Soft-Story Retrofit and West LA Apartment Sales

This guide concerns West LA properties inside the City of Los Angeles. Don't carry its retrofit rules over to Santa Monica or another city just because the buildings look alike. LADBS administers the Los Angeles soft-story program and provides a compliance report and access to its building inventory. Use those records to begin the inquiry, then reconcile the address, orders and permits with the actual building. [1]

If the status is unknown, I would resolve that before commissioning cosmetic sale preparation. Ask LADBS for the property's current case and permit status, and have a structural engineer review the relevant records and physical condition. The engineer addresses the building and proposed structural scope; the city establishes the recorded compliance status. An old drawing or a seller's recollection shouldn't substitute for either.

LADBS describes compliance periods running from receipt of the Order to Comply. Use the actual order and written city confirmation to establish what remains due on this property. Do not treat the listing date as the start of a new compliance period. [1]

With engineering or construction underway, give a buyer enough information to distinguish completed work from the remaining obligation. An engineer's proposal, submitted plans, approved plans and an issued permit describe different stages. Put the dates and current status alongside each document instead of letting the buyer infer progress from the size of the file.

The remaining budget should follow the latest scope. Ask the contractor to identify work completed, amounts paid, unpaid commitments, exclusions and open change orders. Have the engineer explain unresolved design questions. An older bid can be useful history, but it should not be presented as the current cost to finish.

Occupied-building work also has a tenant component. LAHD says a Tenant Habitability Plan application is mandatory for soft-story seismic work mandated by Ordinance 183893. Include the plan's actual status and unresolved tenant arrangements in the sale discussion. Do not assume a construction schedule alone addresses occupancy or service interruptions. [2]

Decide whether you intend to finish before closing or sell with work remaining. Then have counsel make the contract allocation specific, including unfinished work, payments and any proposed credit or holdback. Ask the prospective buyer to confirm lender and insurance requirements early. An agreed purchase price doesn't settle those separate approvals.

Pull the final records before advertising completed compliance. LAHD's seismic cost-recovery documentation includes final permits and a Certificate of Compliance, as well as invoices and proof of payment. Those records give a buyer a stronger basis for review than photos of installed steel. If the city file and the contractor's account disagree, resolve the difference or disclose it clearly. [3]

Keep cost recovery separate from construction completion. LAHD describes recovery as an application-based program subject to approval. If you are collecting a retrofit-related surcharge, provide the approval and its terms and show the collections separately. A pending application belongs in the unresolved file, not in recurring income as though approval has already arrived. [3]

City compliance documents also should not be described as a guarantee against earthquake damage. The LADBS program is intended to reduce structural deficiencies. Ask the engineer to explain the scope completed and any remaining recommendations without broadening that claim in the marketing. [1]

I would compare the current cost to finish and the cost of holding the property with the offer terms available for its actual condition. Completing the retrofit may remove an important buyer concern, but it does not establish a dollar-for-dollar price increase. Selling with unfinished work may suit your timing if the obligations are understood and the buyer can fund them.

For the sale-readiness file, keep the order and city status together with the engineer's scope, current permits, contractor balance and any tenant-plan or cost-recovery decision. That lets us discuss the remaining exposure when setting the asking price, rather than discovering during escrow that the parties were pricing different stages of completion.