Warning to Unlicensed Contractors and Flippers: California Has Changed the Rules

If you are flipping properties or performing construction work in California without proper licensing and full disclosure, consider this your official notice: the game has changed.

California AB 968 – The Flipper Disclosure Law

As of July 1, 2024, California Assembly Bill 968 (AB 968) requires any seller of a single-family residential property (1–4 units) who resells within 18 months of purchase to make comprehensive disclosures to the buyer. If you are flipping homes, you are now legally required to disclose: (1) a detailed description of all work performed — every repair, renovation, alteration, and structural modification made during your ownership; (2) the name and contact information of every contractor who performed work valued at $500 or more in labor and materials; and (3) copies of all permits obtained, or instructions to the buyer on how to obtain them.

This law falls under Civil Code § 1102.6h and supplements the existing Transfer Disclosure Statement requirements. It cannot be waived — even in an "as-is" sale. If you used unlicensed contractors, skipped permits, or cut corners on renovations, you are now required to disclose it. Those disclosures become a roadmap for buyer claims and construction defect litigation after the sale.

California SB 779 – Higher Fines for Unlicensed Contractors (Effective July 1, 2026)

Senate Bill 779 dramatically increases the cost of performing unlicensed contracting work in California. The minimum civil penalty for unlicensed activity — previously as low as $200 — now starts at $1,500 per violation, with maximums reaching $15,000 to $30,000 for serious offenses including willful disregard of building laws, aiding unlicensed contracting, and entering into contracts with unlicensed contractors. These penalty floors are tied to the Consumer Price Index and will increase every five years. The era of a slap-on-the-wrist fine is over.

Don't Think You Can Game the System

Some flippers have tried to use the "Owner-Builder" exemption to sidestep disclosure requirements. It won't work. That exemption requires the property to have been your principal residence for over 12 months prior to completion of the work. If you're in the business of flipping, that exemption doesn't apply to you. And breaking a single project into multiple sub-$500 jobs to avoid contractor licensing thresholds is also illegal — California law looks at the total project value, not the pieces.

What This Means for Buyers

If you are purchasing a recently flipped property, you now have powerful tools at your disposal. You are entitled to know exactly who worked on the property, whether they were licensed, and whether the work was permitted. If a seller fails to comply with AB 968, they face legal liability — including the buyer's right to rescind the transaction or pursue damages. Don't let cosmetic upgrades mask structural problems. Demand full disclosure, verify contractor licenses through the CSLB at cslb.ca.gov, and get a thorough independent inspection.

The Bottom Line

California is demanding accountability from those who profit from real estate transactions. The days of flipping homes with unlicensed labor, skipping permits, and hiding substandard work behind fresh paint are over. The law now requires fair value, honest dealing, and full disclosure. Those who ignore it face steeper fines, civil liability, and potential criminal exposure.

If you have been the victim of a flipper who failed to disclose, used unlicensed contractors, or performed unpermitted work on a property you purchased, contact Cornell Law Group. We are here to help you understand your rights and hold bad actors accountable.

Disclaimer: This article is intended for general informational purposes only and does not constitute legal advice. Reading this post does not create an attorney-client relationship. Laws change frequently, and the information presented here may not reflect the most current legal developments. Every legal matter is unique; you should consult a licensed California attorney for advice specific to your situation.