Q: The sale of our condo home is falling out of escrow over the balcony’s condition, a homeowners association, or HOA’s, responsibility.

After reviewing our seller disclosures, reports and inspections, the homebuyer agreed to waive his inspection contingency period. However, they brought inspectors during a so-called visit while we were at work, which led to interior and exterior inspection reports, including the balcony.

As a result, the homebuyer is threatening to cancel the sale and demand a refund of his earnest money deposit unless we lower the agreed-upon sale price or hold money back for balcony repairs. The buyer’s agent remarked that the buyer would receive an HOA special assessment to fix the balcony because the HOA is underfunded.

Today, our seller’s agent refused to advise whether we should let the buyer cancel and fight over their earnest money deposit or deal with the wooden balcony that needs a complete rebuild. How should we proceed?


A: I’d bring back my preferred home inspector and termite inspector (aka licensed structural pest control operator) for a limited report of the balcony and exterior. Then forward all excerpted exterior component inspections to the HOA manager for a shareable, written response.

Regardless, you could let the buyer cancel, refund the deposit and put the condo back on the market — fortunately, or unfortunately, the buyer’s inspections now will be included with the property for full disclosure. Since the best transactions have two sets of examinations, I’d promote having the best disclosure package for any condo in the area, complete with reports from multiple inspectors of each specialty.

Homebuyers become upset with costly surprises after they buy a property. Conversely, veteran agents know the same issue would be acceptable if disclosed before making an offer. This buyer will claim or proclaim, “Had I known about the defective balcony, I would not have bought that condo.” Your seller’s agent has been instructed to back off and has explained the situation to your realty firm’s real estate attorney. Canceling a sale and fighting over the buyer’s earnest money deposit in a noncontingent purchase offer requires legal advice.

Either way, there will be a special assessment to fix the balcony. Most California condo buyers and sellers are unaware that SB 326 was signed into law on August 30, 2019, and requires “Exterior elevated elements” inspections of “Those components that extend beyond the exterior walls of the building to deliver structural loads to the building from decks, balconies, stairways, walkways, and their railings, that have a walking surface elevated more than six feet above ground level, that are designed for human occupancy or use.”

It is best to book an appointment with a real estate attorney; they will help resolve your issues.

Questions, concerns, or inquiries? Realtor Pat Kapowich is a Certified Real Estate Brokerage Manager and career-long consumer protection advocate. His hometown of Sunnyvale, California, is where he is based. Office Landline: 408-245-7700, Pat@SiliconValleyBroker.com Broker# 00979413 www.YouTube.com/PatKapowich