BROKER RISK MANAGEMENT
WEEKLY PRACTICE TIP
Most agents are aware of the law that went into effect as of January 1, 2025, that requires Homeowner Associations (“HOA”) of “condominium projects” to inspect exterior elevated elements (“EEEs”) of buildings containing three or more multifamily dwelling units. EEEs include balconies, decks, stairways, and walkways that are more than six feet above ground and supported primarily by wood. Specifically, the law requires:
“At least once every nine years, the board of an association of a condominium project shall cause a reasonably competent and diligent visual inspection …..of a random and statistically significant sample of exterior elevated elements (“EEE”) for which the association has maintenance or repair responsibility.”
Civil Code 5551(b)(1) [Emphasis Added.])
The first such inspection by the condo project HOA was required by January 1, 2025, and then every nine years thereafter.
(There is a second law requiring owners of apartment buildings with EEEs to conduct similar inspections no later than January 1, 2026.)
SCENARIO 1: Even though required to comply with this law as of January 1, 2025, some condominium project HOAs have not completed the inspection of EEEs. Is the individual unit owner required to conduct an inspection?
A: The law does not state, but in the absence of a specific obligation on the part of the condo seller, it appears that there is no requirement for the seller to obtain such a report. However, the seller may wish to obtain an inspection of the EEEs associated with their unit from an appropriate professional to provide the buyer with the information and to minimize liability for that issue. If a seller chooses not to provide such report, it is recommended that buyer’s agents discuss obtaining an inspection and report because this can be a safety issue.
SCENARIO 2: The HOA of the condo project states that pursuant to their governing documents, it is the responsibility of the unit owners and not the HOA to maintain and repair the EEEs. Therefore, the HOA will not be inspecting the EEEs. Must the unit owner who is selling their unit hire and pay for an inspection of the EEEs associated with their unit?
A: Basically, the same issues and recommendations as with Scenario 1, but the seller should review the governing documents to determine, perhaps with their attorney, if the HOA determination is correct.
SCENARIO 3: The HOA or governing body of a subdivision states that they are not a “condominium project” and thus, will not be conducting an inspection of the EEEs on their buildings. What does a buyer in such a subdivision do?
A: When in doubt, the seller should check the governing documents which should clearly identify what type of subdivision it is. Even with such subdivisions, it is recommended that buyer agents make the recommendations provided in Scenario No. 1. The types of divided-interest subdivisions recognized by California law and the DRE are: 1) Planned Development; 2) Condominium; 3) Community Apartment; 4) Stock Cooperative; and 5) Tenancy in Common. For more information see “A Guide to Understanding Residential Subdivisions in California” on the DRE website.
SCENARIO 4: The HOA had a report of an inspection of the EEEs on the property but refuses to release it to the unit members stating, for example, it is not a specific requirement of the Davis-Sterling law governing HOAs. Can they do that?
A: Arguably not. But the HOA member/seller can consider these options:
(a) While the law (CC 4525) does not specifically state that the HOA must deliver to the member the EEE inspection report, the EEE written inspection reports are required to be made “in coordination with the reserve study inspection pursuant to Section 5550. And all such reports shall be maintained for two inspection cycles as records of the association.” CC 5551(i) And a “reserve study disclosure summary” IS required to be delivered to the HOA member for delivery to that member’s buyer.
(b) If the HOA still refuses to provide an EEE inspection report, the HOA member (the seller) can ask to inspect and make copies of “association records” which HOAs must make available for that purpose to the member or the member’s representative. CC 5205(a) and (b).
(c) This law (CC 5551(g)) specifies that if, after inspection, the inspector reports that an EEE poses an immediate threat to the safety of the occupants, the inspector shall provide the HOA and the local code enforcement agency with a copy of the report. Upon request, the HOA should provide a copy of the report identifying any threat to safety to the HOA member for delivery to that member’s buyer.
NOTE: Because of this confusion, CAR has sponsored a bill in the state legislature (SB 410) which will make clear that the condominium project HOA must deliver the most recent EEE inspection report to the member for delivery to a buyer as a part of the Davis Sterling law. This bill is expected to pass and become effective January 1, 2026.
PRACTICE TIPS
- Regardless of the type of building that has wooden Exterior Elevated Elements, it is recommended that buyer agents advise buyers to carefully review any inspections of those EEEs and if, for any reason, the seller/HOA is not providing such inspections, to consider retaining appropriate professionals to provide buyer with a report of such inspections, review them and follow their advice.
- Discuss with your manager/broker any questions you may have regarding how to proceed with any of the above issues.
WEEKLY PRACTICE TIP: DO NOT FORWARD TO CLIENTS. This Weekly Practice Tip is an attorney-client privileged communication for the exclusive use of clients of Broker Risk Management and their agents. It may not be reproduced or distributed without the express written consent of Broker Risk Management LLP. The advice and recommendations contained herein are not necessarily indicative of standards of care in the industry but rather are intended to suggest good risk management practice