Property Condition Assessment

Property Condition Assessment is an evaluation of the building, its systems, and site components conditions; the assessment outlines the development of efficient, reliable, and affordable methods for current and future repairs.

The Inspection and the report are based on the ASTM Property Condition Assessment (PCA) standard (ASTM E2018), which describes the scope of work and the limitations.

Types of properties that required the Property Condition Assessment include industrial buildings and facilities, commercial buildings such as retail plazas office buildings and hotel, and apartment buildings.

Property Condition Assessment is typically required for due diligence purposes prior to acquiring a real estate property or for financing/refinancing purposes. The assessment is often requirement of lenders in order to assure the building is in adequate condition, within acceptable maintenance costs during the duration of the mortgage. It is also a tool for investors to negotiate the price of the property with the seller; reducing the price of the property, or demanding repairs before the building transaction is complete.

Industrial properties typically consist of a large warehouse section, (comprising most of the building area) and an office section (at the front). Commonly, industrial buildings have one floor without a basement section; however, there are buildings with office sections containing two floors.

The building materials for industrial properties varies between buildings; however, it is typical to find steel structural components, exterior pre-cast concrete panels, exterior concrete block and brick veneer masonry, exterior metal siding, and flat roofs supported by open-web steel joists.

A commercial property may consist of a self-standing building or a unit in a complex, with one or multi floors. Uses of commercial properties may include office buildings, hotels, retail, and service providing buildings. In some cases, the buildings are mixed-use, with a retail commercial section on the main floor, and residential apartments on the upper floor(s).

Common construction materials for such buildings include concrete or steel structure, exterior brick masonry, flat or sloped roofs, and exterior siding. The mechanical systems includes in many cases rooftop HVAC units, and a sprinkler system.

Apartment buildings that require a Property Condition Assessment are those that have five or more units. However, the assessment is more common for buildings with more than three floors and over 10 units.

Common construction materials for apartment buildings include concrete or wood floors, exterior brick veneer or loadbearing brick masonry, and cast-in-place concrete foundation walls. The mechanical systems typically include a hydronic heating system, consists of a gas-fired boiler and radiators throughout the building; however, may buildings have electric baseboards for heating.

What does a Property Condition Assessment include?

The Property Condition Assessment report includes an evaluation of the physical condition of the building, the site components, and the building's systems in order to estimate long-term maintenance costs and needs. A long-term maintenance program addresses the specific needs and condition of the building, and helps maintaining it in the proper condition, while reducing maintenance costs. Subject to the limitations of the scope of work, the Property Condition Assessment lists major deficiencies in the building and its systems, assesses the remaining service life of major components of the building. Items that are typically included in a Property Condition Assessment include structural elements, roofs, exterior walls, finish, heating systems, electrical systems, and various others.

Many property owners also conduct the Property Condition Assessment on a periodic basis; usually every three to five years. The frequency of the evaluation depends on the use of the building, its structural concept, location, size, and age. It can also be conducted if there are issues that require immediate attention, such as cracks or water penetration that might affect the long-term maintenance program of the building.

Subject to the limitations of the assessment, the scope of the assessment typically includes the following items:

Structural system
Roofs
Exterior walls
Hallways and stairwells
Sample units (in multi-unit buildings)
Underground parking garage (when applicable)
Plumbing systems
Electrical systems
Mechanical systems
Site components
Infrared thermal imaging (optional)

The Report is divided into a few sections, which includes:

Description of the scope of work and limitations
Description of the property
Description of the major elements of the property, finding and deficiencies, and recommendations
Photograph documentation
Probable cost to remedy physical deficiencies for short and medium terms (typically up to 10 years)