What is the correct way to waterproof this?

Basically adding a 2x10 to outer wall where the second floor floor joists are at .. it will lag into the band joist (double floor joist) inside..

It is going through the city and structural engineer but hearing different things on waterproofing..

Do you need to cut out the stucco to add a lip of some kind or just lag it onto outside of house and put some type of waterproofing over it?

Thank you

Couple of way & should be obvious which lasts longer w/o maintenance

silicone all penetrations

and there's more ways as well

I'm assuming you have done your framing engineering with someone in the biz ...

I would pre-drill the lag bolt holes, shoot NP1 caulking into them, then secure the ledger with lags. I would additionally flash (or caulk) the top of the ledger board transition.

Thanks.. any of you a contractor by chance?

My builder suggested what AggieSam mentioned but I have read some pretty complicated stuff online (such as cutting out the stucco where the ledger board will go and attaching direct to the framing then flashing).. I want to do it right but the more you read online the harder it gets..

I wouldn't cut the stucco out at all. By predrilling and filling your holes with np1 prior to installing the lag bolts you are essentially minimizing the intrusion and waterproofing it at the same time. Cutting the stucco out to attach the ledger just creates a larger intrusion into your stucco/wall cavity.

After the ledger is installed you can flash/caulk the top of the ledger to minimize intrusion and add the extra layer of protection.

Whoever is building the deck should easily be able to to accomplish this I would think.