SB 326 Found Defects: Who Pays for HOA Repairs?

Timeline: Recovery vs. Standard Litigation

Boards dread defect claims partly because they picture years of litigation. Standard construction defect litigation in California commonly runs 24 to 36 months. AMPR’s resolution-first approach targets a 9 to 18-month resolution by coordinating experts, contractors, the carrier, and counsel toward resolution rather than starting with a lawsuit.

The timeline matters because defect claims carry hard deadlines. A board that moves promptly after the inspection preserves options that a board that waits will lose. This is not abstract urgency; it is about protecting the board’s legal window to pursue the builder before deadlines pass.

Preserve the Report and All Evidence

The SB 326 report is not just a compliance document; it is the opening evidence in a potential recovery. The board should preserve the full report, all photographs, and the inspector’s documentation, and avoid repairing or altering the documented conditions before a causation assessment is done.

Repairs that erase the evidence can weaken a claim before it starts. If your board is considering repairs, pause and get a causation assessment first. That assessment uses the report as the baseline to determine whether the deterioration traces to original construction. Once that determination is made, repairs can proceed with the recovery path clear.

Why the SB 326 Window Is Also a Recovery Window

There is a timing reason boards should not sit on an SB 326 report. The same inspection that satisfies the nine-year compliance cycle also lands while many buildings are still inside the legal window to pursue the original builder.

California sets a 10-year outer deadline, a statute of repose, to bring a latent defect claim, measured from substantial completion. In California it cannot be extended even if the defect could not reasonably have been found earlier. For a condominium project, that means an SB 326 report arriving in years seven, eight, or nine of the building’s life is a recovery opportunity with a closing window.

Wait a year or two to “see how the repairs go,” and the board can watch its leverage against the builder evaporate. A board that pairs the compliance inspection with a prompt causation assessment captures both obligations at once: safety compliance and cost recovery, instead of solving the first and forfeiting the second.

The Personal Stakes for Volunteer Board Members

This is not abstract for the people on the board. Volunteer members, often a president and treasurer with day jobs, feel personally exposed when a six or seven-figure repair bill lands and owners start asking who let this happen.

Defaulting straight to a special assessment invites exactly the blame board members fear, because it puts the cost on owners for a problem the board did not cause. Pursuing recovery flips that dynamic. Instead of being the board that taxed the community, you become the board that went after the party actually responsible and worked to keep the cost off owners’ backs.

That is a materially better position to be in at the next annual meeting, and it is available only to boards that treat the SB 326 report as the start of a recovery, not just a repair order.

The Fiduciary Angle Boards Overlook

Board members carry a fiduciary duty to the association. That duty is not satisfied simply by writing a check or levying an assessment. It includes investigating whether the cost can be recovered from the party responsible.

Treating an SB 326 finding as a bill to pay, without examining recovery, leaves money on the table that the board has a duty to pursue. Framed that way, pursuing recovery is not just an option; it is part of the job. California courts have increasingly recognized that boards have an affirmative duty to explore cost recovery before passing costs to owners.

Frequently Asked Questions

Who pays for repairs after an SB 326 inspection finds defects?

It depends on the cause. If the deterioration traces to maintenance (lack of proper sealing, deferred upkeep), the association typically funds it, often through reserves or a special assessment. But where the defects trace to the original construction (water intrusion, dry rot from a waterproofing failure, corroded connectors installed at build), the builder may be responsible, and the cost can potentially be recovered rather than passed to owners.

Does an SB 326 finding mean the HOA has to do a special assessment?

Not necessarily. A special assessment is the default many boards assume, but it is not the only path. Where the defects are the builder’s responsibility, pursuing recovery can offset or replace what owners would otherwise pay. A board should evaluate recovery before defaulting to an assessment.

Can the inspection report itself be used to support a defect claim?

Yes. The SB 326 report, its photographs, and the inspector’s documentation are valuable early evidence of the conditions found. The board should preserve all of it and avoid altering the documented conditions before a causation assessment, since premature repairs can undercut a claim.

How long does an HOA construction defect recovery take in California?

Standard defect litigation commonly runs 24 to 36 months. A resolution-first approach that coordinates all stakeholders and pursues recovery before litigation can target a 9 to 18-month resolution. Because defect claims carry firm deadlines, moving promptly after the inspection protects the board’s options.

Is pursuing recovery part of the board’s fiduciary duty?

Investigating whether repair costs can be recovered from the responsible party is consistent with a board’s duty to act in the association’s best interest. Simply levying an assessment without examining recovery can leave recoverable money unpursued. AMPR’s HOA construction defect support helps boards meet that duty.

What if AMPR’s causation assessment finds the damage is maintenance-related, not construction defects?

That answer matters just as much. If the deterioration truly traces to maintenance, the board knows where it stands and can plan an assessment with clear reasoning to present to owners. Our assessment gives the board the facts needed to make an informed decision either way.

The Bottom Line: Recovery First, Special Assessment Last

An SB 326 inspection that finds defects is not just a repair bill. It is often the start of a recoverable claim against the builder. Identify which findings point to original construction, preserve the report as evidence, evaluate builder recovery before defaulting to a special assessment, and move promptly to protect your deadlines.

That is how a board protects both the building and the owners it serves.

Find out where your SB 326 defects really land. Call AMPR Consulting at (310) 361-0209 or get a review of your SB 326 defects. The initial conversation is no-cost, and engagement terms are discussed openly.