Question 1

WHAT IS SB326?

Accepted Answer

SB326 is a California law that went into effect on January 1, 2020 (commonly known as the “Balcony Bill”).  In short, the law requires community associations to have the Exterior Elevated Elements (EEE), meaning the load-bearing components together with their associated waterproofing system (including wood-based decks, balconies, stairways, walkways, supports and railings, and any walking surface) elevated six (6) feet or more above ground level inspected by a licensed architect or licensed structural engineer.  This law applies to condominiums, townhomes, and other common interest communities that have 3 or more attached units in a building containing these EEE.  The first SB326 compliance inspections must be completed no later than January 1, 2025.

Question 2

IF OUR ASSOCIATION DOES NOT HAVE TO BE IN COMPLIANCE WITH SB326 UNTIL JANUARY 1, 2025, WHY SHOULD WE START GETTING INTO COMPLIANCE WITH SB326 NOW?

Accepted Answer

Because there are thousands of community associations in the State of California that need to get into compliance with SB326 no later than January 1, 2025, and there are very few licensed architects and licensed structural engineers willing to put their licenses and credibility on the line to perform these inspections and sign off on SB326 compliance.  Since this is the case, community associations need to start the process of SB326 compliance now to help their chances of getting into compliance by the deadline.  Also, SB326 compliance can be very expensive, especially for older community associations, so starting the process now will help them budget and save money over the next year or two to help pay for the SB326 compliance inspections.

Question 3

WHAT HAPPENS (WHAT ARE THE CONSEQUENCES) IF OUR ASSOCIATION DOES NOT GET INTO COMPLIANCE WITH SB326 BY JANUARY 1, 2025?

Accepted Answer

Since this is a new law and the first deadline for SB326 compliance has not yet passed, we don’t know for sure what the consequences will be to those associations who do not meet the compliance deadline.  The Board of Directors of a community association needs to understand that by not complying with SB326, the association, as well as the Board of Directors, are subject to potential serious liability, especially if damage, injury or even death occurs due to the Board of Directors’ negligence and noncompliance with the law.  Also, it has been rumored that some of the following may be consequences, but again these are just rumors (at the time of this answer) and may never actually happen:

Cities and counties may not issue permits to community associations needing to have work done at their communities unless they can show formal documentation the association is compliant with SB326.
Lenders may not provide financing for refinances or sales of units in a community that is not compliant with SB326.
Insurance companies may drastically increase premiums or drop coverage all together for community associations that are not in compliance with SB326.

Question 4

DO ALL OF THE DECKS AND OTHER EEE AT OUR COMMUNITY NEED TO BE INSPECTED?

Accepted Answer

No, not all decks or other elevated elements need to be inspected.  However, since these inspections must be done by a licensed architect or licensed structural engineer, these experts are going to want to inspect as many decks / EEE (a representative sample) as they feel is necessary. It’s important that they are comfortable and confident in the safety of the EEE throughout the community before signing off on a document (required) confirming this, and putting their license on the line.

Question 5

WHY CAN’T OUR COMMUNITY MANAGER OR MAINTENANCE PERSON PERFORM OUR DECK INSPECTIONS?

Accepted Answer

The law specifically states and requires that a licensed architect or licensed structural engineer perform the SB326 inspections.

Question 6

WHAT IS THE PROCESS OF THE DECK INSPECTIONS AND HOW LONG WILL IT TAKE?

Accepted Answer

Although the law requires visual inspections of the load-bearing components together with their associated waterproofing system of Exterior Elevated Elements, many deck designs have their load-bearing components and waterproofing systems enclosed behind stucco or some type of cavity.  If this is the case, it is often required to make some type of opening(s) to the EEE so the architect or engineer can see the load-bearing components and waterproofing system.  This is most often done by strategically drilling 3” cores on the underside of the decks and using a lighted borescope digital camera to take photographs of the components through the 3” holes.  Once the inspection is complete, the holes are either professionally repaired and painted, or aesthetically pleasing caps are installed into the holes which allows for better ventilation of the deck’s cavity as well as allowing much easier (and far less expensive) access to the deck’s components when the next SB326 compliance inspection is due.

It all depends on the size of the community and the different EEE types, but generally SB326 compliance inspections can be done in 1 to 2 days.

Question 7

WILL OWNERS / RESIDENTS IN OUR COMMUNITY BE NOTIFIED IN ADVANCE WHEN SB326 COMPLIANCE INSPECTIONS OR DESTRUCTIVE TESTING WILL BE DONE?

Accepted Answer

Yes, we work with the community manager to prepare notifications of the inspections or testing so they can be mailed, emailed, or posted in advance letting the members of the association know the basic details and the date(s) the inspections / testing will occur.  Most of the locations we inspect / test are random and selected the day of the inspections / testing.  However, if we notice specific locations at specific units / buildings during our initial walk of the community (usually a couple weeks prior to the date of our inspections / testing), we will notify the owners / residents in those particular units or buildings of the investigations / testing individually, as well.  It is very helpful if the community manager has an updated homeowner list (and tenants of units that are rented out), including correct unit numbers, mailing address, phone numbers and email addresses.

Question 8

WILL PEOPLE NEED TO COME INTO MY HOUSE OR GET ON MY DECK TO DO THEIR INSPECTION?

Accepted Answer

Generally speaking, no.  Most SB326 inspections can be done by using ladders or lifts on the outside of the buildings without having to enter any homes.

Question 9

HOW MUCH IS GETTING OUR COMMUNITY INTO COMPLIANCE WITH SB326 GOING TO COST?

Accepted Answer

This question is almost impossible to answer as every community is different (age, size, number of EEEs, types of EEEs, etc.).  If the community is under 10 years old, there is a chance it will not cost the association anything out of their pocket to get into compliance with SB326 (contact Riley Pasek Canty LLP for more information on this).  If the community is over 10 years old, you should contact a company whose only business is SB326 compliance inspections and ask them to provide you with a quote.  However, it is important to understand that when you are given a quote for SB326 compliance inspections, that quote is only for the inspections and probably the report.  It will not include any repairs to issues found with the EEE during the inspections.

Question 10

WHAT HAPPENS IF ISSUES ARE FOUND WITH OUR DECKS / EEE DURING THE INSPECTIONS?

Accepted Answer

Once the SB326 inspections are complete, the association’s manager and Board of Directors will be given a report which will include a list of issues found with the EEE. Some issues may be minor and can be repaired over a period-of-time as part of a regular maintenance program. Other issues may be significant and will require an escalated schedule to repair (or immediate repair), and some issues may pose a life safety threat causing a particular EEE be red-tagged and unusable until properly repaired and safe to use (the Code provides specific timelines within which this must be done).

Question 11

ONCE THE SB326 INSPECTIONS ARE DONE, HOW WILL WE KNOW IF OUR ASSOCIATION IS IN COMPLIANCE AND WHAT IS OUR ASSOCIATION EXPECTED TO DO AT THAT POINT?

Accepted Answer

At the end of the SB326 compliance inspections, a mandatory report will be provided to the community manager or the association’s Board of Directors that will address all of this.

Question 12

WHEN THE DECK INSPECTIONS ARE COMPLETE AND OUR ASSOCIATION IS IN FULL COMPLIANCE WITH SB326, IS OUR ASSOCIATION THEN IN COMPLIANCE WITH SB326 FOREVER?

Accepted Answer

No, the law requires SB326 compliance inspections be done every 9 years.

Question 13

WHEN YOU ARE PERFORMING SB326 COMPLIANCE INSPECTIONS OF OUR EEE, WHY DO YOU WANT TO LOOK AT OTHER COMPONENTS OF OUR BUILDINGS THAT HAVE NOTHING TO DO WITH SB326?

Accepted Answer

Boards of Directors for community associations have fiduciary duty obligations to inspect the community per the CC&Rs or Maintenance Manual.  The services of architects, structural engineers, and construction companies can be very expensive, so it makes financial sense to have them look at the other building components while they are already there.  If community is under 10 years old, having the experts who are performing the SB326 inspections look at all the other construction components of the buildings while they are there helps the board comply with fiduciary duty obligations. It also helps protect the entire association by identifying any other issues before statutes of limitations expire and the association loses any legal recourse it has to have the developer make repairs or pay to have repairs made.

Question 14

WE DON’T SEE ANY CONSTRUCTION RELATED ISSUES AT OUR COMMUNITY, WHY SHOULD WE HIRE YOUR FIRM AND TEAM OF EXPERTS TO LOOK FOR CONSTRUCTION ISSUES?

Accepted Answer

The Board of Directors of a community association has fiduciary obligations to inspect and maintain the common areas of the community.  However, just because you don’t see any construction issues at your community does not mean they do not exist.  Our law firm’s experience and our team of experts’ training allows us to recognize and identify issues that most can’t.  Many issues or defects with a building’s construction are latent, meaning hidden or concealed (behind stucco, in the walls, under roof tiles, etc.). The longer these issues go unnoticed or unresolved, the more significant the damage will be and the more expensive the cost to repair the issues and damage will be. If we catch these issues early enough (before statutes of limitations expire), we can generally get the builder to make all the repairs at their expense or have them pay money to the association so the association can have the repairs made. There are strict legal timelines for different construction components which allow for the association to have the builder make repairs or pay to have repairs made.  Once these legal timelines expire, the association has no more legal recourse against the developer to make repairs or pay to have repairs made, and the developer has no obligation to do so. This is one reason why it is so important to consider hiring our firm and have our team of experts look for and identify construction related issues before the buildings in the community turn 10 years old and all statutes of limitation expire.

Question 15

OUR COMMUNITY IS YOUNG; CAN’T WE JUST CONTACT THE BUILDER’S CUSTOMER SERVICE OR WARRANTY DEPARTMENT AND HAVE THEM COME REPAIR ANY ISSUES?

Accepted Answer

Yes, but most builders will only make basic repairs or warranty repairs.  Often when the builder comes out to make repairs, they only make aesthetic repairs (like patch / paint a stucco crack or clean the surface mold on a window seal and then caulk around the window) to make the owners and association feel like they are being taken care of. However, these types of repairs often don’t resolve the actual problem or defect - they just cover them up and the issues and damage continue to occur behind the scenes, getting worse as time goes on.  Remember, once the building is 10 years old, the builder no longer has any obligation or reason to fix any problems, so often their methods of repairs are simply to keep the homeowners and association happy while buying time until the 10-year statute of limitations has passed.  Our firm and our experts look at the bigger picture and bigger ticket items to make sure the buildings are performing the way they are intended to many years past the 10-year statute.  More often than not it is a wise decision for a younger association to retain the services of law firm such as Riley Pasek Canty LLP and their independent team of experts (especially if there is no financial obligation to the association) to look at construction-related issues on the association’s behalf, rather than the builder sending out its team (who at the end of the day has the builder’s best interest in mind and not the association).

Question 16

WHAT IS SB800 AND IS IT A LAWSUIT / LITIGATION?

Accepted Answer

SB800, also known as the “Right to Repair Act” is a mandatory process, prior to filing a construction defect lawsuit, to let the developer know there are construction defect issues that need to be addressed.  SB800 is a pre-litigation procedure and is not a lawsuit.

Question 17

IF OUR COMMUNITY IS UNDER 10 YEARS OLD, WHAT OTHER BUILDING COMPONENTS BESIDES OUR DECKS AND OTHER ELEVATED ELEMENTS DO YOU LOOK AT?

Accepted Answer

In a condominium or townhome community, we generally look at all the building components within the building envelope the association has an obligation to repair and maintain (roofs, stucco, windows, siding, electrical, plumbing, common area hardscape, etc.).

Question 18

WHAT ARE THE MOST COMMON ISSUES YOU FIND WHEN INSPECTING BUILDINGS?

Accepted Answer

Water intrusion into the building system through improperly installed stucco, siding, windows, roofs, decks, and their associated waterproofing systems is the most found issue.

Question 19

WHAT IS DESTRUCTIVE TESTING, HOW LONG DOES IT TAKE, AND HOW DISRUPTIVE IS IT?

Accepted Answer

Destructive testing is the term we use when we need to look beyond the exterior surface of the buildings to see how the buildings and components are working and holding up.  The process of destructive testing usually includes removing small areas of stucco, siding, fascia, roof tiles, and the waterproofing components behind them to see if those items are performing the way they should.  Since water intrusion is a major concern when it comes to the performance of the building’s components, we often use pressurized water spray racks to spray the stucco, siding, and roofs before we remove small sections of these items and look behind them.

Depending on the size of the community and what we find during our initial destructive testing locations will dictate as to how long the destructive testing will last.  A typical round of destructive testing at an average size community usually only takes 1 to 2 days.  At the end of each day the areas where the destructive testing was done are cleaned up and over the next 7 to 10 days each testing location is water-proofed, put back together (stucco re-applied, siding and fascia put back on, roof tiles re-attached) and repaired areas are painted to match.

Destructive testing can be a little loud and disruptive to the residents in the building(s) where we are conducting the testing during the actual process of removing small areas of stucco and siding, but it is not overwhelming and this portion of the testing generally only lasts about 45 minutes to an hour.

Question 20

DO YOU HAVE TO DO DESTRUCTIVE TESTING AT EVERY UNIT?

Accepted Answer

No, we only test a representative sample of areas throughout the community.  Most testing locations are randomly selected.  However, if we see tell-tale signs of an issue at a specific location, or if an owner has complained of a specific issue (such as a roof leak), we will likely add those to our test locations.

Question 21

WHEN DOING DESTRUCTIVE TESTING, DO YOU NEED TO GO INTO HOMES OR ONTO DECKS AND PATIOS?

Accepted Answer

Most of the destructive testing is done from the outside of the units and does not require access into homes.  Yes, we will need to get onto decks and patios, but we can usually access these areas from the exterior of the buildings by using ladders and lifts.  However, if an owner has complained about or reported water leaks, stains, unusual cracks, etc. on interior ceilings, walls, and floors, we may request to enter the home to look at and take photographs of these areas.

Question 22

IF YOU ARE BREAKING OUT STUCCO, REMOVING SIDING, PULLING UP ROOF TILES DURING YOUR INSPECTIONS, DO YOU PUT EVERYTHING BACK THE WAY IT WAS BEFORE YOU STARTED?

Accepted Answer

Yes, at the end of each day the areas where the destructive testing was done are cleaned up.  However, it can take 7 to 10 days to have every testing location water-proofed and put back together, with stucco properly re-applied and painted to match.  Our goal is to have every test location put back and looking better than it was prior to the testing so you will not be able to tell we were there.  Again, the post-testing put back process can take 7 to 10 days to be complete (weather can also impact this).

Question 23

IF OUR ASSOCIATION TAKES ADVANTAGE OF YOUR NO COST ASSET PROTECTION / SB326 COMPLIANCE PROGRAM, HOW DO YOU GET PAID IF YOU ARE NOT CHARGING THE ASSOCIATION? HOW DO THE EXPERTS WHO DO THE INVESTIGATIONS AND REPORTS GET PAID?

Accepted Answer

We represent our association clients on a contingency fee basis, which means we do not get paid unless there is a recovery for the association. We also advance the cost of the expert team and construction crews we work with during the process, so the association or homeowners don’t have the stress or the financial burden to pay for those services out of their funds. Then, if/when we find construction-related issues and obtain a recovery (from the builder or their insurance), we get paid and reimbursed out of that recovery.  The goal is for the association to have enough money at the end of the day to make all necessary repairs.  We have a 100% success rate with this.

Question 24

CAN OWNERS IN OUR ASSOCIATION SELL OR REFINANCE THEIR UNIT IF THE ASSOCIATION RETAINS YOUR FIRM TO PURSUE THE DEVELOPER FOR CONSTRUCTION DEFECT ISSUES?

Accepted Answer

Yes, but it can be difficult and there may be exceptions.  There are lenders who will not provide financing for refinancing or sales of units in a community going through construction defect litigation (CDL).  However, CDL is very common today and many lenders have programs to work with owners trying to sell or refinance their homes in communities involved in CDL.

It is very important to remember that when working with Riley Pasek Canty LLP, unlike other law firms, we do everything we can to keep our association clients out of litigation and still get them the money / recovery they need to make all necessary construction repairs. The important word here is litigation because if an association is not in formal construction defect litigation, then there is nothing in this regard to disclose to lenders.  Approximately 98% of the time, our firm resolves construction defect-related matters without filing formal construction defect litigation.

Question 25

WHAT DO WE HAVE TO DISCLOSE TO LENDERS AND POTENTIAL BUYERS OF UNITS IN OUR COMMUNITY IF WE ARE INVOLVED WITH YOUR FIRM?

Accepted Answer

If asked, we believe you should disclose that the HOA is working with the builder to identify and repair issues that may exist. Unless a lawsuit (formal construction defect litigation) is filed, nothing regarding being involved with our firm needs to be disclosed since we are only performing inspections and investigations of the performance of the buildings.  Again, 98% of the time our firm resolves construction defect-related matters without filing formal construction defect litigation.

Question 26

HOW LONG DOES THE ENTIRE PROCESS TAKE FROM THE TIME WE RETAIN YOUR FIRM’S SERVICES TO THE TIME WE HAVE THE MONEY FROM THE RECOVERY IN OUR BANK?

Accepted Answer

This can vary depending on the extent of the construction issues identified, if any, in a particular community.  Under Riley Pasek Canty LLP’s Asset Protection Program Timeline, you can plan on the entire process lasting 10 to 14 months. This is Riley Pasek Canty’s true and proven timeline. It is not the standard, unrealistic SB800 timeline that many other law firms provide as a sales pitch.

Question 27

WHAT HAPPENS IF THE BUILDER REFUSES TO FIX THE IDENTIFIED ISSUES OR IF WE DO NOT RECEIVE ENOUGH MONEY TO REPAIR THE ISSUES IDENTIFIED DURING INVESTIGATIONS?

Accepted Answer

Our goal is to get the association enough money to make all the necessary repairs (or have the builder correctly make all the necessary repairs) through our Asset Protection Program process – we have a 100% success rate in doing so.  If the developer or their insurance companies do not offer enough money to the Association through our process, then formal construction defect litigation is a last resort.  In our experience, formal litigation is only necessary 1% to 3% of the time.  We never file formal litigation without meeting with the association’s Board of Directors, presenting them with all of the information and facts our investigations revealed, a cost to repair those issues, and what the developer or their insurance companies are offering.  At that point, the association’s Board of Directors can make an educated decision regarding whether they want to accept what the builder and their insurance companies are offering, or move forward with a formal construction defect lawsuit.  The ultimate decision is the association’s Board of Directors’ to make.

Question 28

ONCE WE RECEIVE OUR RECOVERY MONEY, WHAT HAPPENS NEXT?

Accepted Answer

We, along with part of our expert team, will meet with the association’s Board of Directors to discuss the recovery obtained and help prioritize the scope of repair so the association can begin the process of hiring a contractor to make the necessary repairs.

Question 29

WHO HIRES THE CONTRACTORS TO MAKE THE REPAIRS ONCE THE ASSOCIATION HAS THE RECOVERY MONEY, YOUR LAW FIRM OR THE ASSOCIATION?

Accepted Answer

The Homeowners Association hires the construction company to make the repairs.  However, we are here to assist the association in any way we can.

Question 30

DOES OUR ASSOCIATION HAVE TO USE THE CONTRACTORS YOUR FIRM RECOMMENDS OR CAN WE INTERVIEW AND HIRE THE CONTRACTOR OF OUR CHOICE?

Accepted Answer

The association’s Board of Directors is in full control of the repair process, including hiring the repair contractor of their choice. However, we are here to assist the Board of Directors in any way we can through the entire process, including but not limited to: identifying reputable contractors, reviewing bids and contracts, and answering questions along the way.

Question 31

CAN YOUR FIRM HELP US IDENTIFY REPUTABLE CONTRACTORS TO MAKE THE REPAIRS, AND WILL YOU ASSIST OUR ASSOCIATION IN REVIEWING THESE CONTRACTOR’S BIDS AND CONTRACTS?

Accepted Answer

Yes, all the post-claim repair work is part of our retention.  We work with the Association’s Board of Directors and the community manager to identify qualified, licensed, bonded, and insured contractors to make the repairs.  Once this is done, we have these contractors submit bids to do the work, and we help the Association’s Board of Directors and manager review these bids to make sure the association is protected.  We also continue our representation of the association through the repair process (from start to competition) should any issue arise.

FREQUENTLY ASKED QUESTIONS (FAQ)

Frequently Asked Questions