In the past, stucco siding was plastered on the house walls and continued down over the foundation.
The top of the foundation is just below the ventilation screen seen at the right side of the photo and the house wall wood framing is bolted to the top of the foundation.
Along comes an earthquake and as it ‘rolls’ across the earth surface; it causes the house walls to move back and forth on top of the rigid foundation.
Since the stucco siding is also rigid and the house walls are moving back and forth, the stucco siding can crack horizontally near the top of the foundation.
This is considered a cosmetic condition and the recommendation is to have stucco cracks sealed to prevent water intrusion.
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