Questions? email us

Property Condition Report, What is Included?

Property Condition Report

What is included in a Property Condition Report (PCR)? The short answer is that the Property Condition Report evaluates all improvements.    Most Property Condition Reports done for lenders are done within the scope and limitation of the ASTM Standard E2018. 

My firm, Partner Engineering and Science, typically defines the scope as follows:

  1. Conduct a thorough walk-thru inspection of the asset by an experienced building inspector or engineer;
  2. Interview tenants, building maintenance staff, and building management;
  3. Visit the city building department to look for violations, records of improvements, and the certificate of occupancy;
  4. Review of building plans, quotations for work, and warranties provided by the seller;
  5. Develop a schedule of Immediate Repairs necessary due to failed systems, systems being past their useful life, and/or building code violations;
  6.  Develop a Replacement Reserve Schedule for the next 12 years (or the requested reserve period), where Partner will estimate the remaining useful life of major systems and provide an estimate of the replacement cost at that time in the future;
  7. Prepare a detailed report discussing each building system and its condition.

Partner’s PCR will evaluate the following systems and conditions:

  • Site Improvements
  • Site Access and Traffic Flow
  • Topography
  • Storm Water Drainage
  • Paving Type/Age
  • Curbing/Wheel Stops
  • Pavement Striping
  • Parking
  • Flatwork/Stairs/Railing
  • Landscaping and Appurtenances
  • Retaining Walls
  • Utilities
  • Site Lighting
  • Waste Storage Area
  • Site and Building Signage
  • Other Site Amenities/Recreational Facilities
  • Structural Foundation and Frame
  • Structural Design Criteria
  • Soils/Geotechnical
  • Foundations
  • Structural Frame
  • Parking Garage/Carport
  • Facades/Exterior Wall Systems
  • Exterior Walls
  • Windows
  • Insulation
  • Doors/Frames
  • Balconies
  • Stairs
  • Roofing
  • Roof Type
  • Active Leaks
  • Roof Drainage
  • Thermal Insulation
  • Flashings/Details
  • Expansion Joints
  • Maintenance
  • Warranty
  • Ancillary roof(s)
  • Mechanical, Electrical & Plumbing
  • HVAC Systems
  • Electrical Systems
  • Plumbing Systems
  • Vertical Transportation/Conveyor Systems
  • Elevators
  • Escalators
  • Fire/Life Safety
  • Fire Sprinklers
  • Life Safety/Alarm Systems
  • Interior Elements
  • Viewed Spaces
  • Floor Coverings
  • Ceiling/Walls/Window Coverings
  • Common Areas

All of these elements are inspected during a walk-through inspection. The inspector will not be turning systems on and off; rather, the inspector will visually inspect the systems and ask questions of building personnel. Some clients want us to do more, and for those clients, Partner will hire sub-specialist to accompany our inspector.   

POTENTIAL EXTRA SPECIALTY SERVICES:

In addition to our walk-thru assessment, Partner can provide specialty inspections. Specialty inspections are done by our significant roster of sub-contract specialist. The Specialty Inspectors investigate beyond the requirements of ASTM E2018. For example, Partner’s general inspector will inspect the elevator and the elevator controls, but an elevator specialist is qualified to open and inspect the elevator pit. The following specialty inspections are often added to Equity Property Condition Reports: 

Specialty                                                   Description 

Energy Audit                                           Model the entire building’s energy consumption, rate building against peer buildings; enter into Portfolio Manager; and make recommendations for energy efficiency improvements.

Energy Benchmark/Disclosure   Enter the building’s utility data and relevant building parameters into EPA’s Portfolio Manager and get a rating for the building.

Structural Inspection                      A registered engineer / structural engineer will inspect the sites superstructure foundations for signs of deflection, structural sagging, cracking, and vulnerability to future loading (seismic if applicable).

Elevator Inspection                         Inspect elevator cab, elevator equipment room, the elevator shaft and hydraulic lifts.

HVAC Inspection                               Inspect all heating and cooling equipment as well as ducting and heat conveyance systems.   Test the heating and cooling output regardless of the season (i.e. test the air condition in the winter).

ADA Compliance Inspection     Inspect the entire asset for compliance with the Americans Disability Act (ADA) and catalogue each system that does not meet ADA Compliance.   Provide a cost estimate for bringing the asset into compliance with ADA.  

Roof Inspection                                     A Roof Inspector will inspect the roof of each of the buildings.  The roof inspector will map all signs of roof aging and failure including: cracking, silting, ponding, bowing, leaking, and patches.

Building Envelope Inspection    Inspect the entire building envelope and curtain wall for its ability to serve as an effective moisture barrier.  Complex curtain wall systems should be evaluated by a specialist.

Be Sociable, Share!
Profile photo of Joe Derhake, PE
Education: MBA, University of Southern California BS, Civil Engineering, Michigan State University Registrations: Registered Professional Civil Engineer, California Registered Professional Civil Engineer, Arizona Registered Professional Civil Engineer, Tennessee EPA Accredited Asbestos Inspector, Management Planner Designer (not current) Affiliations: Member, Environmental Banker's Association Member, Mortgage Banker's Association Mr. Derhake serves as the President of Partner Engineering and Science, a national engineering and environmental consulting firm. He has over 10,000 real estate transactions throughout his career. His due diligence resume includes experience at all levels, including advising lenders and real estate investors through the following product types: Phase I Environmental Site Assessments, Phase II Subsurface Investigations, Phase III Site Characterizations, Remedial Cost Estimates, and Environmental Transaction Screens. Mr. Derhake has a significant portfolio of closed sites and speaks regularly at industry events and conferences.

Related Posts

Why PCAs are a Valuable Tool for Investors and Lenders

A closer look at the new ASTM E2018-15 Standard Guide for Property Condition Assessments

How Climate Change Poses Risks for Banks and Insurers

Leave a Reply

You must be logged in to post a comment.

css.php