What Home Buyers and Sellers Need to Know about California Association of Realtors Assembly Bill 1711

The California Association of Realtors® (CAR) maintains a strong legislative advocacy program or lobby in Sacramento. One of the major and consistent themes of CAR’s efforts is opposition to legislation that mandates “point-of-sale” requirements.  Point-of-sale legislation consists of proposals that require certain actions to take place before a property can change ownership.  It is endorsed by those who believe that some kind of requirement for residences, and often other structures as well, would make the world a better place (e.g. the installation of low-flush toilets, energy-efficient windows, or burglar alarms).

In the past, Proponents of such legislation have experienced that attempts to simply mandate their favored measures across the board/for all people at once are likely to fail immediately.  Homeowners not wanting to bear the expense have led grass-roots movements that have effectively ended previous initiatives.  .  But, as a point-of-sale requirement, proponents figure that over time the goal would be accomplished.  In say, ten years or so, many, if not most, homes would have undergone the required change.    The political beauty of this is that there is no identifiable demographic of those who are likely to buy or sell.  Hence, there is no likely grass-roots opposition to the legislation.

CAR’s opposition to point-of-sale proposals has consistently been, “If the requirement is important, then it should be imposed on everyone, not just buyers and sellers.  It is unfair and unreasonable to make them, and only them, bear this expense.”  Moreover, if the expense is significant, it will be pointed out how this added cost will decrease buying power and make it even more difficult to achieve home ownership.

So, yes, defeating point-of-sale requirements is good for CAR members, because doing so enables more sales to take place.  But that is because it won’t cost buyers and sellers as much to complete a sale.

Currently, CAR has taken legislative aim at the potential for regulatory action that would increase the cost of a sale for buyers and sellers.

Section 25943 of the Public Resources Code requires the State Energy Resources Conservation and Development Commission “to develop a comprehensive program to achieve greater energy savings in the state’s existing residential and nonresidential building stock.”    The same code section stipulates that “the energy efficiency assessments, ratings, or improvements [must] not unreasonably or unnecessarily affect the home purchasing process or the ability of individuals to rent housing”.

However, nowhere does the code give an indication of what might be considered unreasonable or unnecessary.  Fully aware of the possibility of regulatory overreach, CAR is sponsoring Assembly Bill 1711 (Galgiani), which according to CAR, “will clearly define what constitutes an energy efficient retrofit that would ‘unreasonably or unnecessarily’ affect a home purchase”.    The bill will prohibit the creation of any program that would require out-of-pocket payments by buyer or seller in order to close escrow.  It would also prohibit any requirements that would delay an escrow closing.  Finally, it requires that the cost of any mandated improvement must be recoverable (in energy savings) within the expected lifetime of the improvement.

AB 1711 is a simple but, to home buyers and sellers, an important piece of legislation.