Mitigate Risk with a Property Condition Assessment
What is a Property Condition Assessment?
A Property Condition Assessment (PCA), sometimes referred to as a Property Condition Report (PCR), is a review of a building’s condition prior to purchase or finance. It’s a risk management tool with a purpose of better understanding the existing conditions and potential future physical deficiencies of the building in question. The assessment is a thorough inspection of the building and property which is commonly used to make an informed decision on the purchase price or financing.
What does a PCA include?
The building systems most commonly inspected include:
- Site and grounds: landscaping, paving, curbing, parking lots, and stormwater drainage
- Structural Systems – building frame and roofing
- Building Envelope - foundations, roof, doors, walls, and windows
- Interior Finishes – flooring, ceilings, and walls
- Mechanical Systems - plumbing, heating, air conditioning and ventilation, and electrical
- Regulatory Compliance
As part of the PCA, an Immediate Repairs Table and Replacement Reserve Table are prepared.
The Immediate Repairs Table identifies short-term maintenance deficiencies that need immediate attention, such as unsafe conditions and potential building or fire code violations. It will provide estimated costs to those items needing to be fixed within a certain timeframe. Immediate repairs can include everything from increasing the number of fire extinguishers to structural repair.
The Replacement Reserves Table identifies long-term expenses that are based on the life expectancy of the building system or component. Examples of long-term expenses include future boiler or roof replacement costs, based on the age of the systems.
Why is it important?
After a review and assessment of the property, a PCA or PCR report is prepared in general conformance with ASTM E2018-15. This report allows the buyer and financial partner to make knowledgeable decisions regarding the property and anticipated future repairs or upgrades. If you decide to move forward with the property, the PCA report can be used as a negotiation tool. The unknowing seller may have an unforeseen building violation or deteriorating system lurking within the building, but the wise buyer will know what they are walking into and can negotiate and budget accordingly for those needed future improvements saving time and money.
The Westwood team has provided due diligence services for hundreds of projects of various sizes and locations. We can help determine what is needed for your project, whether that’s a PCA, a Phase I ESA, an ALTA Survey, or another service. Give us a call, we’re ready to help.