SB 326 THE BALCONY BILL

THE LAW REQUIRING HOA’s TO PERFORM INSPECTIONS OF BALCONIES

IT’S A NEW LAW AND ITS IMPORTANT

The following information is provided by the Adams/Stirling law corporation

On August 30, 2019, Governor Newsom signed Senate Bill No. 326 (S.B. 326) into law, adding two new statutes to the Davis-Stirling Act. Civil Code section 5551 adds a requirement for associations to perform inspections of balconies and other exterior structural elements that the association has an obligation to maintain. Civil Code section 5986 invalidates and voids developer friendly provisions in governing documents that require homeowner votes prior to filing of a construction defect lawsuit. Below is an overview of the important points you need to be aware of regarding these new laws, which went into effect on January 1, 2020.

Inspections Required. Beginning January 1, 2020, associations with buildings that have three or more units must inspect elevated load-bearing structures which are supported substantially by wood. (Civ. Code §5551(l).) The inspector must submit a report to the board providing the physical condition and remaining useful life of the structures and their associated waterproofing systems. The statute does not change who is responsible to maintain, repair or replace balconies or other elevated structures. It imposes inspection and repair obligations on HOA’s as to balconies and/or elevated structures which associations are already obligated to maintain, repair or replace.

Dry Rot Defined. The term "dry rot" is a misnomer. Wood does not rot when it's dry. For decay to occur, moisture must be present before fungi can feed on the wood. Like viruses and bacteria, fungal spores are microscopic and travel through the air. The spores act as seeds which grow when they land on moist wood products. When they plant themselves into wood, they feed on the wood's cellulose. Cellulose is what gives wood its strength. As the fungi consume cellulose, the wood weakens. Without moisture, fungi can't grow. Thus, the importance of keeping all waterproofing systems well-maintained. That is why the Davis-Stirling Act requires a thorough inspection of waterproofing components such as flashings, membranes, coatings, and sealants. (Civ. Code 5551(a)(1).)

Repairs.

Fungi (like termites) spread throughout a structure as they feed on wood. As a result, dry rot can be difficult to treat. To stop the destruction, all decayed wood and fungi must be removed. The longer it goes untreated, the weaker the wood becomes until it collapses without warning. See: Balcony Maintenance & Repairs

Cantilevered balconies that require invasive testing. Balconies supported by posts that require invasive testing under the Davis-Stirling Act.

Elevated Structures Defined. Required inspections apply to load-bearing components and associated waterproofing systems. Load bearing means those components that extend beyond the exterior walls of the building to deliver structural loads to the building from decks, balconies, stairways, walkways, and their railings, that have a walking surface more than six feet above ground level, that are designed for human occupancy or use, and that are supported in whole or in substantial part by wood or wood-based products. (Civ. Code §5551(a)(3).)

#1. Cantilevered balconies constructed of wood must be inspected.
#2. Balconies supported by wood posts require inspection.#1. Cantilevered balconies constructed of wood must be inspected.

#3. Balconies supported by the main structure do not require inspection since they cannot collapse.

#4. Balconies partly supported by the structure and partly cantilevered require inspection.

#5. Exterior stairs and landings attached to wood require inspection.

#6. Elevated walkways supported by wood structures must be inspected.

#7. Balconies made entirely of concrete and steel do not require inspection.

NOTE: Elevated structures that do not require inspection under Civil Code §5551 still require a diligent visual inspection for purposes of an associations 3-year cycle of inspections for their reserve study. This includes concrete balconies.

Townhouse Balconies. A townhouse is a form of construction, not a form of ownership. A townhouse can be defined as a condominium or a separate interest in a planned development. If the townhouse is a condominium, responsibility for balconies will depend on how a condominium unit is defined. If the unit's boundaries are the unfinished surfaces of the interior walls, ceilings and floors, the townhouse structure is owned in common by the membership. That makes the association responsible for repair and replacement of the structure unless the CC&R’s clearly state otherwise. (Civ. Code §4775.) If a unit's boundaries are defined as extending to the exterior surfaces of the townhouse, the structure becomes part of the unit and is the responsibility of the homeowner, unless the governing documents state otherwise.

If townhouses are defined as a planned development, homeowners own the structure and the lot upon which it was built. That means homeowners are responsible for their own balconies. The balcony bill does not apply to planned developments, only to condominiums.

Deadline for Inspections. Associations must complete their first inspection before January 1, 2025. Thereafter, elevated structures must be inspected at least once every nine years. (Civ. Code §5551(b)(1).)

Architect/Engineer and Reserve Analyst. The inspections must be conducted by a licensed structural engineer or architect. (Civ. Code §5551(b)(1).) The inspector must inspect sufficient number of units inspected to provide 95 percent confidence that the results from the sample are reflective of the whole, with a margin of error of no greater than plus or minus 5 percent. (Civ. Code §5551(a)(4).) The association's reserve study professional should be notified when the inspection occurs since the result could impact the cost allocations for particular line items in the study. Following is a list of inspection companies readers sent to us. Boards should have legal counsel review any proposed contracts.

Borescopes. Inspectors are allowed to use the least intrusive method necessary to examine load-bearing components, including visual observation in conjunction with moisture meters, borescopes, and infrared technology. (Civ. Code §5551(a)(5).) The advantage of a borescope is that only small holes are drilled into the stucco, which are easily patched. However, it is sometimes difficult for the scope to see signs of water infiltration and deterioration of the framing. Often, the better approach is to open the underside of balconies so an inspector can easily see the structural elements. Some inspectors use both inspection methods, depending on the particular project and the condition of the structures.

Inspection Costs. To achieve the 95% confidence level required by the bill will be expensive. It is estimated that most associations should expect costs in the range of $5,000 to $20,000. The total cost will depend on the number of elevated structures inspected to achieve the high confidence level required by the bill.

Using Reserves. Because inspections are directly related to reserves needed to repair elevated structures and because the definition of "replacement cost" includes related expenses, inspection costs can be included in an association's reserve budget. Using reserves for such purposes would not be deemed a borrowing.

Inspector's Report. The inspector must submit a report to the board of directors specifying the current physical condition and remaining useful life of the load-bearing components and associated waterproofing systems. The report must be submitted to the board immediately upon completion of the report, and to the local code enforcement agency within 15 days of completion of the report. (Civ. Code §5551(e).) The inspector's reports must be kept by the association for at least two inspection cycles. (Civ. Code §5551(i).)

Safety Measures. If the inspector advises that the exterior elevated element poses an immediate threat to the safety of the occupants, the association must take preventive measures immediately upon receiving the report, including preventing occupant access to the exterior elevated element until repairs have been inspected and approved by the local enforcement agency. (Civ. Code §5551(g).)

Contracting for Inspections and Repairs. Contracts prepared by vendors can sometimes be skewed to protect the vendor. This is normal but not particularly beneficial to the association. Before signing any contracts, boards should make sure legal counsel reviews them.

Inspection Companies. Below is a list of companies that perform inspections of elevated structures. The information was sent to us by readers of our newsletter and should not be construed as an endorsement of the performance of any of the companies listed below. Before hiring a company, boards must perform their due diligence and make sure the company is licensed and insured. In addition, boards should have legal counsel review all contracts before signing them.

A7 Group, Inc. 700 2nd St, Unit H Encinitas, CA 92024 (760) 945-3700

Adam Rohrbaugh info@a7arch.com www.a7architect.com

A.D. Magellan 701 Palomar Airport Rd, #300 Carlsbad, CA 92011 (877) 899-5990

Becky Larson beckyl@admagellan.com www.admagellan.com

AWS Consultants 2030 E 4th St, #208D Santa Ana, CA 92705 (714) 835-2301

Carl Brown cbrown@awsconsultants.com www.awsconsultants.com

Axis Consultants 2544 Barrington Ct Hayward, CA 94545 (833) 799-0333

MaryAnne Siena msiena@axisconsults.com www.axisconsults.com

B2R Consulting Group 1740 W. Katella Ave, Suite L Orange, CA 92867 714-744-6100

Any Bradvic info@b2rconsultinggroup.com www.b2rconsultinggroup.com

Bergeman Group Const. Mgmt 11099 La Cienega Blvd, #175 Los Angeles, CA 90045

Robert Grosse (213) 432-5110 rgrosse@bergemangroup.com www.bergemangroup.com

CL Sigler & Assoc., Inc. 521 Charcot Ave, #203 San Jose, CA 95131 74820 Borrego Dr. Palm Desert 92260 480-922-0262

chris@siglercm.com www.siglercm.com

Design Build Associates 5655 Lindero Canyon Rd, #321 Westlake Village, CA 91362 (818) 889-0402

Dennis Brooks DennisBrooks@dbuild.com www.dbuild.com

Focused Inspection Group 1999 S. Bascom Ave, #700, Campbell 95008 333 City Blvd West, #1700 Orange, CA 92868

Alex Riley alex@focusedinspections.com www.focusedinspections.com

Pacific InterWest 1600 South Main St, #380 Walnut Creek, CA 94596

Stacy Daiker (925) 939-5500 sdaiker@pacificinterwest.com www.pacificinterwest.com

Rupert Construction Services 9114 Adams Ave, #340 Huntington Beach, CA 92646 (714) 904-2885

Devin Dial Devin@RupertServices.com www.rupertservices.com

Southern Cross Consultants 4045 Hancock St, #240 San Diego, CA 92110 (858) 395-8657

Matthew Boomhower, AIA Matthew@SouthernCrossPC.com www.SouthernCrossPC.com

Sullivan Construction Mgmt P.O. Box 2387 Alpine, CA 91903-2387 (619) 722-7580

Pat Sullivan pat@patsullivancm.com www.sullivancm.com

Van Sande Consultants 2920 De la Vina Street Santa Barbara 93105 805-963-6901

Carolle Van Sande, CSM carolle@bristolsb.com www.vansandestructural.com

Acknowledgement. Thank you to Dennis Brooks of Design Build Associates for photos of balconies and to Bill Leys of DeckExpert.com for his photo of dry rot in a balcony beam.

Stock Co-ops & Community Apartments. Stock cooperatives and community apartment are both forms of common interest developments governed by the Davis-Stirling Act. Civil Code §5551(l) states that inspections of elevated wooden structures apply to multi-family structures with three or more units. This would seem to apply to stock co-ops and community apartment projects.

However, the statute also states, "At least once every nine years, the board of an association of a condominium project shall cause a reasonably competent and diligent visual inspection to be conducted..." (Civ. Code §5551(b)(1).)

That language appears to let these two forms of common interest developments off the hook even though they own and are responsible for maintaining and repairing balconies and other elevated wooden structures. The statute's clear intent is to increase the safety of residents in associations with elevated wooden structures. Accordingly, stock co-ops and community apartment projects would voluntarily follow the statute's requirements to inspect and repair all elevated wooden structures. Doing so protects residents and minimizes any potential for lawsuits.

Recommendation. Because of the anomaly in the statute, stock cooperatives and community apartment projects with multi-family structures with three or more units should get a written legal opinion from legal counsel on how best to proceed. Clearly, the safer course of action is to inspect and repair elevated structures. Doing protects residents and minimizes any potential for litigation and judgments against the association.