Property Condition Assessments
are due diligence projects associated with commercial real estate. Commercial property and Building Inspections are important for clients seeking to know the condition of a property or real estate they may be purchasing, leasing, financing or simply maintaining.
Whether you’re a loan officer, an acquisitions director, or an asset manager, you need a thorough understanding of the condition of the properties in your domain. Tri-County Engineering & Inspections is a full-service due diligence company can offer a menu of options to assist you in the purchase of Real Estate.
A Property Condition Assessment (PCA)
is a solid understanding of the a building assessments will help understand the history of the property and forecasting of Capital Improvements .
A Property Condition Assessment
, aka Property Condition Report
or Commercial Building Inspection, is an evaluation of a commercial real estate asset based on a thorough inspection, including all improvements and all the systems of each building on the property. A PCA is typically ordered as part of the due diligence process when a property changes hands. A lender may request a PCA before issuing a loan, or an investor/buyer may request the assessment before purchase.
The scope of a PCA
is defined in ASTM E2018 Standard Guide for Property Condition Assessments: Baseline Property Condition Assessment Process.
Depending on a client’s needs and preferences, some PCA
s are completed by a single commercial building inspector or engineer, and others can require the involvement of specialists, such as a mechanical engineer or electrical engineer.
The most important parts of the Property Condition Assessment
and Report are the Immediate Repairs Table
and the Replacement Reserve Table
. The Immediate Repairs Table identifies capital needs and prices all failing or damaged building systems and life safety issues. The Replacement Reserve Table identifies long-term capital expenses (typically within 12 years of inspection) based on the expected useful life of the building systems and components.
What does a Property Condition Assessment evaluate?
- Structural frame and foundation
- Roof including membrane, flashings, and drainage
- Exterior walls including façade, windows, doors, and signage
- Interior finishes (concentrating on non-cosmetic considerations)
- Heating, Ventilation, and Air Conditioning (HVAC) systems and components
- Plumbing systems and fixtures
- Electrical systems and components
- Elevators and conveyance systems
- Fire protection systems and components
- Landscape components including parking, paving, irrigation, and retaining walls
- Accessibility including Americans with Disabilities Act (ADA) and Fair Housing Act (FHA)
The goal of the Property Condition Assessment is to identify:
- Routine and/or deferred maintenance
- Systemic deficiencies
- Remaining useful life (RUL) of all major building systems
- Capital replacement needs
- Overall system compliance with the original design/engineering intent
- Compatibility with contiguous systems
- Prioritized list of repairs
- Total building replacement cost
In short, PCA
reports serve different purposes: A PCA
, generally requested before a property changes hands, will characterize the asset at a particular point in time, give you a general overview of the costs associated with correcting existing deficiencies as well as an estimate of the costs of maintaining the property over time.
Who needs a Property Condition Assessments?
The need for a PCA
is identified in the due diligence part of a commercial real estate transaction. PCA
s are often required by lenders for both new purchases and refinancing. For lenders, PCA
s offer insight about the way a borrower treats their assets and their ability to make payments. A poorly maintained building can indicate a lack of funds for repairs, which may translate into difficulty repaying a loan. A property that serves as collateral can lose value without regular maintenance.
Click here to contact Tri-County Engineering & Inspections
for a Property Condition Assessment