SF Red Flags: Soft Story, Foundations, Unwarranted Units

A handful of problems come up again and again in San Francisco homes: a soft ground floor, a brick foundation, a unit that does not exist on paper, wiring an insurer will not touch, and soil that liquefies in a quake. Here is what each one is, how to verify it, and whether it is a price adjustment or a reason to walk.

Soft-story buildings

A soft-story building has a ground floor, usually open garage or storefront, much weaker than the floors above; these were the buildings that pancaked in the Marina in 1989. SF's Mandatory Soft Story Retrofit Program (Ordinance 66-13, 2013) covers wood-frame buildings permitted before 1978 with five or more residential units and three or more stories (or two over a basement), tiered by use and size (Tier I educational, assembly or care uses; Tier II 15 or more units; Tier III everything else; Tier IV ground-floor commercial or liquefaction zones). Smaller buildings and houses are outside the program but can have the same weak ground floor. The deadlines have passed, and non-compliant buildings have been placarded and issued notices of violation.

How to check: the disclosure package should state the program status, DBI's permit records show whether the retrofit permit was issued and finaled, and a placard is hard to miss. In a condo or TIC the cost is shared under the governing documents, so an unfinished retrofit is a coming assessment and belongs in your HOA review. In a rental building, retrofit costs can be passed through to tenants over 20 years, subject to hardship exemptions; check current Rent Board rules before counting on it.

Foundations: brick, bolting and cripple walls

Victorians and Edwardians often sit on brick foundations, and many houses built into the 1940s sit on concrete never bolted to the framing. In a quake the house slides off its foundation or the short "cripple wall" between foundation and first floor collapses. Bolting and bracing cripple walls with plywood is a standard retrofit; the state's Earthquake Brace + Bolt program offers grants of up to $3,000 (plus up to $7,000 supplemental for income-eligible households; the 2025 income cap was $89,040) for pre-1980 wood-frame houses on raised foundations in eligible ZIP codes, many in SF. The 2025 round opened the program to non-owner-occupied rentals for the first time, and registration runs in limited windows, so check the current rules. Typical brace-and-bolt jobs have run about $3,000 to $7,000 by the program's own estimate; as of 2026-10-25, get current bids.

A brick foundation is a different animal. It cannot be bolted meaningfully and is usually replaced in sections with new concrete, often while the house is shored. As of 2026-10-24 there is no reliable published SF average for a full replacement, and bids vary with slope, access and occupancy; expect a six-figure number under an occupied hillside house and get two bids during your inspection period. Signs: brick in the garage or basement, sloped floors, cracked plaster at door corners. A seller's engineering letter is useful; your own contractor's bid is what you negotiate with. Inspectors and specialists covers who to call.

Unwarranted units

An unwarranted (unpermitted) unit is living space with a kitchen and often its own entrance that does not appear in DBI's records: the in-law behind the garage, the converted basement, the attic flat. They are the most common price-changing fact in SF transactions.

Spot one by comparing the 3R's legal unit count with what you toured: a second kitchen, separate entrance, extra mailbox or meter, and no permit history for the space. Price it as an extra room, not a unit: appraisers give little or no value to unpermitted space, lenders may not count its rent, insurers may exclude it, and DBI can order it legalized or removed.

The legalization path: SF's unit legalization program (Planning Code Section 207.3) allows one unpermitted unit per lot, built before January 1, 2013 and used as housing, to be legalized even above the lot's density limit. DBI screens eligibility, and you document the unit's age (leases, utility bills) and submit a licensed contractor's report on bringing it to code. Two conditions matter to buyers: a legalized unit can never be condo-converted, and a unit where a tenant was served a no-fault eviction notice after March 13, 2014 is barred from legalization for five years after an owner move-in eviction and ten years after any other no-fault eviction, counted from the notice to the application; Planning verifies the history with the Rent Board. ADU rules offer other routes. A tenant in an unwarranted unit has full tenant rights regardless; see buying a tenant-occupied home. TIC conversion and ADUs covers what you can build later.

Knob-and-tube, galvanized plumbing and old laterals

Knob-and-tube wiring, standard before about 1940, is ungrounded and often spliced into modern circuits. Bay Area brokers report that disclosing active knob-and-tube now draws declines from standard carriers, pushing buyers toward the California FAIR Plan, and without insurance your lender will not fund. A full rewire is a five-figure job in most SF homes (published ranges run roughly $8,000 to $30,000; local bids are often higher), and these homes usually still have 60- or 100-amp service, so budget a panel upgrade too. Look for ceramic knobs and cloth-wrapped wire in the basement and attic.

Galvanized supply pipes corrode from the inside; low pressure at a second-floor shower is the tell. The sewer lateral to the main is the owner's responsibility and often original clay; if the package has no sewer video on a pre-1950 house, order one.

Water, drainage, hillsides and retaining walls

Look for efflorescence and staining on basement walls, sump pumps, downspouts discharging at the foundation, and decks with soft ledgers. On hillside lots, retaining walls are structural: a leaning or cracked wall uphill of the house or on the property line is an engineering question, and a failed one is a six-figure repair that may involve the neighbor. Ask who owns each wall.

Liquefaction, landslide zones and the NHD

The California Geological Survey maps regulatory zones for liquefaction and earthquake-induced landslides; in SF liquefaction follows the filled land (Marina, Embarcadero, SoMa, Mission Bay, the southeastern waterfront) and landslide zones follow the steepest hills. Inside a zone, new construction and most significant additions need a site-specific geotechnical study before a permit issues, and sellers must disclose zone status on the Natural Hazard Disclosure. Lenders do not refuse conventional loans over it, but it raises the cost of future foundation or addition work and feeds earthquake insurance pricing. Check the DataSF seismic hazard layer and read earthquake insurance.

Dry rot and the pest report figure

Section 1 of the pest report lists active infestation or damage, which in SF usually means dry rot at decks, bathroom subfloors and window sills rather than termites. The Section 1 total is the number to negotiate around; read the diagram, since rot at a structural ledger matters more than a fence post. The disclosure package covers the report.

How to verify each flag

Fixable versus walk-away

Fixable at a price you can estimate: bolting and bracing, a rewire, a repipe, a sewer lateral, dry rot, a soft-story retrofit with a permit issued. Get bids, take the cost off your number, and check that number against closed sales in the comps tool; how much to offer shows how to present it.

Fixable but hard to price: a brick foundation under an occupied hillside house, an unwarranted unit you need the rent from, a retaining wall shared with a neighbor. These need a specialist's bid before offer day, not after.

Walk-away for most buyers: a placarded soft-story building with no retrofit plan and no reserves, active landslide movement, a foundation problem the seller will not let you investigate, or an unwarranted unit with a protected tenant you were counting on moving. The home will be beautiful. The next one will be too.