In our recent podcast episode, Juan Huizar, President of Sage Real Estate, and Cody Charnell, a broker at Sage Real Estate, delved into the impending balcony inspection law that will soon impact property owners in California. With only six months left before the law goes into effect, it is crucial for apartment owners and brokers to understand the requirements and prepare accordingly. This post highlights the key points discussed during the podcast to help you stay informed and compliant.
Understanding the Balcony Inspection Law: SB 326
The balcony inspection law, known as SB 326, was introduced following a tragic incident in Berkeley where a balcony collapse resulted in the deaths of six students. This law mandates that all properties with three or more units in California, which have balconies or stairs exposed to the elements, undergo a mandatory inspection. The primary aim is to prevent similar tragedies by ensuring the structural integrity of these elements.
Who Needs to Comply?
The law applies to all apartment owners in California with properties of three units or more. If your building has balconies, decks, or stairs that are exposed to the weather, you are required to have an inspection. It is important to note that this requirement does not apply to duplexes, even if they have external stairs or balconies.
Inspection and Compliance Process
- Initial Inspection: Every affected property must undergo an inspection conducted by a contractor with an A, B, or C license. This inspection will assess the structural integrity of the wooden elements of balconies, decks, and stairs. It is mandatory for all eligible properties to complete this inspection.
- Work Requirements: If the inspection reveals any structural deficiencies, property owners are given 120 days to complete the necessary repairs. These repairs can range from treating wood for termites to reinforcing or completely rebuilding structures. It is critical to note that the contractor who performs the inspection cannot be the one to carry out the repair work, ensuring an unbiased assessment.
- Cost of Inspections: The cost of inspections can vary significantly. While some property managers have managed to secure inspections for as low as $800, typical quotes range around $1,500. The price disparity often depends on the volume of work a contractor anticipates from a property manager.
Challenges:
- Financial Burden: The financial implications of this law are significant. Inspections and subsequent repairs can be costly, potentially reaching thousands of dollars. For property owners already facing high operational costs, this new mandate could add substantial financial pressure.
- Market Reaction: Cody Charnell highlighted a growing concern among property owners who feel overwhelmed by the increasing regulations and costs associated with owning rental properties in California. This sentiment could lead to more owners exiting the market, especially those who are already contemplating selling their properties.
- Impact on Property Transactions: The new law is also affecting property transactions. Buyers are now more cautious and may request significant price reductions to cover potential repair costs. Sellers, on the other hand, might be blindsided by these requirements, which could delay or derail transactions.
Recommendations for Property Owners
- Stay Informed: It is imperative for property owners to stay updated on the latest regulations. Understanding the specifics of SB 326 and other local laws can help you prepare and avoid last-minute surprises.
- Proactive Inspections: Consider getting your inspections done proactively. This can give you a head start on any necessary repairs and potentially secure more favorable quotes before the law takes full effect.
- Financial Planning: Plan for the financial impact of these inspections and repairs. Setting aside funds now can help mitigate the strain on your finances when the time comes to comply with the law.
- Long-Term Outlook: Despite the challenges, real estate remains a sound long-term investment. The market in California, with its limited land and high demand, continues to hold promise. By navigating these regulations effectively, property owners can protect and potentially enhance the value of their investments.
Conclusion
The upcoming balcony inspection law represents a significant shift in the regulatory landscape for California property owners. By understanding the requirements and taking proactive steps, you can ensure compliance while minimizing the financial impact. At Sage Real Estate, we are committed to helping our clients navigate these changes and make informed decisions. If you have any questions or need assistance with your properties, feel free to reach out to us.
