SB 1462
Condominiums have historically provided more affordable starter-homes for first-time homebuyers, but some aspects of state law make it difficult to finance condo projects, discouraging their construction.
SB 1462 will allow condo developers to use deposits made by buyers during the pre-sale process to cover construction costs, while upholding protections to ensure the buyer is refunded if the project is not completed. The bill is designed to reduce financing costs of new construction, thereby creating an incentive to builders to develop more affordable condos for purchase.
Historically, condominiums have provided affordable starter-homes for first-time homeowners. Condos are on average 2.7 times less expensive than a typical single-family home.
However, current state law increases the risk and costs to building new condominium projects, discouraging their construction and making higher-cost luxury and rental projects much more attractive for developers.
SB 1462 will reduce financing costs and risks for new condominium projects by allowing developers to use deposits made by buyers during the pre-sale process to cover construction costs. The bill also requires that the California Department of Real Estate oversee projects that make use of this provision, and that the developer is financially insured so that deposits are fully repaid in the event the project is not completed.
Updates
SB 1462 passed out of the Senate Business, Professions and Economic Development Committee on 4/15/24 by a 7-2 vote with 4 abstentions. It passed out of the Senate Judiciary Committee on 4/23/24 by an 8-3 vote. It was held on the suspense file in the Senate Appropriations Committee.
Author
Glazer (D, SD 7)
Co-Authors
Allen (D, SD 24), Cortese (D, SD 15)
Supporters
California YIMBY, SPUR, Mayor of San Jose Matt Mahan