Our two-story house was built in 1988 on a hillside in southern Cal beach community. lower level is semi-subterranean. Bought in 2015. Lived there for two years and didn’t notice water intrusion, no cracks on the walls/foundations of the house.

Then started doing a whole house renovation in 11/2017 and gutters were all removed. Some part of the house foundations (away from the hill) were examined for house additions, and was deemed normal, safe and sound. But started noticing water leaking when raining through the retaining wall into a small part of the lower level (abutting the retaining wall/hillside and no house addition around this part). GC recommended to redo water proofing from outside. As workers dug down outside of the retaining wall to about 4-8 feet deep into the ground, only saw loose gravel, no compacted soil or concrete. And additional gravel would flow out from “foundation” space under the house. Unable to dig further due to loose gravel kept on flowing out, concerning the house structure would be compromised.

GC (40 years of building experiences) said he never saw anything like this. Waiting for soil engineer and possible structure engineer to provide recommendations to mitigate this problem.

Yellow part is where water intrusion happens. Green part is the excavation part. Skinny gray area is cantilevered bump-out on the upper level only.

Any input as to what may have happened when the house was built in 1988? Instead of pebbles, what sort of soil preparation should it be? Any recommendations to repair/correct this part of the foundations? If unable to redo waterproofing outside of the old retaining wall, what other additional water proofing methods should be done (definitely will put on gutters and also concrete this area with drains to direct water away from the house)?

Thank you.

Thank you.