The Balcony Safety Inspection Bill: Avoiding Owner Liability

The Benefits to Building Owners of Health & Safety Code §17973

Article Contributed by Berding & Weil LLP

By now, most owners of apartment buildings with balconies and other elevated exterior components know that safety inspections are required by California Health and Safety Code §17973.[i]  This regulation was inspired by the collapse of a balcony in Berkeley, California, in June of 2015 that killed six Irish exchange students and badly injured seven others. Generally, the statute requires balconies, walkways, staircases, and other “exterior elevated elements” built primarily of wood or wood-based products on residential buildings of three or more units, to be inspected for structural safety every six years. (Editor’s Note: The first inspection must be completed no later than January 1, 2025.)

These inspections must include a visual investigation of “load-bearing components,” even if that means removing portions of the building to do it. The assessments must be done by a licensed architect, civil or structural engineer, or a general contractor holding specific specialty licenses. The statute requires that most wood-based exterior elements intended for human occupancy be inspected and their condition and life expectancy reported. Findings that indicate probable safety hazards must be reported to the local building official.

It is always tempting to regard new government regulations as just more interference with the rights of property owners. However, there is ample evidence of building failures resulting in injury or death to justify this new requirement. But what rarely is discussed is how this new statute can be beneficial to the owners of apartment buildings and preserve an income producing asset[ii].

When wood is used to construct a building, it is vulnerable to rot if moisture is present. Many low-rise apartment buildings have framing, structural supports, railings, decks, exterior staircases, and elevated walkways built primarily of wood. We know that the longer moisture invades wood materials the more decay and damage results to where the structure of a balcony or other walking surface can fail, and fail spontaneously with devastating consequences, as it did in Berkeley. The converse is that the earlier leaks or moisture intrusion are discovered, the easier and cheaper it will be to fix those problems. In Berkeley, it appears that water entered the structural supports for the balcony at the juncture of the balcony and the building. Compounding that problem was a lack of ventilation of the enclosed balcony supports preventing moisture trapped in the balcony assembly from drying out. When extensive wood rot caused that balcony collapse, the building was only eight years old.

Had the inspection required by the “balcony inspection bill,” Health and Safety Code §17973, been conducted within six years of construction of that building, the inspector would have opened the soffit of the balcony and tested the joists for moisture content and potential rot. Moisture in the wood members supporting that balcony, and the likely visible signs of deterioration, would have been detected and the source of the moisture sealed. Any structural weakness could have been fixed, and a tragedy avoided. Like cancer, early detection is the key to avoiding wood rot and deterioration of a component to the point of failure. Every six years is not too often to inspect load-bearing components for potential life-safety concerns.

Even setting aside the life-safety aspect, wood rot, caught early in the life of a building, can be repaired inexpensively when weighed against the cost of total replacement of, say, a balcony, deck, or stairway. And certainly, at much less cost than the possible tragic price of a collapse. Compliance with §17973 is an operations expense, but it can also promote the long-term preservation of the capital asset. Considering that the expense of the required inspections of investment property and any immediate repairs can be deductible business expenses, an inspection that preserves asset value makes sense, with the added benefit of protecting owners from liability if an occupant or guest is injured.

Beyond avoiding liability, the required inspections can also provide an avenue for a significant monetary recovery in newer buildings. California law allows a building owner ten years to discover, and file a claim for, “latent” defects—a ten-year “warranty” of sorts[iii] which applies to the entire project, not just those components covered by §17973. While the limitation period following actual “discovery” of the problem can be shorter, many hidden building defects are unknown to the owner until they cause visible damage, or an inspection uncovers them. A builder or contractor can be sued for construction defects during that ten-year period when a construction failure leading to damage is discovered, but once the ten-year period has lapsed and absent fraud, usually little can be done.

The inspection required by §17973 operates as belated quality control, uncovering defective construction that can lead to damage or injury. These issues should be identified while the building is under construction but frequently are not. The inspection of those components mandated by the statute will either give the owner an assurance of proper construction or discovery of the contractor’s failure to build the building correctly. If the latter is the case and the building remains within the ten-year limitation period, a claim against the contractor could provide the building owner with the funds to cover the cost of repair and compensation for loss of use or tenant concessions.

Encouraging inspections within the ten-year limitation period, not just of those portions of the building covered by §17973, but of all other potentially defective building components, can help to satisfy the fiduciary duty of asset managers to the owners, shareholders, and others with a financial stake in the project. Should building defects exist, a timely claim can provide significant relief that will be lost if the limitation period for such claims is allowed to lapse.

Government regulations are rarely welcomed. But where compliance with a statute provides real value to a building owner and protection against legal jeopardy, its value cannot be overstated.

Tyler Berding, founding partner of Berding & Weil LLP, has represented the commercial and residential real estate industry since 1974. Mr. Berding has litigated numerous building product and construction failures. He primarily represents residential building owners and commercial investors. For more information, go to: www.berding-weil.com.

[i]   Senate Bill 721 effective January 1, 2019.

[ii] California Health and Safety Code §17973 does not apply to condominiums. Condominium buildings have a similar, although not identical, balcony safety inspection requirement at California Civil Code §5551. Inspectors who may offer their services to the owners of both types of projects should be aware of certain critical differences in each statute’s requirements.

[iii] The liability of a contractor, and the rights of the owner, are also governed by applicable law and any contract between the parties. A lawyer should be consulted to evaluate the strength of the case.