It is not from AKC, but actually a law in California, which tells what breeders must do when selling pups. This law applies to people selling CKC (Continental) too - if in California.
They are trying to inform buyers that the papers are only as good as the breeder's ethics - this also applies to all the breeders ethics going way back in the generations too. I think this is why DNA registration is becoming popular now.
AKC will visit someone if they breed - it is just a toss of the dime when - to check records, etc.. In my all breed club about 1/3 of members have been checked - all checked out well, of course. We also just had an AKC inspector come to speak at my club and it was very interesting. At least they (AKC) do go around and check -as best they can. They check records, conditions of dogs, and area where the dogs live. The main thing they also check is litter records - whom you sold to, make sure all records are up to date and filled out completly and correctly - they can also ask for DNA on the sire and dam and pups to make sure it is correct. I think it is a good idea, because not everybody is ethical and it makes them do what is right. I do not think at this time that CKC (Continental) checks or makes visits.
But the California law does make it look like buyer beware. I was afraid of this. You could be a great breeder and do everything by the books, but it does send a negative message to buyers.
My main concern about this too - was that there are people going around California buying dogs where the breeder does not know about this law and then sueing the breeder. Now what about the dog, what happened to it, does the buyer really care for the dog?
T.