The Secret is out! Enhancing Transparency in Real Estate: AB 968
The California Senate Judiciary Committee’s analysis of AB 968 reveals significant measures to protect homebuyers from risks associated with house flipping. House flipping often involves quick, cosmetic renovations that may bypass proper permits and use unlicensed contractors, leading to potential hazards for buyers.
Key Provisions of AB 968:
1. Enhanced Disclosure Requirements: Sellers must disclose any improvements, alterations, or repairs done within 18 months of purchasing the property. This includes the name and contact information of contractors involved and copies of any permits obtained.
2. Consumer Protection: By mandating these disclosures, AB 968 aims to provide buyers with crucial information to assess the quality and legality of the renovations. This transparency helps buyers make informed decisions and potentially avoid costly future repairs.
3. Encouraging Compliance: The bill incentivizes house flippers to adhere to legal standards, obtaining necessary permits and employing licensed contractors, thereby ensuring safer and higher-quality renovations.
Existing Law:
• Sellers must provide a Transfer Disclosure Statement (TDS) detailing property conditions.
• Certain sales, such as between co-owners or via court orders, are exempt from these disclosures.
• Delivery of disclosures must be timely, with buyers given a window to terminate the offer if disclosures are delayed.
Impact of AB 968:
• Buyers’ Empowerment: Buyers gain transparency about the property’s renovation history, reducing the risk of encountering substandard or unsafe work post-purchase.
• Regulatory Compliance: Flippers are nudged towards compliance with building codes and contractor licensing laws, fostering safer real estate transactions.
• Market Integrity: By addressing the loopholes exploited by some house flippers, the bill seeks to enhance the overall integrity of the housing market.
This legislative effort underscores California’s commitment to safeguarding consumer interests in real estate transactions, particularly in the dynamic and sometimes risky landscape of house flipping.
For a detailed analysis, you can refer to the California Senate Judiciary Committee’s report on AB 968.