protects homebuyers from purchasing properties with undisclosed or unpermitted work, which can pose safety hazards and lead to costly repairs down the line.
Related Post: Can General Contractors Hire Unlicensed Subcontractors?
How Does AB 968 Benefit California Home Buyers and Sellers?
- Buyer Protection: AB 968 safeguards buyers from purchasing properties with undisclosed or substandard renovations, reducing the likelihood of post-purchase complications and expenses.
- Seller Compliance: Sellers benefit from clear guidelines on disclosure and permit requirements, mitigating legal risks and promoting transparency in property transactions.
- Market Integrity: AB 968 contributes to a more transparent and trustworthy real estate market, fostering confidence among buyers, sellers, and industry stakeholders.
Related Post: Navigating Home Improvement Contracts in California
CA AB 968 represents a significant step towards improving residential property transactions in California. By promoting transparency, accountability, and prioritizing quality, the law benefits consumers and the real estate industry. As the implementation of this law unfolds, it is expected to contribute to a more trustworthy and sustainable home purchasing market that ultimately benefits homeowners and buyers across the state.
At Putterman Law, we understand the complexities of real estate transactions and the importance of legal compliance for both buyers and sellers. Please contact us for comprehensive real estate and construction legal guidance and ensure your interests are protected throughout the buying or selling process. To book a consultation, fill out the form below.
