Attached residential condominium sales: liquidated damages.

The entire provision amending Section 7531 of the Business and Professions Code (private investigator licensee responsibility for employees and agents) was deleted from the bill. The bill no longer touches private investigator regulation.

The bill's section numbering was reorganized: the Civil Code amendment (liquidated damages) moved from Section 2 to Section 1, and the Business and Professions Code addition (subdivision deposit disbursement) moved from Section 1 to Section 2. The private investigator section (formerly Section 3) was removed.

The liquidated damages threshold in Civil Code Section 1675 was raised from 3 percent to 10 percent of the purchase price. Amounts at or below this threshold are valid unless the buyer proves unreasonableness; amounts above it require the seller to prove reasonableness. This applies across subdivisions (c), (d), and (f) of the section.

The fiscal committee determination changed from 'yes' to 'no,' reflecting the removal of the private investigator provision and the restructured scope of the bill.

Assembly Member Wicks was added as a co-sponsor of the bill.

The bill's title and digest are narrowed from 'Residential property contracts: Attached residential condominium sales' to just 'Attached residential condominium sales,' reflecting that the general residential property rule is no longer being changed.

The general liquidated damages threshold in Civil Code Section 1675(c) and (d) is reduced from 10 percent back to 3 percent of the purchase price, reverting to the existing law level for all residential property.

The special liquidated damages threshold for newly constructed attached residential condominium units in structures of 10 or more units (subdivision (f)) is reduced from 10 percent to 6 percent of the purchase price, affecting when a seller must perform an accounting and refund excess amounts.

Entire new Business and Professions Code Section 11013.7 was deleted. This section had authorized developers to disburse purchaser deposits held in escrow before closing to pay construction costs, project fees, and other expenses for subdivision projects not yet built, subject to conditions including DRE approval, project budgets, completion bonds or letters of credit, and purchaser express informed consent.

Civil Code Section 1675 subdivisions (g), (h), and (i) were deleted. These had provided the mechanism for early deposit disbursement in subdivision sales, allowed liquidated damages to exceed 3 percent when those conditions were met, and preserved existing escrow/bond alternatives.

The liquidated damages threshold was increased from 3 percent to 10 percent of the purchase price throughout Section 1675. Amounts at or below 10 percent are now presumptively valid (previously 3 percent), and amounts above 10 percent require the seller to prove reasonableness (previously 3 percent).

For attached condominium sales in structures of 10 or more units, the accounting and refund trigger threshold was raised from 3 percent to 10 percent. Sellers must now refund amounts retained above the greater of 10 percent of the purchase price or actual losses (previously 3 percent).

Fiscal committee designation changed from 'yes' to 'no,' reflecting the removal of the DRE review fee provision that had been part of the deleted deposit disbursement framework.

Minor language correction in Section 1675(a)(2): 'his or her the buyer's residence' was corrected to 'the buyer's residence.'

Added new Section 11013.7 to the Business and Professions Code authorizing disbursement of purchaser deposits held in escrow before closing to pay for project construction costs, architectural/engineering/legal fees, financing costs, and incidental expenses in subdivisions not yet constructed or developed.

Amended Section 1675 of the Civil Code to add subdivision (g) permitting a purchaser's deposit equal to or exceeding 3 percent of the purchase price to be disbursed before closing for subdivision lots, subject to conditions including DRE approval of the final public report with adequate disclosures and the prominent notice.

Added subdivision (h) to Section 1675 of the Civil Code allowing liquidated damages to exceed 3 percent of the purchase price when the conditions in subdivision (g) are satisfied, in which case the liquidated damages shall equal the amount of the deposit.

Established conditions that must be met before deposit disbursement: DRE must have issued an effective date for the preliminary public report, developer must record declaration and bylaws, submit a project budget showing all completion costs, provide evidence of sufficient funds (purchaser funds, equity, loan commitments), obtain DRE review and approval, and secure purchaser express informed consent.

Required developers to submit security for construction completion when funds are disbursed before construction is complete, including completion or performance bonds equal to 100 percent of construction cost, irrevocable letters of credit from federally insured institutions, or other DRE-approved instruments. Bonds must include a provision requiring written notice to DRE before payment to beneficiaries.

Required a prominent notice in the developer's preliminary and final public report warning purchasers that their deposits may be disbursed before closing, that the project may not be completed, and that the developer may keep the entire deposit if the purchaser backs out or fails to complete the purchase.

Required purchasers to provide express informed consent in writing after receiving the notice and evidence of security for construction completion. A copy must be provided to DRE and the escrow agent before funds may be disbursed.

Provided that if a purchaser is unable to close at project completion and requires a refund, they shall receive the full deposit back, less 5 percent if the purchaser becomes insolvent due to bankruptcy or death. The burden of proof of inability to close falls on the purchaser.

Required the Department of Real Estate to complete its review within 30 days of receipt of documents, and authorized DRE to charge a fee not exceeding reasonable costs of conducting the review.

Fiscal committee designation changed from 'no' to 'yes,' indicating the bill now has fiscal implications due to the new DRE review and fee provisions.

Added Assembly Member Wilson as a co-author of the bill alongside Assembly Member Ward.