California's New Flipper Bill:
What Home Buyers and
Sellers Need to Know

Published July 5, 2024.
Written by Reno Perry.

California's New Flipper Bill:
What Home Buyers and
Sellers Need to Know

As of July 1, 2024, California has introduced Assembly Bill 968 (AB 968), a significant piece of legislation aimed at increasing transparency and accountability in the real estate market, especially concerning flipped homes. This new law impacts real estate agents, investors, and potential homebuyers in Southern California. Here’s a breakdown of what AB 968 entails and how it affects you.

1. Understanding AB 968

AB 968 requires sellers who purchased a property within the last 18 months and are looking to sell it again to disclose detailed information about any improvements made to the property. This law is primarily targeted at flippers—those who buy homes, renovate them, and sell them quickly for a profit.

Key Requirements:

• Detailed Work Descriptions: Sellers must provide a comprehensive description of all work performed on the property.

• Contractor Information: Details about the contractors involved in the renovations must be disclosed.

• Permit Status: The permit status for each project must be reported, including whether the work was permitted or unpermitted.

2. Why AB 968 Matters

Historically, many flippers have avoided full disclosure by claiming exemptions due to lack of residency or other reasons. This led to situations where buyers were unaware of substandard or unpermitted work, potentially leading to safety issues and additional costs.

Impacts:

• Increased Transparency: Buyers can now make more informed decisions, knowing the quality and legality of the renovations.

• Accountability for Flippers: Flippers must ensure that all work is properly documented and disclosed, reducing the likelihood of hidden defects.

• Legal Ramifications: If a seller fails to disclose this information and issues arise (e.g., electrical failure), they can be held liable and sued by the buyer.

3. How This Affects Buyers and Sellers

For Buyers:

• Informed Decisions: You can now have a clearer picture of the property’s history and the quality of work done, helping you avoid potential pitfalls.

• Safety Assurance: Properly permitted and professionally done renovations reduce the risk of encountering safety hazards.

For Sellers:

• Compliance: If you’re selling a home purchased within the last 18 months, be prepared to provide detailed disclosures. Failing to do so can result in legal consequences.

• Potential Buyer Hesitation: Buyers may be wary of homes with extensive unpermitted work or those renovated by unlicensed contractors.

4. Navigating the New Requirements

Steps to Take:

1. Document Everything: Keep detailed records of all improvements, including receipts, contractor information, and permit documents.

2. Hire Licensed Professionals: Ensure that any renovation work is done by licensed contractors and obtain the necessary permits.

3. Consult a Real Estate Agent: Work with a knowledgeable real estate agent who can guide you through the disclosure requirements and help you navigate the selling process.

Conclusion

AB 968 is a crucial step towards ensuring transparency and safety in the California real estate market. Whether you are a buyer or a seller, understanding these new requirements will help you make more informed decisions and avoid potential legal issues. As real estate agents, we are here to help you navigate these changes and ensure a smooth transaction process.

For more information on buying or selling a home in Southern California, feel free to contact us. We are committed to providing you with the latest updates and professional advice to make your real estate experience as seamless as possible.

For more information on real estate opportunities in these areas, feel free to contact our team at Century 21 Marty Rodriguez. We’ve been helping our clients make the right decisions about real estate in Southern California since 1978!