California’s New Flipper Disclosure Law: A New Era of Accountability
California’s hot housing market has fueled a wave of property “flips”—homes purchased, renovated, and resold within months for profit. While flipping often revitalizes neighborhoods, it has also led to increased complaints from buyers who later discover hidden defects, unpermitted work, or rushed renovations. In response, lawmakers passed Assembly Bill 968 (AB 968), which took effect July 1, 2024, adding new disclosure requirements for flippers and reshaping the due diligence expected of agents and investors alike.
The Legal Change: AB 968 / Civil Code § 1102.6(h)
Under AB 968, any seller who accepts an offer within 18 months of acquiring title to a single-family residential property must now provide expanded disclosures that go beyond the traditional Transfer Disclosure Statement (TDS).
Specifically, sellers must:
Disclose all renovations, additions, or repairs made during their ownership.
Identify each contractor involved for any work where labor and materials exceeded the statutory licensing threshold.
Provide copies of building permits for that work—or explain how the buyer can obtain them.
These duties apply whether or not the seller personally performed the work. The law supplements existing disclosure requirements under Civil Code § 1102 et seq., meaning sellers cannot rely on the TDS alone to satisfy their obligations.
Legislative Intent: From Transparency to Accountability
The Legislature’s goal in enacting AB 968 is clear—to increase transparency and deter unpermitted or substandard renovations. Lawmakers recognized that quick turnaround sales carry higher risk that corners were cut: contractors hired without proper licensing, permits skipped to save time, or cosmetic repairs masking underlying defects.
By requiring documentation of who performed the work and whether permits were obtained, AB 968 aims to bridge the information gap that buyers often face when purchasing a recently “flipped” home.
The Risks of Non-Compliance
The consequences for failing to comply with AB 968 can be serious:
Buyer lawsuits for nondisclosure, misrepresentation, or rescission.
Expanded discovery in litigation, as contractor and permit information becomes a roadmap for defect claims.
E&O exposure for brokers who fail to ensure their clients complete proper disclosures.
Regulatory scrutiny if a DRE complaint is filed regarding inadequate supervision or misleading statements.
Even when work was performed in good faith, incomplete or inconsistent disclosures can create the appearance of concealment—making flippers and their agents easy targets for claims.
For Sellers and Flippers:
Maintain detailed records of all renovations, including invoices, permits, contractor agreements, and inspection reports.
Use licensed contractors and verify that permits are finaled before sale.
Prepare a comprehensive disclosure package summarizing all work performed during ownership.
Include indemnity provisions and escrow holdbacks in contracts to address unresolved or disputed items.
Have all disclosure documents reviewed by counsel before listing to ensure compliance and consistency.
For Agents and Brokers:
Verify whether the seller acquired the property within the past 18 months.
Confirm that AB 968 disclosures accompany the TDS and are properly completed.
Advise sellers on risks of nondisclosure and encourage early legal review of records and contractor documentation.
Keep written records of disclosure discussions to reduce later liability exposure.
Why Legal Guidance Matters
AB 968 adds complexity to an already disclosure-heavy process. What once felt like a routine resale can now evolve into a legal trap for sellers and agents who underestimate the law’s reach. Early legal involvement allows for a structured review of the renovation history, accurate drafting of disclosure language, and careful coordination with escrow and buyers’ agents to prevent post-closing disputes.
At Blake Law Firm, we work with investors, brokers, and developers to ensure their transactions meet California’s evolving disclosure standards. From preparing compliant disclosure statements to defending post-sale claims, our team helps clients protect their deals—and their reputations—before problems arise.
Our Firm Can Help
If you’ve renovated or resold a property within the past 18 months, contact Blake Law Firm to ensure your transaction complies with AB 968 and avoids the costly pitfalls of California’s new flipper disclosure law.
Contact us:
Phone: (858) 232-1290 or (949) 310-6722
Email us at: info@blakelawca.com or
Visit: www.blakelawca.com to learn more