Starting January 1, 2026, California condominium sellers covered by Civil Code §4525 have had to hand the buyer the HOA's latest balcony and exterior elevated element inspection report as part of the standard resale packet. The rule came from SB 410, which Governor Newsom signed on October 10, 2025. It added the report as item eleven on the list of documents required under Civil Code §4525.
The buyer's lender reads the same report. Under current Fannie Mae and Freddie Mac rules, a lender reviewing a condo project has to obtain and review any recent structural inspection. If that inspection shows unaddressed critical repairs, the project is ineligible for a conventional loan. In Redwood City, where SAMCAR recorded only five condo and townhome sales in September 2026, the balcony report may affect whether a deal closes more than any other document in the packet.
What the Inspection Covers, and What Changed This Year
Under Civil Code §5551, a condo association has to inspect the decks, balconies, stairs, walkways and similar elements it maintains if they sit more than six feet above ground, are designed for use, and are supported by wood. A licensed structural engineer, civil engineer or architect inspects a random, statistically significant sample of those elements at least once every nine years. The first round was due by January 1, 2025. Buildings whose permit applications were submitted on or after January 1, 2020 have a separate deadline, no later than six years after the certificate of occupancy is issued.
The inspector produces a signed or stamped report on the elements' condition, their expected remaining useful life and recommended repairs. That report becomes part of the association's reserve study, and the association keeps it for two inspection cycles. SB 410 also made the reports easier to scan. The first page now has to show the total number of units in the project, and the inspector has to certify that a statistically significant sample was evaluated. The law now covers buildings with three or more attached multifamily units.
The inspection requirement isn't new. The new part is that the report now travels with the sale. Before 2026, a buyer had to know to ask for it. Now it arrives in the same packet as the governing documents, the assessment statement, any approved assessment changes that haven't come due yet, and, if the buyer asks, the past 12 months of approved board minutes. Under Civil Code §4530, the HOA has to provide these documents within 10 days of a written request and may charge a reasonable fee based on its actual cost.
Redwood City Puts the Report on a Clock
A report's findings only mean something once you know what follows from them, and in Redwood City the city sets those deadlines. The City of Redwood City's SB 326 page asks associations to send their inspection report to Code Enforcement whether or not repairs are needed, and it offers an Exemption Declaration Form for buildings that don't qualify. The city also sets deadlines for each type of finding:
| Finding in the report | What Redwood City's process requires |
|---|---|
| Inspection complete | Stamped or signed report to the HOA board within 45 days |
| No repairs needed | Report still goes to Code Enforcement, and a copy stays on file at the property |
| Corrective work, no immediate threat | HOA applies for a building permit within 120 days and completes the work within 120 days of permit issuance |
| Immediate threat, blocked access or shoring needed | Report goes to the city within 15 days, and occupant access stays blocked until city staff inspect and approve the repairs |
| Record keeping | Reports kept for two inspection cycles, or at least 18 years |
Take the middle row. A report that finds non-emergency corrective work starts a process that can run up to 240 days before the work is done, and that's if the permit is issued as soon as it's applied for. A unit can easily go on the market somewhere in that stretch. The report in the disclosure packet then describes work the association has committed to but hasn't finished.
The Second Reader of the Same Report
Here the disclosure rule runs into mortgage underwriting. Fannie Mae's Selling Guide, in section B4-2.1-03 (current edition dated October 7, 2026), sets this inspection requirement for lenders:
"If a structural and/or mechanical inspection was completed within 3 years of the lender's project review date, the lender must obtain and review the inspection report."
The same section defines critical repairs as repairs that significantly affect a building's safety, soundness, structural integrity or habitability, or the project's financial viability or marketability. Its list of examples includes advanced physical deterioration, water intrusion, and any project that "failed to pass state, county, or other jurisdictional mandatory inspections" tied to structural safety. Balconies, waterproofing and stairwells are named among the items to consider. If a report shows unaddressed critical repairs, the project stays ineligible until the work is finished and an engineer's report, or a substantially similar document, shows the concerns have been resolved.
Freddie Mac's Section 5701.3 follows the same logic. The seller has to review structural and mechanical reports completed within three years and needs evidence that critical repairs were resolved. Both rules generally apply to projects with five or more attached units. Fannie's FAQ exempts detached units, two- to four-unit projects and certain Fannie-to-Fannie limited cash-out refinances from the critical-repair review. Freddie's March 2026 bulletin requires five- to ten-unit projects that use its Exempt From Review path to be free of critical repairs and evacuation orders.
The timing matters. A balcony inspection finished in late 2024 to meet the January 1, 2025 deadline falls within that three-year lookback until late 2027. Through all of 2026 and most of 2027, the report a seller is now required to disclose is very likely the same report the buyer's lender is required to review.
Neither Fannie Mae nor Freddie Mac has published guidance that names California's balcony law specifically. Their rules cover failed mandatory inspections and unsafe balconies in general terms.
Why a Special Assessment Does Not Close the Gap
The obvious fix for a costly finding is a special assessment, but under the lending rules, voting the money is different from finishing the work. Fannie Mae requires lenders to look at each current or planned assessment's purpose, approval date and status, original and remaining amount, and expected payoff date, to judge whether it pays for a critical repair. If it does and the problem hasn't been fixed, the project is ineligible.
The guide also sets some limits on this. Routine repairs, meaning preventive work or normal capital replacement paid for from the operating budget or through assessments within guidelines, are not critical. Damage confined to one or a few units that doesn't affect the project's overall safety or habitability is outside these requirements. So two balcony reports with similar repair lists can lead to very different financing results, depending on how the engineer describes the condition and whether the work has been completed.
Lenders don't have to use any standard form to collect this information. Fannie's Form 1076 is optional, and lenders have to gather other documents if a questionnaire leaves eligibility questions open. The Form 1076 addendum added in December 2021 asks for inspection dates and findings, incomplete repairs and their schedules, reserve study details, and current or planned assessments. The reserve study is under closer review too. For loan applications on or after August 3, 2026, Freddie Mac requires that when a seller relies on a qualifying reserve study, the project budget include the study's highest recommended reserve allocation, and that allocation cannot rest on a baseline funding method. Freddie Mac's replacement reserve minimum rises from 10% to 15% on January 4, 2027.
Five Sales in September
All of this plays out in a small market. According to SAMCAR's September 2026 common interest development report, Redwood City had five condo and townhome sales that month, at a median price of $1,100,000. Units averaged 53 days on market and sold for 98% of list price. There were 24 units in inventory, with 2.9 average months to sell. In September 2025, the same report showed 10 sales at a $965,000 median, 42 average days on market and 99% of list. Redwood Shores had a single sale in September 2026, at $1,238,888 and 104% of list after 12 days, with seven units in inventory.
That 14% year-over-year rise in the median rests on five sales, so it says more about which units happened to close than about a market-wide trend. The thin volume still tells you something. When a city closes five condo sales in a month, a single deal that slips because a project fails lender review is a large share of that month's activity. Longer days on market and a slightly lower sale-to-list ratio leave more time for a lender's questions to come up before closing.
Taken together, a balcony report typically moves through a Redwood City resale in this order:
- The licensed inspector delivers the stamped report to the HOA board and sends it to Redwood City Code Enforcement.
- The report's findings and repair cost estimates become part of the association's reserve study.
- The seller includes the most recent report in the §4525 resale packet, which the HOA provides within 10 days of a written request.
- The buyer's lender, reviewing a project with five or more attached units, pulls any structural report completed within three years.
- If the report shows unaddressed critical repairs, the project stays ineligible for Fannie Mae or Freddie Mac financing until an engineer documents that the work is finished.
Questions From the Escrow Desk
Does a clean report guarantee financing? No. A lender reviews a whole set of documents, including board minutes, reserve studies, repair lists and assessment lists. The balcony report is one item in that set.
What if my building has only a few units? Fannie Mae's critical-repair review applies to projects with five or more attached units and exempts two- to four-unit projects. The state inspection law covers buildings with three or more attached multifamily units. So a small building can be covered by the inspection law without triggering the same lender review.
Why does Redwood City's page still list a January 2025 deadline? That was the general statutory deadline for the first round of inspections, with a later window for buildings permitted on or after January 1, 2020, and the current text of §5551 still shows it. The city's page explains its process but doesn't show how many associations have filed reports.
Who can confirm whether a specific association has filed? Redwood City handles report submissions through its permits line at 650-780-7350 and by email at [email protected].
If you're preparing to list or make an offer on a Redwood City or Redwood Shores condo, Peninsula Realty Partners can read through the association's balcony report, reserve study and assessment history with you before the lender does, so any financing questions surface early in the timeline. Schedule a consultation to go through the packet together.
This article is general information, not legal, tax or financial advice. Consult a qualified professional about your situation.
