What Is AB 968 and Who It Affects

Assembly Bill 968 is a 2024 California statute that added Civil Code § 1102.6h to the state's real estate disclosure framework. It targets a specific segment of the residential market: sellers who acquired a property and are reselling it within a short holding period. The law does not ban flipping. It forces transparency by requiring detailed disclosures about the condition and history of recent work.

The Legislative Background

California lawmakers enacted AB 968 in response to a wave of investor-driven flipping in which properties were rapidly renovated and resold with minimal disclosure of the work performed. Buyers were discovering undisclosed defects, unpermitted additions, and substandard contractor work after closing. The law is designed to give buyers a complete picture of what was done to the property and who did it.

Who Must Comply

AB 968 applies to any seller of a residential property of one to four units who accepts a purchase offer within 18 months of acquiring title. This includes individual owners, LLCs, trusts, and estates. The obligation is triggered by the timing of the acquisition and sale, not by the seller's intent or business model. A homeowner who unexpectedly relocates within 18 months is subject to the same rules as a professional flipper.

The 18-Month Trigger and Property Types Covered

The 18-month window is the cornerstone of AB 968. Title teams must verify the seller's acquisition date to determine whether the statute applies. The clock starts on the date the seller received title and stops on the date the seller accepts a buyer's offer.

Property Types Included

The law covers residential real property containing one to four dwelling units. This includes single-family detached homes, condominiums, townhomes, planned unit development lots, duplexes, triplexes, and fourplexes. Properties with more than four units, commercial buildings, and vacant land are excluded.

How to Verify the Acquisition Date

Title teams should pull the preliminary title report or chain of title to confirm the date of the seller's acquisition. If the seller acquired the property through a quitclaim deed, tax sale, or probate transfer, the acquisition date is still the date title was recorded in the seller's name. For entity sellers, verify the date the entity took title, not the date the entity was formed.

Required Disclosures: Renovations, Contractors, and Permits

When AB 968 applies, the seller must deliver a written disclosure that covers every renovation and repair performed during the seller's ownership. The disclosure must be specific, detailed, and supported by documentation where available.

Description of Work

The seller must describe each renovation or repair in sufficient detail for a buyer to understand the scope. Generic descriptions like "kitchen updated" or "bathroom renovated" are insufficient. The disclosure should identify the rooms affected, the nature of the work (electrical, plumbing, structural, cosmetic), and the approximate timing.

Contractor Name and Contact Information

For each item of work exceeding $500, the seller must provide the full name, phone number, and address of each contractor who performed the work. If the seller performed the work themselves, the seller must disclose that fact. This requirement is designed to give buyers a direct line to the person or company responsible for the quality of the work.

Permit Documentation

The seller must provide copies of all permits obtained for the work. If permits were not obtained, the seller must state that no permits were obtained and must still provide the contractor's contact information. This creates a clear record for buyers to assess whether the work was performed to code and whether unpermitted work may trigger municipal enforcement or insurance issues.

The $500 Threshold and What's Exempt

AB 968 does not require disclosure of every minor repair. The statute establishes a $500 threshold per item of work. Work costing $500 or less is exempt. Work costing more than $500 must be disclosed, even if the seller believes the work was minor or cosmetic.

What the $500 Threshold Covers

The threshold applies to the total cost of each discrete project. A $2,000 kitchen backsplash replacement is disclosable. A $200 faucet repair is not. If a seller hired a contractor for a $10,000 whole-house paint job, the entire project is disclosable. If the seller bought $300 in paint and did the work themselves, no disclosure is required.

Avoiding Threshold Games

Sellers cannot evade disclosure by breaking a project into sub-$500 invoices. Title teams and buyer agents should watch for multiple invoices from the same contractor within a short timeframe that, taken together, exceed the threshold. If the work was part of a single project, the total cost controls.

How AB 968 Interacts with the TDS and Seller Disclosures

AB 968 is not a standalone disclosure. It operates within California's existing seller disclosure framework, supplementing the Transfer Disclosure Statement (TDS) and the Natural Hazard Disclosure Statement. Title teams must treat the AB 968 disclosure as a required component of the disclosure package.

Delivery Timing

The AB 968 disclosure must be delivered to the buyer in the same manner and timeframe as the TDS. In practice, this means the disclosure should be provided with the seller's initial disclosure package, typically within the first few days of escrow. Late delivery can give the buyer a right to cancel or extend the contingency period.

What Buyers Should Expect

Buyers should receive a document that lists each project, describes the work, names the contractor, and attaches permits or a no-permit declaration. If the disclosure is vague, incomplete, or missing permits, buyers should investigate further. Title teams can flag incomplete AB 968 disclosures as a condition for closing.

Supplementing, Not Replacing, the TDS

The AB 968 disclosure does not replace the TDS. Sellers must still complete the TDS in full, including all standard sections on property condition, defects, and material facts. AB 968 adds a layer of detail specific to recent renovations, which is especially relevant in transactions where the property has been cosmetically refreshed for resale.

Title Team Verification Checklist for AB 968 Compliance

Title teams should add AB 968 verification to their standard California closing workflow. The following checklist ensures nothing is missed.

• Confirm acquisition date. Review the preliminary title report to determine when the seller acquired title. If the offer acceptance date is within 18 months, AB 968 applies.
• Identify entity sellers. If the seller is an LLC, trust, or corporation, verify the date the entity acquired title. Do not rely on the entity formation date.
• Request the AB 968 disclosure. Ensure the seller or listing agent provides a completed AB 968 disclosure as part of the disclosure package.
• Verify the $500 threshold. Confirm that the disclosure covers all work exceeding $500 and does not omit projects that should have been aggregated.
• Check for permits. Confirm that permits are attached for disclosed work. If permits are missing, verify whether the seller provided contractor contact information and a no-permit statement.
• Cross-check against the TDS. Compare the AB 968 disclosure with the TDS to ensure consistency. Discrepancies should be resolved before closing.
• Flag incomplete packages. If the AB 968 disclosure is missing or incomplete, notify the escrow officer and the parties. Do not close until the deficiency is cured or waived in writing.

Liability Risks: Seller, Agent, and Title Company Exposure

AB 968 creates a private right of action for buyers who discover undisclosed or misrepresented renovations. The statute also exposes agents, brokers, and title companies to professional liability if they fail to ensure compliance.

Seller Liability

A seller who fails to provide a complete and accurate AB 968 disclosure is exposed to claims for misrepresentation, concealment, and breach of contract. Buyers may seek rescission of the sale, damages for repair costs, and attorney fees. In cases of willful non-disclosure, courts may award punitive damages.

Agent and Broker E&O Exposure

Real estate agents and brokers have a duty to advise sellers of their disclosure obligations under AB 968. An agent who tells a seller that disclosure is unnecessary, or who fails to request the disclosure from a flipper client, may face an errors and omissions claim. E&O carriers are already seeing claims related to undisclosed flipper work, and premiums for agents who handle high volumes of flipped properties may rise.

Title Company Risk

Title companies are not guarantors of disclosure accuracy, but they are expected to verify that the disclosure package is complete before closing. If a title company closes a transaction without the required AB 968 disclosure, and the buyer later suffers damages from undisclosed work, the title company may face claims for negligence or for facilitating a defective transaction. Best practice is to treat a missing AB 968 disclosure as a title defect.

AB 968 in HOA Communities: Extra Considerations

Properties located in common interest developments add complexity to AB 968 compliance. HOA communities often have their own architectural review committees, design guidelines, and permitting requirements that run parallel to municipal codes.

HOA Permits and Approvals

In addition to city or county permits, many HOAs require prior written approval for exterior changes, fencing, roofing, and even interior modifications in condominiums. Sellers must disclose not only municipal permits but also HOA approvals. A buyer who learns that a renovation was performed without HOA approval may face a demand to restore the property to its original condition.

Common Area Work

If a seller owns a condominium and performed work that affected common elements (such as plumbing lines, electrical panels, or structural walls), the HOA may have separate inspection and approval requirements. Title teams should verify that the seller's disclosures cover both the unit and any common area work.

Resale Disclosure Coordination

Title teams ordering HOA resale documents should coordinate the AB 968 disclosure with the HOA's disclosure package. If the HOA's CC&Rs require specific contractor qualifications or prohibit certain types of work, the buyer should receive both the AB 968 disclosure and the HOA's governing documents simultaneously. This allows the buyer to cross-check compliance before removing contingencies.

AB 968 Disclosure Requirements at a Glance

Requirement	Details	Title Team Action
Effective date	July 1, 2024	Apply to all California residential closings
Property types	Residential properties of 1-4 units	Verify property type on the preliminary title report
18-month trigger	Offer accepted within 18 months of seller acquiring title	Check acquisition date in chain of title
Work to disclose	All renovations and repairs over $500	Confirm disclosure lists each project over threshold
Contractor info	Name, phone, and address for each contractor	Verify contractor contact details are included
Permits	Copies of permits obtained; contractor info if not obtained	Review permit copies and flag missing documentation
TDS integration	Disclosure accompanies the Transfer Disclosure Statement	Ensure AB 968 disclosure is in the disclosure package
Non-compliance risk	Lawsuits, rescission, E&O exposure, title claims	Treat missing disclosure as a title defect

Frequently Asked Questions

What is California AB 968 and when did it take effect?

California Assembly Bill 968 is the state's flipper disclosure law, codified as Civil Code § 1102.6h. It took effect on July 1, 2024, and requires sellers of residential properties (1-4 units) who accept an offer within 18 months of acquiring title to disclose all renovations, repairs, contractors, and permits.

What types of properties does AB 968 apply to?

AB 968 applies to residential properties of one to four units. This includes single-family homes, condominiums, townhomes, duplexes, triplexes, and fourplexes. It does not apply to commercial properties, vacant land, or properties held longer than 18 months.

What is the 18-month trigger under AB 968?

The 18-month trigger is measured from the date the seller acquired title to the date the seller accepts a purchase offer. If that period is 18 months or less, AB 968 disclosures are mandatory, regardless of whether the seller intended to flip the property.

What renovations and repairs must be disclosed under AB 968?

Sellers must disclose all renovations and repairs performed during their ownership that cost more than $500. The disclosure must include a description of the work, the name and contact information of each contractor who performed the work, and copies of all permits obtained. If no permits were obtained, the seller must provide the contractor's contact information.

Are there any exemptions under the $500 threshold?

Yes. Work costing $500 or less is exempt from AB 968 disclosure requirements. This threshold is designed to exclude minor cosmetic repairs such as touch-up painting, replacing a faucet, or patching drywall. Work exceeding $500, even if performed by the seller, must be disclosed.

How does AB 968 interact with the Transfer Disclosure Statement?

AB 968 supplements the Transfer Disclosure Statement (TDS). The flipper disclosure must be delivered to the buyer alongside or as part of the TDS. Title teams should verify that the AB 968 disclosure is present in the disclosure package before closing, especially for sellers who acquired the property within the last 18 months.

What are the liability risks for non-compliance with AB 968?

Non-compliant sellers face lawsuits for misrepresentation, rescission claims, and damages. Real estate brokers and agents may face E&O exposure for failing to advise sellers of their disclosure obligations. Title companies that close transactions without verifying AB 968 compliance may face claims for facilitating defective transactions.

Does AB 968 apply differently to properties in HOA communities?

AB 968 applies to HOA properties the same way it applies to non-HOA properties, but HOA communities add a layer of complexity. HOAs often have their own architectural review and permitting requirements. Sellers must disclose not only municipal permits but also HOA approvals for renovations. Buyers should verify that the seller's disclosed work complied with HOA rules.

Key Takeaways

• AB 968 is California's flipper disclosure law, codified as Civil Code § 1102.6h, effective July 1, 2024.
• The 18-month trigger applies to sellers of residential properties (1-4 units) who accept an offer within 18 months of acquiring title.
• Sellers must disclose all renovations and repairs over $500, including contractor names, contact information, and permit copies.
• The $500 threshold exempts minor cosmetic work, but sellers cannot evade disclosure by splitting projects into sub-$500 invoices.
• AB 968 supplements the TDS and must be delivered as part of the seller's disclosure package.
• Title teams must verify acquisition dates, request the AB 968 disclosure, and treat missing disclosures as a title defect.
• Non-compliance exposes sellers, agents, and title companies to lawsuits, rescission claims, and E&O liability.
• In HOA communities, sellers must disclose both municipal permits and HOA approvals for renovations.