The Property Condition Assessment (PCA) provides you with the strategic information you need before purchasing or financing a property. The PCA is used to investigate and document the physical condition of the property and to quantify the costs of needed repairs and deferred maintenance. The assessment is used to determine structural, mechanical and electrical deficiencies of the improvements. It serves to uncover associated risks which would adversely impact the value of the real estate asset. This protects you from making a poor purchasing or financing decision which will compromise your financial investment.
A buyer of real estate will use it to quantify in dollars and cents the deferred maintenance associated with the real estate asset in order to adjust the purchase price accordingly. A lender will use the PCA in order to establish the escrow amounts necessary to make the necessary repairs and protect their interest.
A Property Condition Assessment is only valid in context of a referenced standard. The recognized standard for conducting a PCA is contained in the guidelines established by the American Society for Testing and Materials (ASTM). The ASTM guidelines are called: ASTM E2018 – 08 Standard Guide for Property Condition Assessments: Baseline Property Condition Assessment Process:
- This includes a review of existing building plans and specifications.
- Then a walk-through survey of the building to research building components and observe the various building systems.
Building systems include the site and building components. The site components are made up of:
- Storm water management and drainage systems
- Paving
- Parking lots
- Sidewalks
- Landscaping
- Exterior lighting and any recreational facilities
The building components include:
- Structure
- Roof
- Plumbing
- Mechanical equipment
- Electrical
- Life safety/fire protection
- Interior elements
Mechanical equipment generally includes:
- HVAC system
- Elevators
The PCA can also include researching compliance with the building code, zoning code and accessibility code (ADA).
The deliverable from the PCA effort is in the form of a Property Condition Assessment Report. The purpose of this report is to document the work that was performed. This includes a discussion of the various building components which include:
- Site Components—Site components include ingress and egress, vehicular circulation, signage,condition of pavement, parking striping, structural components, site lighting, landscaping, drainage and storm water management.
- Building Components—Building components include the structure, the roof, architectural system,plumbing, electrical and mechanical systems, life safety systems and accessibility criteria.
The report contains a discussion of each of these components noting its age, condition and noted deficiencies. All noted deficiencies are categorized and an engineer’s opinion of cost is calculated to quantify the needed improvements.
This information is used by buyers to decide on a fair price for the purchase and by lenders to determine the amounts that need to be put in escrow from the load for making the repairs.
