SB326 Condo Problems in California? You May NOT Need to Pay All Cash
If you’ve been shopping for a condo in California — especially in the San Francisco Bay Area — you’ve likely heard this:
“This building has SB326 issues… it’s a cash-only deal.”
That’s not always true.
And believing that could cost you a great opportunity.
SB326 doesn’t kill deals — bad information and the wrong lender does.
🔎 What is SB326 (Quick Version)
SB326 requires condo HOAs (with 3+ units) to inspect:
- Balconies
- Decks
- Walkways
- Exterior stairs
A structural engineer must confirm they are safe and structurally sound.
Here is the link to read up on it more: https://www.ssfca.gov/files/assets/public/v/4/economic-amp-community-development/documents/california-balcony-laws-faq.pdf
🚨 Why This Is Killing Deals
Many lenders immediately label these projects as:
- ❌ Non-warrantable
- ❌ Too risky
- ❌ Declined
So buyers walk away… even when financing may still exist.
Have you read my other articles about Condominiums?
Here are a few:
💡 The Reality: You Have 3 Financing Options…and none have prepayment penalties so you can refinance into better rate options without the penalty.
🟢 OPTION 1 – “Best Rate” (Documentation Heavy)
Rates ~0.75% above market rates
Highlights:
- Up to 80% LTV
- Loan amounts: $50K–$5M
- DTI up to 50%
Works when the HOA is proactive and organized.
✔ What Lenders WANT:
- Engineer’s report
- Contractor repair bid or active special assessment
- Proof of safety measures (blocked balconies, scaffolding, etc.)
❌ Deal Killers:
- Active city violations or fines
- No defined repair scope or cost yet
👉 Translation:
If the HOA is taking action, you may still get near-market financing.
🟡 OPTION 2 – “Flexible Condo Loan”
~2% above market rates
This is where many deals get saved.
Key Advantages:
- No condo questionnaire
- No warrantability requirement
- Only cares about YOUR unit
Highlights:
- Up to 80% LTV
- Loan amounts: $250K–$3M
- DTI up to 60%
- Flexible income options with add-ons to rate (P&L, WVOE, etc.)
- Litigation often OK
👉 Translation:
The project can have issues — as long as YOUR unit is not directly impacted.
🔴 OPTION 3 – “Last Resort / Highest Flexibility”
~3.5% above market rates
- Up to 70% LTV
- Very flexible underwriting
- Designed for tougher scenarios
👉 Translation:
This is the “don’t lose the deal” option.
⚠️ What Most Buyers Get Wrong
They assume:
- “SB326 issue = no financing”
- “Only cash buyers can win”
That’s simply not true.
🧠 The Real Problem
It’s not SB326.
It’s:
- ❌ The wrong lender for the loan request
- ❌ Incomplete HOA information-ask me for a FNMA CONDO QUESTIONNAIRE
- ❌ Lack of strategy
🎯 Bottom Line
Before you walk away from a condo:
👉 Make sure someone has reviewed ALL options.
Because the right structure can mean:
- You buy when others can’t
- Less competition
- Better pricing
📞 Call to Action
Have a condo deal with SB326 concerns?
Let’s review it together before you lose it.
🔎 BROKER’S EDGE – Smarter Real Estate Lending
🤝 Looking out for your Best Interest, and Helping Homeowners, Investors & Small Business Owners since 1990
📞 Steven Hook | Residential & Commercial Mortgage Broker
📱 415-260-9376 | 📠 415-449-3428
🎓 MBA | CMPS | CMA
👉 Schedule a Call
🌐 SanFranciscoLoanOptions.com
🌐 shook@Uamco.com or smhloans007@gmail.com
🆔 NMLS #303544 Ca DRE #00987187
This content is provided for informational purposes only and is not a loan commitment or guarantee of financing. Loan programs, rates, terms, and conditions are subject to change and borrower qualification. Individual results may vary.
