For buyers of many Beverly Grove condos, the HOA resale packet that arrives during escrow has one new item this year. Alongside the governing documents and the assessment statement, the seller of a unit in a building covered by California's balcony inspection law now has to provide a copy of the most recent inspection of the building's balconies, decks, stairs and walkways. California added that requirement through SB 410, which took effect January 1, 2026.
The buyer reads that report, and so does the buyer's lender. Fannie Mae and Freddie Mac both treat unaddressed critical repairs as a reason to decline an entire condo project. Neither agency reviews every project, though. Units in small, standalone buildings skip that review entirely. In a neighborhood with condo buildings of many sizes, two units with similar reports can get different results at underwriting. Most of the difference comes from how many units share the roof.
What the seller now hands over
Civil Code Section 4525 lists what a condo owner must give a prospective purchaser before the transfer of title. As amended, item eleven reads:
"A copy of the report issued pursuant to the most recent inspection conducted pursuant to Section 5551."
The same list already required a written statement of current regular and special assessments, along with any assessment changes the board has approved that are not yet due. Approved board minutes from the previous 12 months are included if the buyer asks for them. In covered buildings, a buyer now sees the building's physical condition and the money set aside to address it in the same packet.
Section 5551 is the inspection itself. It covers buildings with three or more attached units, and it applies to load-bearing balconies, decks, stairs and walkways more than six feet above ground that are supported wholly or substantially by wood. A licensed structural engineer, civil engineer or architect has to inspect a statistically significant random sample at least once every nine years. The first deadline was January 1, 2025. The report has to describe the condition of those elements, their expected remaining life and any recommended repairs. If the inspector finds an immediate threat to safety, the association must block access, and the report goes to local code enforcement within 15 days.
How a balcony finding becomes a loan question
Fannie Mae's Selling Guide section B4-2.1-03, Ineligible Projects, version dated August 5, 2026, lists projects "in need of critical repairs" among those whose loans it will not buy. Its definition is broad. Each of these qualifies:
- Material deficiencies that could lead to failure of a critical element or system within one year
- Mold, water intrusion or potentially damaging leaks
- Advanced physical deterioration
- Failure of a state, county or other mandatory inspection for structural safety, soundness or habitability
- Unfunded repairs costing more than $10,000 per unit that should be done within the next 12 months
The guide names balconies, waterproofing and stairwells as examples. Routine repairs don't count as critical. If a structural inspection was completed within three years of the lender's review, the lender must get it and read it. If the report shows unaddressed critical repairs, the project stays ineligible until the work is done and an engineer's report or a similar document confirms it. Freddie Mac's Guide Section 5701.1 uses closely matching language, including the $10,000-per-unit threshold and the reference to balconies. Section 5701.3 applies the same three-year lookback.
A Section 5551 report fits squarely within that lookback. The joint Fannie and Freddie condo questionnaire, Form 1076, asks the association when its last building inspection took place, whether it found safety or structural issues, and whether repairs are complete.
The unit-count line
That screen only applies when a project review actually happens. Fannie Mae's waiver rules in B4-2.1-02 skip the review for several categories of units. Freddie Mac's Exempt From Review route in 5701.7, effective for applications received on or after August 3, 2026, follows similar lines.
| Building type | Fannie Mae project review | Freddie Mac project review | Where the balcony report sits |
|---|---|---|---|
| Two units | Waived | Exempt | Outside Section 5551, so no report is required |
| Three to four units | Waived | Exempt | Disclosed to the buyer if Section 5551 covers the building's elevated elements |
| Five to ten units, no master association | Waived | Exempt | Disclosed to the buyer if covered; not part of an agency project review |
| Five to ten units within a larger development or master association | Full Review required | Not exempt | Read against the critical-repair rules |
| More than ten attached units | Reviewed | Reviewed | Read against the critical-repair rules |
When Fannie waives a review, other requirements still apply, including property eligibility, appraisal standards and insurance. For purchase loans, Fannie's list of requirements for waived projects does not include the critical-repair test. Fannie applies that test under a waiver only to certain Fannie-to-Fannie refinances in buildings with more than ten attached units. A waiver means the agency does not require the review. It does not tell you what an individual lender's own process will ask for.
Where Beverly Grove buildings fall
The SurveyLA report for the Wilshire Community Plan Area describes the broader Beverly-Fairfax area, including Beverly Grove, as built up mainly with single-family and multifamily homes during the 1920s through the 1940s. The newer condo buildings mostly fall on the reviewed side of the table:
- Four Seasons Private Residences, 9000 W. 3rd St. A 12-story building with 59 townhomes and condominiums, which received a temporary certificate of occupancy in late 2020, per Urbanize LA.
- The Ainsley, 728 N. Sweetzer Ave. A four-story building with 49 condos.
- The Addison, 724 N. Croft Ave. A four-story project with 28 townhomes. Urbanize LA covered it together with The Ainsley.
- Westbury Terrace, 321 S. San Vicente Blvd. An 11-story condominium building that was undergoing renovation when a fire was extinguished there on April 20, according to the Beverly Press.
Unit count alone doesn't tell you whether Section 5551 applies. The law covers only elevated elements supported substantially by wood. So a buyer has to answer two separate questions for any address. Is the building inside the inspection law? And is the project large enough that a lender's review will read the report?
Special assessments sit on both sides of the line
The $10,000 threshold applies to unfunded repairs, and Fannie excludes repairs that are funded through a special assessment. That exclusion has a limit. Lenders must find out each assessment's purpose, approval status, original amount, remaining balance and payoff date. If the assessment pays for a critical repair that hasn't been fixed yet, the project is still ineligible. An approved assessment shows the board has a plan to pay for the work. Under these rules, the project becomes eligible again only once the repair is finished.
In a small, waived building, the assessment still reaches the buyer through Section 4525's disclosure statement, even though no agency review reads it. The Los Angeles Times reported on October 2 that experts link rising condo costs across California to aging buildings, insurance and balcony inspections, and that emergency assessments above $20,000 per unit have become more common. Timing can matter as much as cost. A reader letter published in the Los Angeles Times in May described Section 5551 repairs taking six months to a year once drawings and permits were included.
Why it matters more in this market
Condo buyers are scarce right now, so a sale that falls through is harder to replace. The Los Angeles Times reported in May, citing ATTOM, that Los Angeles County recorded 1,976 condo sales in January and February 2026, the weakest start to a year since 2005. In September 2026, statewide condo and townhome sales were down 7.5% from a year earlier, and the median time on market was 39 days, according to the California Association of Realtors.
The agency rules also only go so far. They govern loans that Fannie Mae and Freddie Mac buy, and FHFA's 2026 county limit list sets the one-unit limit for Los Angeles County at $1,249,125. As of FHFA's October 14 page update, no 2027 limits had been posted. Above that limit, the review rules described here are not the ones that apply.
One more date is coming up. For applications dated on or after January 4, 2027, both agencies raise the minimum reserve contribution in full project reviews from 10% to 15% of the association's annual budgeted assessment income. Fannie announced the change in Lender Letter LL-2026-03 and Freddie in Bulletin 2026-C. For a larger Beverly Grove building, that is one more number in the budget a lender's review will check.
Quick answers
Does a two-unit condo have a balcony report? Section 5551 applies to buildings with three or more attached units, so a two-unit project falls outside it.
How old can the report be? Inspections happen at least every nine years. Fannie and Freddie look at structural inspections completed within three years of the project review, so a report can be current under state law and still fall outside the lenders' window.
Does damage to one unit's balcony sink the whole project? Under Fannie's guide, damage or deferred maintenance limited to one or a few units doesn't trigger the project-level rule, as long as the safety and structural integrity of the project as a whole are unaffected.
This post is general information, not legal, tax or financial advice. Confirm how these rules apply to your building and your loan with a real estate attorney and your lender.
If you're buying or selling a Beverly Grove condo, the first thing I look at is the balcony report and the building's unit count, because together they shape the financing before an offer is written. Mark Gallandt can read the resale packet with you and coordinate with your lender early. Let's Connect.
