WHY ARE BALCONIES A BIG PROBLEM RIGHT NOW?

SB326- Balcony Law

What is SB 326?
Also known as The Balcony Law, it was established on August 30, 2019 essentially to keep residents safe and protect condo property owners from defects in the building. SB-326 requires regular inspections of balconies, walkways, and decks on condominiums in California. THIS AFFECTS CONDOS ONLY, NOT PUDS.

What does an HOA need to do?
SB-326 requires regular inspections of balconies, walkways, and decks on condominiums in California. 

1. Initial inspections of a significant sample of balconies, walkways and decks must be completed by January 1, 2025
2. Subsequent inspections must be completed every nine years.
3. Only licensed structural engineers, licensed general contractors, or certified building inspectors can perform the inspections.
4. All exterior elevated elements like decks and balconies that are six or more feet above the ground and made mostly of wood must be inspected.
5. Inspectors must also check the waterproofing of all balconies, decks, and walkways.      
6. The inspector must prepare a report of their findings and recommendations and give it to the HOA board. 
7. The HOA board must then budget for the repairs and complete them.

Why it matters?
Lenders are now requiring a copy of the SB326 inspection report if completed on every loan if subject property is a condo. If the repairs are significant, we cannot lend unless the repairs for all affected units are completed even if the subject unit is not impacted. The HOA needs to have funds in the reserve account to cover the repairs or it may have to levy a special assessment. 

Bottomline:
Find out before you take on a listing or write an offer on a condo, if the HOA has completed the inspection. Have the lender  review the report upfront to figure out if they can lend on the condo. Too many deals are falling apart at the last minute. Better to be SAFE THAN SORRY. 

This article was provided by Risha Kilaru, SVP of Mortgage Lending at OriginPoint.
For more details, contact Risha: www.RishaKilaru.com