Bipartisan legislation sponsored by Senator Steve Oroho that would increase protections for homebuyers when purchasing recently renovated properties was approved by the Senate Community and Urban Affairs Committee.
Sen. Steve Oroho’s bill that would increase protections for homebuyers when purchasing recently renovated properties was approved by the Senate Community and Urban Affairs Committee. (©iStock.com)
“Homebuyers sometimes fall into a money pit when purchasing a house that was inadequately renovated by a real estate investor,” said Oroho (R-24). “Requiring short-term resellers to disclose that their work is up to code is a vital measure to safeguard homebuyers from acquiring properties that could be unsafe or require costly repairs. This legislation ensures greater transparency in the home buying process and enhances accountability for investors who flip houses.”
Under current law, New Jersey homeowners are exempt from permitting requirements when conducting certain renovations or alterations of their primary residence.
Senator Oroho’s bill, S-2850, stipulates that real estate investors who utilize the homeowner’s exemption must complete a property condition disclosure statement informing potential buyers of any recent house alterations as well as any other conditions or material defects on the property. This disclosure must be provided before the house can be sold and applies to homeowners who are reselling a property within one year of purchase.
The legislation also states that a short-term reseller must put in escrow for a period of four months the greater of five percent of the home sale price or $10,000 for potential damages arising from work done on plumbing, electrical or HVAC systems not in accordance with the State Uniform Construction Code.
Additionally, if the seller fraudulently misrepresents conditions or home alterations under the disclosure statement, they would be subject to various financial penalties prescribed under the law.
“Purchasing a home is one of the most important investments that anyone can make,” Oroho added. “Establishing and enforcing quality standards for short-term resellers ensures that homebuyers are making a prudent financial decision.”