What to Know About Senate Bill 326 (SB 326)

The long-awaited Senate Bill 326 (SB 326) has finally been enacted by the California Legislature to protect property owners from building defects. According to the bill, there are three main objectives to accomplish.

Inspection for Exterior Elevation

Associations having 3 or more multifamily dwelling units now need to meet new requirements in accordance with the Civil Code Section 5551 of the SB 326.

So all exterior elevated elements supported in substantial part by wood or wood-based products must be inspected by a licensed structural engineer or architect every 9 years.

Part of this bill also requires the inspector to submit a report to the association board to provide specified information. This includes the current physical condition and the remaining useful life of the load-bearing components and associated waterproofing systems.

Moreover, the inspector must provide a copy of the inspection report to the association right after the completion of the report. A copy must also be furnished to the local code enforcement agency within 15 days after completing the report.

If the inspection of any exterior elevated element has already been carried out, the inspector advises that the exterior elevated element poses an immediate threat to the safety of the occupants.

In this case, the bill will authorize the local enforcement agencies to recover the enforcement costs in connection to these requirements. Then, the association board will also be able to enact rules or bylaws to impose requirements more than those imposed by these provisions.

Membership Vote Requirements to Act Against Developers

The association has the authority to bring formal and informal legal proceedings versus a declarant or developer of the community. Thus, developers can add provisions together with the governing documents limiting or restricting the ability of the association to bring such actions against a developer without the consent of the membership.

Nevertheless, the addition of section 5986 to the Civil Code aims to invalidate the ruling and outright prohibit the governing documents of the association to limit the authority of the board to initiate legal proceedings versus a developer.

Since section 5986 applies retroactively to any association to limit the language in the governing documents, associations are no longer required to comply with the restrictive provisions in the governing documents.

Provide Written Notice

Within the Civil Code section 6150, associations looking to bring action versus a developer for construction defects are required to provide written notice. This is intended to discuss problems that may lead to formal legal action and available options to address the problems.

The new bill SB 326 will amend the Civil Code section 6150 to require associations to notify the membership and discuss the potential impacts of filing a civil action, which includes financial impacts.

Authority for Legal Proceedings

The act also states that an association has the standing to institute, defend, intervene, or settle in the litigation, arbitration, mediation, or doing administrative proceedings in its own name.

SB 326 requires the board to determine whether an association may start to make legal proceedings versus a builder, declarant, or developer of a common interest development unless specified.

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