SB 326 Balcony Law & Reverse Mortgages: What California Seniors Must Know

Introduction

California’s SB 326 often called the “Balcony Law” was enacted in response to a series of tragic balcony collapses that exposed critical safety gaps in multi-family buildings.

Under this statute, property owners must conduct regular, comprehensive inspections of all exterior elevated elements (balconies, decks, stairways, walkways) to identify structural defects before they become life-threatening failures.

For reverse mortgage homeowners, SB 326 carries special significance. Since a reverse mortgage converts a portion of your home equity into tax-free loan advances, unplanned repair costs or mandated compliance upgrades can quickly erode your remaining equity and affect your loan balance.

Understanding SB 326’s inspection requirements and how to pay for them helps California seniors protect their homes, preserve equity, and avoid triggering loan defaults.

In the sections that follow, we’ll break down everything you need to know: the law’s scope, inspection cycles, financial implications for reverse mortgage borrowers, and practical steps to stay compliant without jeopardizing your retirement security.

What Is SB 326?

California Senate Bill 326, known colloquially as the Balcony Law, was signed into law in October 2019 and went into effect January 1, 2020. Its primary goal is to bolster public safety in multi-family residential buildings by mandating systematic structural inspections of all exterior elevated elements that is, anything more than six feet above ground level that supports residents, including:

• Balconies and balconies’ guardrails

• Decks and porches

• Exterior stairways and walkways

• Loading platforms and pedestrian bridges

Covered properties are multi-unit buildings both condominiums and apartments with three or more residential units. Single-family homes, duplexes, and buildings under three units are exempt.

Under SB 326:

1. Initial Inspection Deadline
   

   • Buildings constructed before January 1, 2003 had to complete a one-time structural inspection by January 1, 2025.

1. • Properties built on or after January 1, 2003 must be inspected within 15 years of their construction date.

2. Ongoing Inspection Cycle
   

   • After the initial inspection, all covered exterior elevated elements must be reinspected at least once every six years.

Inspectors must be licensed engineers or architects with experience in structural evaluation. A detailed written report documenting any observed hazards, deterioration, or required repairs must be provided to the building’s homeowners’ association (HOA) or property owner.

Understanding SB 326’s scope and timing is the first step for reverse mortgage borrowers. Next, we’ll look at exactly what those inspections entail and who’s qualified to perform them.

SB 326 Requirements for Balcony Inspections

Under SB 326, every exterior elevated element must undergo a thorough, structural safety inspection both at the law’s initial deadlines and every six years thereafter. Here’s what California seniors specially those with reverse mortgages need to know:

Inspection Frequency & Scope

• • Initial Inspection
    

    • Pre-2003 buildings: by January 1, 2025.

    • Post-2003 buildings: within 15 years of completion.

  • Ongoing Cycle
    

    • Re-inspection at least once every six years.

  • What’s Inspected
    

    • Structural components: ledger connections, support posts/beams, fasteners, guardrail integrity.

• • • Finishes and coatings: signs of corrosion, rot, or cracking in concrete and wood.

    • Drainage and flashing: evidence of water intrusion that can undermine structure.

Qualified Inspectors

• • Must be a licensed architect or professional engineer in California.

  • Demonstrated expertise in structural analysis of wood-framed and concrete elements.

  • Carry professional liability insurance to cover any oversights.

Reporting & Records

• • Inspectors issue a written report detailing:

    • Findings (deficiencies, hazard levels).

1. • • Recommended repairs or maintenance actions.

1. • • Photographic documentation of observed conditions.

   • HOA or property owner must retain the report and make it available to residents, prospective buyers, and lenders.

1. • Compliance confirmation: Some counties require submittal of a certificate of inspection to the local building department.

Failure to comply can result in fines, stop-work orders on repairs, and even worse unexpected repair costs that could strain your reverse mortgage line of credit. In the next section, we’ll explore why reverse mortgage homeowners should care about SB 326’s mandates and how inspection and repair costs can affect your loan balance.

Why Reverse Mortgage Homeowners Should Care

For seniors holding a reverse mortgage, SB 326 isn’t just another regulation it directly impacts your home’s safety, your financial well-being, and your ability to keep the equity you’ve unlocked. Here’s why you should pay close attention:

1. Unexpected Repair Costs Can Erode Equity

1. • Reverse mortgages convert home equity into loan advances, reducing your remaining equity over time. If your building’s HOA or you personally must fund SB 326–mandated repairs often ranging from a few thousand to tens of thousands of dollars those expenses can substantially diminish the cushion you planned for living expenses or legacy planning.

2. Loan Balance & Draw Availability May Be Affected
   

   • Some reverse mortgages place limits on future draws if the property falls into disrepair or violates local safety codes. A delayed or incomplete SB 326 inspection could prompt your lender to freeze further advance requests until compliance is demonstrated.

3. Risk of Default Triggers
   

   • Though reverse mortgages don’t require monthly payments, they do mandate that borrowers maintain the home in good repair. Failure to address hazardous balcony conditions could technically constitute a default under your loan terms, risking foreclosure proceedings.

4. Insurance & Tax Escrow Implications
   

   • Many reverse mortgages escrow property taxes and insurance. If SB 326 compliance leads to increased insurance premiums (e.g., if your insurer deems balcony repairs a material safety improvement), your escrow payments and thus your overall loan balance could rise.

5. Preserving Safety & Resale Value
   

   • Aside from the financial angle, timely inspections and repairs protect residents from structural failures and uphold property values. Should you move or sell later, a documented SB 326 compliance report will reassure buyers and appraisers, preserving your home’s market price.

By understanding these implications, reverse mortgage homeowners can proactively budget for inspections and repairs, work with their HOAs to spread costs, or even tap into future reverse mortgage advances to finance necessary work ensuring SB 326 compliance doesn’t undermine your retirement security.

Key Deadlines & Compliance Timeline

SB 326’s inspection requirements roll out based on building construction date, with county reporting deadlines varying slightly depending on local ordinance implementations. Here’s a high-level schedule and what happens if you miss the deadlines:

County-by-County Rollout Notes

• Los Angeles County: Initial compliance certificate due to county by March 1, 2025.

• San Francisco: Reports submitted via SF DBI portal by February 1, 2025.

• San Diego: Certified inspections must be logged with the Development Services Department by April 1, 2025.

• Orange County: Record inspections on or before May 1, 2025 using county online portal.

• Other Counties: Check your local building department’s SB 326 webpage for exact submittal dates most align within Q1 2025.

Consequences of Missing Deadlines

1. Fines & Penalties: Counties can impose daily fines (e.g., $100–$500 per day) until records are submitted.

2. Lender Notifications: Mortgage servicers may flag non-compliance, potentially freezing reverse mortgage draws.

3. Liens: In extreme cases, local governments can place liens on properties to recoup inspection or enforcement costs.

4. Insurance Risks: Insurers may decline coverage or increase premiums if required inspections aren’t completed, further raising homeowner expenses.

Action Steps

• Contact your HOA or property manager to confirm inspection schedules.

• Verify your county’s submittal deadline on the local building department website.

• Retain inspection certificates and submit promptly to avoid penalties.

Financing SB 326 Repairs with a Reverse Mortgage

Seniors can leverage their existing reverse mortgage to fund SB 326–compliant repairs rather than tapping savings or obtaining a separate loan. Here’s how:

1. Using Loan Advances for Repair Costs
   

   1. Accessing Unspent Proceeds: If you set aside a portion of your reverse mortgage line of credit at closing or have taken only part of your available funds you can request additional advances to pay for balcony inspections and repairs.

   2. Lump Sum Advances: Ideal for a known repair cost (e.g., a contractor bid of $12,000). You receive the total in one transaction.

   3. Line of Credit Draws: Draw smaller amounts in stages as work progresses, minimizing interest accrual on unused funds.

2. Pros of Tapping Home Equity
   

   1. No Monthly Payments: Advances on a reverse mortgage require no repayment until the home is sold or the borrower permanently leaves keeping cash flow steady.

   2. Competitive “Interest”: While reverse mortgages charge a rate plus a margin, it often compares favorably to home equity lines or personal loans for seniors with limited income.

   3. Flexible Disbursement: Choose lump-sum, monthly, or line-of-credit draws to match repair timelines.

3. Cons & Considerations
   

   1. Reduced Available Equity: Every advance increases your loan balance and reduces the remaining line of credit potentially limiting future cash needs.

   2. Interest Accrual: Interest compounds on outstanding advances, so drawing only what’s necessary can minimize long-term costs.

   3. Closing-Cost Offset: Some reverse mortgages allow rolling certain closing costs into the loan to consider whether inspection and permit fees can be included.

4. Steps to Draw on Your Reverse Mortgage
   

   1. Contact Your Loan Servicer: Request an advance for “home improvement” or “structural repairs.”

   2. Provide Repair Estimate: Submit contractor bids or a compliance invoice to justify the amount.

   3. Sign Advance Agreement: Review and sign paperwork outlining how and when funds will be released.

   4. Receive Funds & Complete Repairs: Coordinate with your contractor, then confirm completion.

   5. Keep Records: Retain paid invoices and inspection certificates to demonstrate SB 326 compliance.

By strategically using reverse mortgage advances, California seniors can fulfill SB 326 obligations ensuring balcony safety without depleting cash reserves or navigating new loan applications.

Practical Steps for California Seniors

To navigate SB 326 smoothly and protect both your home’s safety and reverse-mortgage equity, follow these actionable steps:

1. Find a Qualified Inspector
   

   • Search Licensed Professionals: Look for a California-licensed structural engineer or architect with specific experience in balcony, deck, and exterior stair inspections. You can verify their license on the California Architects Board or Board for Professional Engineers, Land Surveyors, and Geologists websites.

   • Get Multiple Bids: Contact at least two firms to compare scope, timelines, and fees. Ask for references from other HOAs or senior communities.

   • Confirm Insurance: Ensure the inspector carries professional liability insurance in case of oversight.

2. Budget for Anticipated Repairs
   

   • Review the Report Carefully: Your inspection report will categorize deficiencies as Immediate Safety Hazards, Maintenance Items, or Future Concerns. Prioritize immediate hazards first.

   • Obtain Contractor Estimates: For each item, get detailed bids that break out labor, materials, and permit fees.

   • Estimate Total Costs: Combine inspection fees (typically $500–$1,500 per building) with repair estimates. In California, average balcony repairs run $8,000–$15,000 per unit, but complex structural work can exceed $25,000.

   • Explore Funding Options:

     • Reverse Mortgage Advances: Draw from your existing line of credit.

     • HOA Assessments: If you’re in a condominium, the HOA may bill members proportionally.

     • Local Grants or Loans: Check city/ county programs for senior home-repair assistance.

3. Document Work for Your Lender
   

   • Keep Inspection Certificates: Obtain the official SB 326 inspection certificate and file it with your mortgage servicer to demonstrate compliance.

   • Save All Bids & Invoices: Contractors’ signed bids and paid invoices prove that repairs were necessary and completed to code.

   • Maintain Before-and-After Photos: Photograph each affected balcony, deck, or stair before work begins and after completion.

   • Submit Documentation Promptly: Provide your servicer with a compliance packet inspection certificate, repair invoices, and photos to avoid any draw freezes or default concerns.

By proactively selecting the right professionals, accurately estimating and funding repairs, and meticulously documenting every step, you’ll ensure SB326 compliance protects both your home’s safety and your retirement equity.

Frequently Asked Questions

Does SB 326 apply to my property type?

Only buildings with three or more residential units fall under SB 326. Single-family homes, duplexes, and triplexes are exempt. Condominiums and apartment complexes with three-plus units must comply.

Can inspection fees be rolled into my reverse mortgage?

Yes. Most HECM reverse mortgages allow you to draw from your available line of credit for “home improvement” purposes including SB 326 inspections and repairs. Contact your loan servicer, submit the inspection invoice, and they can advance the funds without a new loan application.

What if I’m selling the home after inspection?

Before sale, you’ll need to provide the buyer and title company with your SB 326 inspection certificate and repair documentation. An up-to-date compliance report:

• Speeds closing by removing inspection contingencies

• Instills buyer confidence, often supporting a stronger sale price

• Eliminates last-minute renegotiations over uncovered defects

Who bears the cost if I live in an HOA/Condo?

In condominiums or HOAs, the association typically arranges and pays for the inspection. Costs are then allocated to unit owners via special assessments or reserve draws per the HOA’s governing documents.

What happens if I miss the inspection deadline?

Counties can impose daily fines (often $100–$500/day) and may file liens to recoup enforcement costs. Lenders may also freeze reverse-mortgage draws until proof of compliance is provided.

Conclusion & Next Steps

SB 326’s Balcony Law is essential for preventing tragic structural failures but it also carries important implications for reverse mortgage homeowners. Timely inspections and repairs:

1. Ensure Resident Safety

2. Protect Your Remaining Equity

3. Maintain Full Access to Loan Advances
   

Next Steps for California Seniors

1. Schedule Your Inspection: Engage a licensed structural engineer or architect before your county’s deadline.

2. Plan & Fund Repairs: Obtain contractor bids and draw on your reverse mortgage line of credit to cover costs.

3. Document & Submit: Keep your inspection certificate, invoices, and photos handy provide them to your lender promptly.

For personalized guidance on SB 326 compliance and reverse mortgage financing, contact Equity Access Group today. Our experts will help you navigate inspections, funding strategies, and paperwork so you can focus on what matters: living safely and comfortably in your home.