Real Estate Pitfall No. 2: California Balcony Laws SB-721 and SB-326

I'm a realtor at Keller Williams. I'd like to introduce the pitfalls in California's balcony laws, SB-721 and SB-326. Overview of the Laws: These laws mandate regular inspections of wooden or wood-framed balconies, walkways, and stairs in California apartment buildings and condos with HOAs. The regulations apply to buildings with three or more units. The initial inspection must be completed by January 1, 2025. Inspections must be conducted by a licensed architect or engineer. Urgent repairs for severe issues must be addressed immediately, while non-urgent repairs must be completed within 120 days. Apartment buildings are inspected every six years, while HOA condos are inspected every nine years. Potential Pitfalls - Delayed Repairs and Impact on Selling: If significant issues are discovered during an inspection, immediate repairs are required. During this period, it may be difficult to obtain financing for loans on units within the complex, hindering sales. Considering the notoriously slow pace of repairs in the US, this can pose a significant challenge. - HOA Fee Increases: If major problems are identified, HOAs may levy substantial fee increases to cover repair costs. - Financial Burden on Homeowners: If HOAs are unresponsive or repair costs are high, the financial burden falls on homeowners. In some cases, individual homeowners have faced expenses ranging from $10,000 to $70,000 for repairs. Advice for Buyers of Properties with HOA - Verify Balcony Inspections: Contact the HOA to confirm whether balcony inspections have been conducted. - Avoid Older Properties Without Inspections: If inspections haven't been done and the property is older, consider avoiding it. - Thorough HOA Assessment: If inspections have been completed without issues, ensure there are no other HOA problems, such as litigation or delayed repairs. These issues could hinder financing. - Proceed with Caution if Issues are Discovered: If inspections reveal problems, consider postponing the purchase. All-cash buyers may find favorable deals in such situations. Advice for Sellers of Properties with HOA - Verify Balcony Inspections: Contact the HOA to confirm whether balcony inspections have been conducted. - Communicate Inspection Status: If inspections haven't been done, inform the HOA about the required timeline and disclose this information to potential buyers to avoid legal disputes. - Proceed with Confidence if Inspections are Clear: If inspections have been completed without issues and there are no other HOA concerns, proceed with the sale. - Urge Prompt Repairs for Identified Issues: If inspections uncover problems, urge the HOA to expedite repairs to prevent delays in the selling process. By understanding the implications of California's balcony laws and taking proactive measures, both buyers and sellers of HOA properties can navigate these potential pitfalls and make informed decisions.