Buying a home in California already requires families to save, plan and stretch their budgets. Every dollar matters, especially for first-time buyers and working Californians trying to take the first step toward homeownership. California law reflects that. For decades, the state has capped at 3% of the purchase price of what a seller can keep when a purchase falls through, to ensure that a transaction that doesn’t go through does not destroy a family’s dream of purchasing a home. 

 

AB 1406, would have changed existing law and allowed developers in certain new condo sales to keep 6% of the buyer’s deposit, twice that allowed in existing law if the sale did not go through. On an average California condo which is about $675,000, that is the difference between losing roughly $20,000 and losing more than $40,000. 

 

The CALIFORNIA ASSOCIATION OF REALTORS® (C.A.R.) strongly opposed AB 1406 because it would have dismantled long-standing consumer protections, would have made homeownership even more difficult for first time buyers afraid to make offers on the exact type of homes, condos, that are more affordable.  C.A.R. worked aggressively to educate lawmakers about why this bill was detrimental to consumers and why California should not shift more financial burden onto Californians trying to purchase a home. Our efforts on the bill succeeded and it was pulled and will not move forward this year. 

 

This outcome keeps important protections that have existed for decades in place for homebuyers and keep the path to homeownership within reach. C.A.R. will continue working to protect homebuyers from policies that put their savings at risk and make getting a home more challenging to support solutions that give more Californians the confidence and opportunity to pursue homeownership.