SB 410, SB 326, and the Next Wave of Condo Sale Problems in California

A couple of days ago, I was on what felt like my millionth call this year about FNMA issues. A community manager reached out because their condo project had been flagged due to their SB 326 report. Based on past experience, I assumed it was the usual situation: incomplete repairs, open safety concerns, and lenders unwilling to proceed. I was ready to walk through the familiar explanation that Fannie Mae won’t allow financing until all “critical repairs” are completed.

But this time, the response caught me off guard.

“All the SB 326 work is done,” the manager said. “We just don’t have any proof.”

That’s when it hit me: the next major problem is already here.

Going forward, the issue won’t simply be identifying repairs. The new challenge will be that repairs were completed, but no documentation exists to show they were finished. No completion report. No confirmation for lenders. Nothing that gives buyers, realtors, or underwriters confidence that the project is safe and stable.

The manager pointed out that SB 326 doesn’t require a follow-up report once repairs are done, and they’re right. The law never mandates a second report confirming completion and that gap is about to create significant complications.

Beginning January 1, SB 410 takes effect in California. Under SB 410:

• Sellers must provide buyers with the most recent SB 326 inspection report.
• These reports can no longer be withheld or redacted.
• The reports are now officially considered HOA records, meaning any owner can request and review them at any time – not just during a sale.

SB 410 also establishes new content requirements. Each inspection report must include:

• The date of inspection
• The total number of units in the community
• How many exterior elevated elements are in the community
• How many units contain elevated elements
• How many elements were inspected
• Whether any safety concerns were identified

While SB 326 was created to improve safety, SB 410 was created to increase transparency. Without clear documentation on both fronts – especially proof that repairs have been completed – condo sales will become increasingly difficult.

Now is the time for associations to have proactive conversations with their inspection teams, contractors, and escrow providers. Establishing a clear system for completion reports and ongoing record-keeping is critical – before the next escrow is at risk.