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More About California’s Balcony Law SB721

The SB721 Balcony Inspection Deadlines

California’s Balcony Law, SB721, was enacted in 2019. During the thick of the COVID-19 pandemic, multifamily tenants nationwide were severely impacted. As a result, California’s multifamily owners experienced an unforeseen 2-year delay both in physical and economic terms to address balcony inspection compliance requirements. Recently, however, there has been a surge of interest from portfolio owners and property managers inquiring about and implementing mandatory balcony inspections. Here are some updates and best practices from which all owners and managers of California multifamily properties can benefit.

1. Understand how the deadlines work

The first deadline for balcony inspection is January 1, 2025. The second inspection is six years later. People who have completed inspections before January 1, 2025, the due date, do not need to complete another inspection until January 1, 2031.

2. Treat the inspections and repair work as two separate tasks

SB721 prohibited the contractors who conduct balcony inspections from providing repair work. SB 607, signed into law in September 2021, eliminated the prohibition against the contractor performing both inspections and repair work. However, project owners should still be cautious when hiring a single entity to perform the inspection and repair work, as there is a conflict of interest. When an inspector is hired only for inspection work, they receive no benefit from the scope of repair. Their findings may be more unbiased than a contractor who performs the inspection, and their inspection report is more likely to prescribe only the extent of repair required. It is prudent for building owners and managers to hire two different entities to oversee the inspections and repair work.

3. Lenders are taking an interest

In addition to keeping inspection reports on record for two cycles (12 years), the law requires the seller to share past inspection report(s) with the buyer at the time of any subsequent sale of the multifamily building. The lending landscape has changed, causing transaction volume to slow down. As interest rates rise and funding tightens up, lenders add layers of criteria to filter and select eligible borrowers. They may factor the financial obligations of balcony inspection and repair into underwriting. Some lenders are asking for the cost of the assessment to be put into the immediate repair table. Others want to see it flagged in the body of an inspection report.

4. Start early to leverage competitive pricing

The delayed supply chain and shortage of talent in the industry have taught us that getting in line early is the best way to meet deadlines these days. Balcony inspections and repairs are no exception. Regarding balcony inspection compliance, the law puts the responsibility on the property owner. The process begins from the moment an owner contracts a qualified inspector. The inspector follows the inspection guidelines to survey properties and to prescribe the outcomes based on health and safety considerations. The report will provide four outcome scenarios that lead to different follow-up actions. The building will either pass inspections or will require repairs. Once the building passes inspections, the owner receives the final report. All reports should be on file for two inspection cycles. This entire process completes the compliance process from the beginning to the end. Since the inspection dates are fixed, owners and managers can budget and shop around early to enjoy competitive pricing.

Please note that balconies fail regardless of the age of the building. Proactive management can save money and life. It’s good to start now rather than wait and have to pay more for your inspection. For information on SB721 balcony inspection law, please refer to More than Balconies - California’s Balcony Inspection Law SB721.