Will the Surfside Tragedy Lead to Changes in the California Balcony Law?

The future of Civil Code §5551 and the practical concerns facing boards of directors.

BY TYLER BERDING, ESQ., AND STEVEN WEIL, ESQ.

Much has been written about the Champlain Towers collapse in Surfside, Florida. We won’t speculate on what caused the collapse. We’re not structural engineers. We do understand how buildings are constructed and how community associations deal with the maintenance and repair of their projects in California and across the country. We also know the role that the laws of each state play in the decisions boards of directors must make.

Like the balcony failure in Berkeley before it, the Champlain Towers incident will likely lead to some legislative action. California has already acted. California Civil Code §5551 (CC §5551), enacted in 2019, put in place what we believe is the first-ever requirement that structural components in condominium buildings be inspected for safety.

But Surfside has raised questions as to the future of CC §5551 as do the practical issues encountered when complying with the existing statute. For example, CC §5551 applies only to wood frame buildings. Should it be expanded to include other types of condominium buildings or planned developments where an association has some responsibility for maintenance? The law only requires that “exterior elevated elements” be inspected. Should other structural components be included? Why isn’t the reserve study required by California Civil Code §5550 enough to protect the occupants of condominium buildings? What should directors expect when complying with CC §5551—inspector contracts, disclosures, and obtaining membership support for added expenses? What are the responsibilities and risks of a managing agent?

LIMITATIONS OF THE CALIFORNIA RESERVE STUDY STATUTE

California Civil Code §5550 (a) states: “(a) At least once every three years, the board shall cause to be conducted a reasonably competent and diligent visual inspection of the accessible areas of the major components that the association is obligated to repair, replace, restore, or maintain as part of a study of the reserve account requirements of the common interest development.” There are two words in that statute that greatly limit its effectiveness, “visual” and “accessible.”

It is impossible to adequately inspect critical structural components that are not visible or readily accessible. Joists and ledgers that support balconies, shear walls that limit earthquake damage, roof sheathing, and foundation supports are normally hidden behind other components in a building (e.g., soffits, siding, and roof coverings). Unless these covers are removed or opened for inspection, the condition and service life of the hidden components cannot be evaluated. The cause of the failed balcony in Berkeley was not visible. The same may very well be true of the internal structural components that failed in Florida.

DOES CALIFORNIA CIVIL CODE §5551 CLOSE THE GAP?

The California balcony inspection statute requires that certain structural supports, those carrying occupant “loads,” be inspected whether they are readily visible or not. The “load-bearing” components themselves, not just the surrounding construction, must be inspected in new condominium buildings within six years and every nine years after that. The inspector must report the condition of those components, and that condition and likely service-life must be considered in the CC §5550 reserve study. But there are limitations to CC §5551. First, it only applies to structures built primarily of wood. Second, it only applies to “exterior elevated elements”—essentially balconies, entry structures, decks and similar components attached to the exterior of a building. Finally, it leaves to the inspector the number of such components inspected to provide a report on.

Left out of that statute are other condominium buildings, those built of concrete and steel for example and components internal to a building, such as shear walls, reinforcing steel, and supporting columns. The Champlain Towers building was constructed of concrete with steel reinforcing on a “podium slab.” There are hundreds of such buildings in California, but they are exempt from inspection under CC §5551. That statute was written for low-rise, wood frame buildings, but even in those buildings, hidden structural components that are not part of an exterior element may need to be inspected.

This leaves critical gaps in the coverage afforded by CC §5551. At this writing, there has been no effort in the California legislature to expand that coverage, but losing life in Florida is leading many states to examine the safety of condominium buildings of all types. California may be next.

WHAT PRACTICAL CHALLENGES ARE FACED IN IMPLEMENTING THE REQUIREMENTS OF CC §5551?

Speculation as to future legislation won’t help boards that must address the practical aspects of Civil Code §5551 now. Surfside has greatly raised awareness of possible building failures, so what do boards of directors and management companies want to know? Here are some issues each board needs to consider and address on a case by case basis:

INSPECTION CONTRACTS: These are likely to strictly limit the liability of the inspector, construction manager, and contractors performing the inspections and should be reviewed carefully with assistance from counsel.

MANAGEMENT’S ROLE: Management is not responsible for decisions as to the scope of testing or repairs, but where they can add value is in obtaining documents needed by the inspector, alerting a board to its responsibilities and generally keeping the process “on track.”

DISCLOSURES: The report must be “incorporated” into the reserve study, but otherwise the nature of the disclosure obligation and when it must be made is not addressed in CC §5551.

MEMBERSHIP SUPPORT: Some associations will not have enough money to pay for the testing, let alone the repairs. A funding strategy, possibly involving reserve borrowing, special assessments imposed by the board or approved by the members, and/or obtaining bank loans will need to be considered at the outset of the project.

CC&R AMENDMENTS: Someone is likely to propose amendments to the CC&Rs that shift balcony responsibility to each owner. In theory, this might relieve the association of the responsibility, but the issue is complex, because it needs to consider the current “untested” condition of components. To be completely effective, the amendment would need to shift responsibility for all relevant elevated components and their waterproofing elements.

POTENTIAL CLAIMS: Obviously, if injuries happen because of the failure to make repairs that a proper investigation would have revealed, there is exposure to associations and directors. Other kinds of claims are also possible: loss of sales if a buyer balks because the board violated the statute or other economic losses based on increased repair costs when inspections or repairs are finally made.

Condominium associations acting through their boards always had the duty to prudently inspect and make repairs to common areas to minimize risks of harm. CC §5551 merely codifies this responsibility in a specific context and with specific obligations. By doing so, the law forces associations to take the inspection and repair obligations more seriously than ever before and creates significant liability risks for those who do not and whose failure to implement the law results in personal injury or other claims. The Surfside tragedy makes the obligation to perform adequate inspections even more compelling.

Tyler Berding, Esq.

Steven Weil, Esq.

Tyler Berding, Esq., and Steven Weil, Esq., are founding principals of Berding | Weil, LLP. They worked for more than 40 years in the industry.