Noteworthy California Laws Scheduled to Take Effect July 1, 2024

While a significant portion of the bills signed into law by Governor Newsom during the last legislative session became effective on January 1, 2024, there are several notable ones slated to take effect on July 1st of this year. Among them are Assembly Bill (AB) 968 and Assembly Bill (AB) 12, each introducing substantial changes impacting real estate transactions and tenant-landlord relationships.

ASSEMBLY BILL (AB) 968 – Effective July 1, 2024

AB 968 introduces disclosure requirements aimed at real estate sellers commonly referred to as “flippers.” These sellers, who accept an offer within 18 months of acquiring a property and subsequently hire a contractor for renovations or repairs, will now be obligated to provide detailed disclosures to potential buyers.

The law applies to transactions involving residential properties comprising 1 to 4 units, where the seller accepts an offer within 18 months of acquiring the property, and renovations or repairs were conducted by a hired contractor. Starting July 1, 2024, sellers must disclose all room additions, structural modifications, and any other alterations or repairs made during their ownership. Additionally, sellers must furnish copies of any permits obtained or provide information about third parties who can supply the permits if they do not possess them.

Alternatively, sellers may disclose renovations and repairs as listed by the contractor. Furthermore, if the total cost of labor and materials exceeds $500, sellers are required to disclose the names and contact information of each contractor involved in the property work.

ASSEMBLY BILL (AB) 12 – Effective July 1, 2024

AB 12 focuses on rental security deposit regulations, particularly restricting landlords from demanding or receiving security deposits exceeding one month’s rent for residential properties. This applies regardless of whether the property is furnished or unfurnished.

Previously, landlords could collect up to two months’ rent as security deposit for unfurnished units and three months’ rent for furnished units. However, as of July 1, 2024, landlords may only collect a maximum of one month’s rent as security for all types of units.

A limited exception is made for “small landlords,” defined as individuals (including family trusts and LLCs) owning no more than two investment rental properties, totaling no more than four units. These small landlords may still collect up to two months’ rent as security deposit for any type of unit.