SB 326 and California Condo Sales: What Homeowners and Buyers Need to Know in 2025

If you own a condo in California or are thinking about buying one, there’s a new law you need to know about—SB 326, also called the Balcony Safety Inspection Law. This legislation is already impacting real estate transactions across the state, and many condo owners and potential buyers don’t realize how it could affect them.

Recently, we experienced this firsthand during a Newport Beach condo sale, and it’s something every HOA homeowner should be aware of.

What Is SB 326?

SB 326 is a California law that requires HOA communities with three or more units to complete safety inspections of exterior elements such as:

• Balconies

• Decks

• Walkways

• Elevated exterior structures

The goal is to ensure these areas are structurally safe, preventing accidents and costly future repairs. If inspections reveal damage—like dry rot or structural weakness—the HOA must complete repairs to remain eligible for traditional financing from lenders following Fannie Mae and Freddie Mac guidelines.

How SB 326 Impacted Our Recent Transaction

During a recent Newport Beach condo escrow, everything seemed on track—until 20 days into the transaction, the buyer’s lender (a large national bank) declined the loan.

The reason? The HOA was not SB 326 compliant. The bank’s report cited 65 areas with dry rot and staircase issues, and the HOA had not yet completed the necessary repairs.

Under SB 326, this meant the property could not be financed with conventional lending. The buyer had only two choices:

1. Pay cash for the condo, or

2. Secure alternative financing outside traditional bank loans

In this case, our clients switched to a credit union lender that approved the purchase—allowing the sale to close successfully. But not every buyer has access to those options.

Why This Matters for Condo Owners

If your HOA hasn’t completed its SB 326 inspections or repairs:

• Your property may not qualify for traditional financing

• You could be limited to cash buyers or niche lenders

• Your buyer pool shrinks—potentially affecting your sale price and days on market

This means planning ahead is crucial if you intend to sell your condo in the near future.

What Buyers Should Watch For

If you’re buying a condo in California:

• Ask early in the process whether the HOA is SB 326 compliant

• Request documentation from the seller or HOA

• Have a backup financing plan in case compliance is an issue

• Work with a real estate agent who understands how to navigate these situations

Action Steps for Homeowners

If you own a condo in an HOA community:

1. Contact your HOA to ask about SB 326 inspection status and repair timelines.

2. Request written proof of compliance to show buyers and lenders.

3. Address repairs early to avoid last-minute transaction disruptions.

Times Real Estate CA Can Help

At Times Real Estate CA, we help clients overcome challenges like SB 326 compliance issues by:

• Coordinating with HOAs to get documentation quickly

• Connecting buyers with flexible lenders who can finance non-compliant properties

• Creating selling strategies that minimize delays and maximize offers

📍 Thinking about buying or selling a condo in Orange County or anywhere in California? Let’s talk about your HOA’s SB 326 status and how to position your property for success.

📞 Regan Beegle | 949-836-5480 | [email protected]
📞 George Hanold V | 949-836-5479 | [email protected]
🌐 TimesRealEstateCA.com