The bill, AB 1406<\/a>, would allow condo developers to better leverage buyers\u2019 pre-sale deposits to secure financing from lenders by guaranteeing those lenders at least 6% of that deposit if a buyer defaults on a purchase. The California Assembly has approved the bill, and it is now in the state Senate.<\/p>\n Opponents say the bill would increase a buyer\u2019s risk of losing their money. Supporters say it would make lenders more likely to finance condo construction and keep developers from having to seek more expensive options.<\/p>\n For revitalization efforts in downtown Fresno, making condos easier to build is \u201cone piece of the puzzle,\u201d said Michael Lane, a supporter of the bill and state policy director for the San Francisco Bay Area Planning and Urban Research Association<\/a>. Lane is originally from the San Joaquin Valley and previously served on the Visalia City Council.<\/p>\n A downtown condo that offers homeownership near restaurants and nightlife \u2014 \u201cthat could be a very attractive lifestyle,\u201d Lane said.<\/p>\n UC Berkeley\u2019s Terner Center for Housing Innovation<\/a> reports construction of condos has fallen 90% in the state\u2019s major population centers in the past 20 years. Policy experts have blamed regulations, including the cap on how much lenders can recover from buyers\u2019 deposits and also construction defect liability rules that encourage homeowners to sue and drive up developers\u2019 insurance costs. A recent addition to a California bill filed in February, AB 1903<\/a>, aims to reduce those lengthy lawsuits.<\/p>\n \u201cWe need the pre-sale reform, and the construction defect reform as part of a package for affordable homeownership,\u201d Lane said, \u201cparticularly with this type of building (condos) in our downtowns.\u201d<\/p>\n Pre-sale deposits from prospective buyers help developers obtain financing for homes they want to build because they show the market has interest in the project.<\/p>\n Today, California law allows lenders to collect 3% of a deposit if a buyer defaults on a condo sale. Increasign that penalty to 6%, reduces the lender\u2019s risk, Lane said.<\/p>\n \u201cIf people begin to back out, that creates jeopardy for the project,\u201d he said.<\/p>\n Among the bill\u2019s opponents is the California Association of Realtors.<\/p>\n \u201cIt dismantles strong, long-standing consumer protections for buyers, putting their savings, life-changing sums of money at risk to finance the condominium projects,\u201d the organization says on its website<\/a>.<\/p>\n The organization\u2019s Fresno chapter did not respond to a request for comment about the bill.<\/p>\n But Lane said the 3% cap on what lenders can recover from defaulted buyers\u2019 deposits is \u201cso low that it can encourage speculation.\u201d He said 6% is \u201ccloser to the industry standard.\u201d In New York, state law allows a 10% cap as long as the recovery of deposits is not done punitively, he said.<\/p>\n Downtown Fresno City Councilmember Miguel Arias told The Bee that downtown condos, including those on Huntington Boulevard and R Street, have brought professionals to live in the area in the past.<\/p>\n Government employees, lawyers and medical professionals who work downtown have bought condos in those complexes, which he said have been around for decades and are still very well-maintained.<\/p>\n \u201cCondominiums have been a critical component of downtown Fresno,\u201d he said.<\/p>\n Local officials are hoping downtown\u2019s population will triple to 10,000 residents as a result of its revitalization efforts. In recent months, the city has started loaning money it received from the state to developers whose apartment projects have stalled for years. Builders have said it\u2019s been difficult to fill the gaps in their financing for apartments in downtown Fresno, where rent prices often do not justify construction costs.<\/p>\n The loan should help at least one project that promises 174 apartments next to Chukchansi Park<\/a> break ground this year.<\/p>\n \u201cBut we need a variety of new housing,\u201d Arias said.<\/p>\n He said there are a lot of people living in Fresno who come from larger areas and want to \u201clive, work and play in the same neighborhood.\u201d<\/p>\n \u201cDowntowns allow that, but we don\u2019t have enough homeownership opportunities in downtown yet,\u201d he said. \u201cWe are going to have to provide it if we want to create that permanent residency in our downtown.\u201d<\/p>\n Related Stories from Fresno Bee<\/p>\n![\"The](\"https:\/\/www.newsbeep.com\/us-ca\/wp-content\/uploads\/2026\/03\/FRS_downtownfresnokohlruss00083.JPG\" "\\"FRS_downtownfresnokohlruss00083.JPG\\"")
The iconic Fresno postage stamp mural by late Fresno muralist FranCisco Vargas faces north with downtown Fresno behind it on Tuesday, May 30, 2023. CRAIG KOHLRUSS ckohlruss@fresnobee.com CA bill would allow lender to keep 6% of defaulted condo buyer\u2019s deposit<\/p>\n![\"Downtown](\"https:\/\/www.newsbeep.com\/us-ca\/wp-content\/uploads\/2026\/03\/FRS_soccer_stadium03.jpeg\" "\\"FRS_soccer_stadium03\\"")
Downtown Fresno including Chukchansi Park stadium photographed in this drone image on Monday, Oct. 30, 2023. CRAIG KOHLRUSS ckohlruss@fresnobee.com Downtown Fresno short on ownership options, City Councilmember says<\/p>\n
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