If you are selling a condominium or buying a condominium, please pay attention. This is extremely important. As of January 1st, 2025, lenders will require condominiums, the Homeowner Association for the condominium, to have completed SB326 inspection.
SB 326 is a California law that was passed years ago. It’s referred to as balcony bills. It’s basically an inspection that they bring a structural engineer or architect to check the balcony and decks for safety. But now as of January 1st, 2025, the lenders require it. So it’s very important if you’re selling, you want to make sure the buyer is able to get financing. If the buyer pays cash, no problem. It’s just when the buyer is getting financing.
So what can you do to make sure you’re not going to have problems? If you’re selling your condominium, please pick up the phone. Call your homeowner association, ask, can I get a copy of the SB326 inspection? If they say, we don’t have it, what are you talking about? You’re going to have problem. But if they say this, we have it, please ask them, please send it to me, and share that inspection report with your preferred lender, whoever did your mortgage or refinance. Ask your preferred lender and say, could you please look at this SB326 for me and let me know what you think? Your lender is going to look at it, and they’re going to look at the high priority items. It’s just like an inspection, so it’s going to list minor items, not to worry too much, but high priority. The high priorities are important because the lender wants to make sure those high priority items were fixed before they will give loan to the buyer. So your lender will be able to tell you if you have an issue. If, for example, one of the neighbor’s balcony has issue and that hasn’t been fixed, even though it’s not your balcony, right? But it’s going to be a problem because the buyer’s lender wants to make sure all the high priority items for the entire condominium has been fixed.
If you are a buyer, you want to make sure you don’t waste time and you don’t waste money. Because once you go in escrow, you’re, of course, very happy. That’s great. You’re going to spend money on inspection. Then you’re going to find out, oops, they don’t have SB326 inspection completed. So before you go in escrow, pick up the phone, call the agent, and say, please, could you find out if there’s an SB326 inspection on file? And if there is, please send it to me. I’m going to have my lender review it. Send that inspection report to your lender and ask them to review it. Your lender may ask you for a copy of the meeting minutes because they want to check on the meeting minutes to see if those high priority items have been discussed. What are they doing about it? Are they fixing or not? So it’s important you do that. And this is exactly why it’s important.
You as a buyer, when you’re making offer, you are in multiple offer scenario and you want to make sure your offer is strong and you start removing contingencies. Be very, very careful when you’re removing your loan contingency. As agents, we do not recommend that, but if you choose to do that, you might have problem with this because when you have a loan contingency, the lender wants to make sure you as a borrower, you’re approved. But also wants to make sure the condominium is approved. So there’s two pieces to this. So if you have a perfect credit score, perfect income, and you are 100% qualified, and your loan is approved, but the condominium is not approved, and if you remove your loan contingency, and if your lender says, sorry, we cannot give financing for this condominium, you are going to lose your earnest money deposit. This is a very serious topic, and you need to pay attention to this before you do that. So that’s why as agents, we do not recommend you to remove loan contingency. If you have any questions about this, feel free to reach out, and I look forward to hearing from you soon.
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Shirin Rezania Ramos | 858.345.0685 | www.shirinramos.com | Compass, DRE 0203379
