SB 326 Special Assessment: Can You Still Get a Mortgage on Your California Condo?

One of the most disruptive consequences of SB 326 compliance is the special assessment — a one-time charge levied by an HOA on all unit owners to fund required structural repairs. Assessments for SB 326 balcony and deck repairs are running $10,000–$175,000 per unit in some California buildings. And once a special assessment is outstanding, conventional lenders treat the entire building as non-warrantable — even if the repairs are already underway.

Here’s what you need to know if you’re trying to buy, sell, or refinance a condo where an SB 326 special assessment is in play.

Why Special Assessments Make Buildings Non-Warrantable

Fannie Mae and Freddie Mac flag outstanding special assessments because they represent financial uncertainty in the HOA. An unfunded special assessment means:

• The building has identified a serious enough problem to require extraordinary funding
• Not all owners may be able to pay — creating delinquency risk within the HOA
• The HOA finances are in an abnormal state that may affect ability to maintain the building

From a lender’s perspective, buying into a building with an outstanding special assessment means buying into an HOA under financial stress — and that risk gets priced into non-warrantable status.

Three Special Assessment Scenarios — and What They Mean for Financing

Scenario 1: Assessment Levied, Not Yet Collected

The HOA has voted to levy the assessment but not all owners have paid. This is the most problematic scenario for conventional financing. Fannie Mae and Freddie Mac will decline. Portfolio and non-QM options remain.

Scenario 2: Assessment Collected, Repairs Underway

The HOA has collected the assessment and construction is in progress. This is better — some portfolio lenders will approve financing with documented proof that repairs are funded and scheduled for completion. The closer to completion, the better.

Scenario 3: Assessment Paid, Repairs Complete

The HOA has collected the full assessment and repairs are finished. This is the best scenario — the building may be able to regain warrantable status. Get updated lender questionnaire responses from the HOA confirming the assessment is fully resolved. Conventional financing may be restored.

Can the Seller Pay Off the Assessment at Closing?

Yes — and this is one of the most practical solutions for deals that would otherwise fall apart. If the seller’s unit share of the special assessment is, say, $25,000, a negotiated purchase agreement can require the seller to pay the assessment in full at closing from sale proceeds. If the full building assessment is collected by closing, the non-warrantable issue may be resolved.

This requires coordination between the HOA, the title company, and your lender — and it doesn’t always work cleanly — but it’s worth exploring for deals where the property value makes the math work.

Buying in a Building with a Special Assessment: Negotiating the Purchase Price

A building with an outstanding SB 326 special assessment has a significantly smaller buyer pool — most conventional buyers are shut out. This creates negotiating leverage. Buyers willing to use portfolio or non-QM financing can often negotiate meaningful price reductions that offset the financing premium and the assessment cost.

Example: A condo listed at $650,000 in a building with a $30,000/unit special assessment might sell for $590,000 to a portfolio loan buyer — the $60,000 price reduction more than offsets the rate premium and assessment obligation. We help buyers run this math before they negotiate.

Refinancing When Your Building Has a Special Assessment

Homeowners trying to refinance their current condo when the HOA has levied an SB 326 special assessment face the same non-warrantable problem — conventional refinances will be denied. Options:

• Portfolio refinance: Same concept as portfolio purchase — lender uses its own criteria, not agency guidelines
• Wait for resolution: If the assessment is close to being fully collected and repairs nearly complete, it may be worth waiting 60–90 days for the building to regain warrantable status and refinance conventionally at better rates
• Cash-out from primary home: If you own other property with equity, a cash-out refinance on that property may be an indirect solution

How to Find Out About Special Assessments Before You Buy

Under California law, sellers are required to disclose known special assessments to buyers. But disclosure isn’t always complete or timely. Best practices:

• Request the full HOA disclosure package early in your due diligence period
• Ask specifically for the SB 326 inspection report and any subsequent correspondence about assessments
• Have your lender review the HOA questionnaire — we catch assessment issues before they become surprises
• Call us before you’re in contract if you have any questions about a specific building

We Solve SB 326 Special Assessment Financing Problems

DiVita Home Finance works with portfolio and non-QM investors who specifically handle SB 326 special assessment situations throughout California. We serve buyers and homeowners in Palm Springs, San Francisco, Los Angeles, Orange County, Marin County, East Bay, San Diego, and everywhere in between.

Don’t let a special assessment end your deal. Call 800-239-1103 or apply online. We’ll evaluate your specific building situation and lay out every option available. See our SB 326 condo mortgage guide for the full picture.

Related Resources

• SB 326 Non-Warrantable Condo Mortgage Options California
• August 2026 Fannie Mae Condo Rule Change
• SB 326 and San Francisco Condo Financing
• Mortgage Options for SB 326 Non-Warrantable Condos
• High-Balance Conforming Loans 2026

More SB 326 Resources

• SB 326 Los Angeles Condo Mortgage 2026
• SB 326 Oakland & East Bay Condo Mortgage 2026
• HOA Special Assessment Loan Options California 2026
• Can I Refinance My Condo with SB 326 Pending?
• SB 326 vs SB 721 — What Buyers Need to Know
• SB 326 Approved Lenders California