SB 721 – California Multi-Family Buildings New Require Inspections of “EEEs”

Many in the construction industry and multi-family development field have been closely following Senate Bill 721, or the “Balcony Bill,” regarding new requirements for building owners associated with decks and balconies. After almost a dozen amendments, the “Balcony Bill” finally passed in the state legislature with an overwhelming majority and was signed into law September 17th, 2018, by Governor Jerry Brown.

Balconies and decks, called “Exterior Elevated Elements” (“EEE”) in the statute, are common features in most multi-family buildings in California – where better to enjoy the California sun? However, many of the structures have proven to be problematic at best due to complex intersections of construction trades and design issues as well as limited understanding and effectuation of maintenance. Indeed, the “Balcony Bill” arose largely out of an outcry following the 2015 balcony collapse in Berkeley in 2015, which left six young people dead and another seven injured.

Since the average age of apartments in California is over 40 years, a large segment of the real estate rental market will be affected.

What Buildings Must Comply?

Buildings containing three or more multi-family dwelling units are covered by the Balcony Bill. However, due to significant push back from the common interest development community, condominiums are generally excluded. However, condominium conversions sold after January 1, 2019, must comply with the new inspection requirements.

What are the Inspection Requirements?

The bill covers not just “balconies” or “decks” and their associated supports and railings, but all “exterior elevated elements” – which is notably broadly defined to include “balconies, decks, porches, stairways, walkways, and entry structures that extend beyond exterior walls of the building and which have a walking surface that is elevated more than 6 feet above ground level, are design for human occupancy or use, and rely in whole or in substantial part on wood or wood-based products for structural support or stability of the exterior elevated element – and “all associated waterproofing elements.” The new statute applies to multifamily units with 3 or more units.

The owner of an affected building must ensure that the first inspection is completed before January 1, 2025, and subsequent inspections are required every 6 years after January 1, 2025, or by or before January 1, 2031. The inspections must also include any testing needed to evaluate the conditions. Additionally, condominium conversions sold after January 1, 2019 will need the EEE inspection conducted before the first close of escrow of a separate interest/unit.

However, if a project has submitted for permit after January 1, 2019, the inspection must occur no later than 6 years from the date of certificate of occupancy. Thereafter, the inspection must be performed by Jan 1^st every six years. If the property was inspected within 3 years prior to January 1, 2019, and a report was issued stating the EEE were in proper working conditions and do not pose a threat to the public health and safety, no further inspection is required until January 1, 2025. If any immediate threat to health and safety are found, the report must identify that and advise if occupants should be kept out of the buildings, if emergency repairs are recommended, or if shoring is needed. If repairs are recommended, the inspector must prepare a report within 45 days and issue it to the owner and the local law enforcement within 15 days of the report’s publication. If emergency repairs are called for, the Owner is obligated to perform preventive measures including preventing occupant access to the EEE until the emergency repairs are completed.

The inspector’s report must include photos, a narrative, and any test results. In addition, the report must include the repair and replacement work to be performed by a licensed and qualified licensed professional per Health & Safety Code section 17922. Notably, the inspection must include a sampling of at least 15% of each type of EEE.

The report must contain:

• identification of each type of EEE that does not meet the load requirements
• assessment of the load-bearing components and associated water proofing elements of the EEE using methods that allow for direct visual observation or comparable means for evaluation of their performance
• the current condition of the EEE
• expectations of future performance and projected service life
• recommendations for further inspections needed

In addition, the repair recommendations are to include work to be done in compliance with the recommendations of the licensed professional providing the report, the applicable manufacturer’s specifications, the California Building Standards Code (consistent with Health & Safety Code §17922(d)), and all local jurisdictional requirements.

What has to be done once an inspection occurs?

The inspector must issue a report with the findings and repair recommendations, if any. If repairs are recommended and there is no emergency situation, the owner has 120 days to apply for a permit and once approved, have another 120 days to complete the repairs, they must be completed within 120 days.

Failure to make repairs timely can be costly as well. If the repairs are not done within 180 days, the inspector (who had been hired by the Owner) has to report the Owner to the local enforcement agency and notify the owner. If within 30 days of this notice, the repairs are not completed, the Owner faces mandatory civil penalties based on a fee schedule set by the local authorities (min. $100/day and max $500/day) until the repairs are completed unless the Owner procures an extension of time from the local agency. Moreover, if the fines are assessed, the local agency can record a building safety lien. If the lien is discharged, released, or satisfied, the notice of discharge must be recorded by the local agency and include the amount of the lien, the name of the agency, the street address, the legal description and assessor’s parcel number, and the name and address of the building Owner.

Who can perform the EEE Inspection?

The requirements for an inspector are fairly broad. A licensed architect, civil and structural engineer, a contractor holding an A, B or C-5 licenses for over five years and with experience constructing multi-story wood-frame buildings are all authorized. Additionally, local jurisdictions can allow specific certified building inspectors from recognized state, national or international associations (e.g., International Code Council). However, a contractor who conducts the inspection cannot perform the repairs called out in his or her report.

Owners of multifamily buildings (and likely mixed use where multifamily is included in the project) with balconies, decks or other exterior elevated elements must pay close attention to their buildings and the requirements for testing and inspections, as well as performing timely repairs to avoid liability under this new law. Real estate developers and landowners of common interest developments (i.e., condos) have a sigh of relief, for now, as there is an explicit provision exempting common interest developments from this law. The idea behind the exemption was due to the fact that the Owner would not have as much control when the project is either a condominium or converted to a condominium, if any such “Owner” could be identified. Due to the nature of all new laws, taking time up front to ensure your actions are going to put you in the best position to comply is highly recommended. Be sure to act early to review your properties and retain legal counsel familiar with construction and this new law as well as a qualified consultant to assist in evaluation of the buildings you own.