WHAT IS A PROPERTY CONDITION ASSESSMENT ?
What is a property condition assessment and why is it important? Is a property condition assessment the same as an environmental site assessment? In order to know what a PCA is, we have to define certain terms and learn its relationship to the industry. Only then can it be better understood and properly assessed whether it should be deemed an integral part of a real estate transaction.
When a property is being sold, the seller specifies to the buyer what he is offering: raw land or a property with existing structures. In developing commercial real estate in a prime location, most already have existing buildings. Buyers and lenders will deem it important to know the condition of these buildings. Knowing the current shape it is in will allow developers to either create a plan around the building or decide to demolish it because further maintenance will not prove to be cost effective. It can also be that demolition is done simply because the structure will not conform to the overall vision for the property development.
This is where a property condition assessment is conducted. It is an evaluation or appraisal as to the soundness or current shape of the property. Is the property in A1 condition or does it need extensive repairs? Is the structure still habitable or should be part of the list of condemned buildings?
As mandated by law and to serve as protection for buyers, sellers, developers and lenders, environmental due diligence is needed prior to purchasing a property. Hand in hand with this is the need to conduct an environmental site assessment.
Those who are not familiar with the business may ask whether an environmental site assessment already encompasses a property condition assessment. Although they are equally important and may be both required, they exist separately. The concern of property condition assessment is limited to the building or structure itself while environmental site assessment deals with the totality of the area where the structure (or its surrounding area) is located.
Who is tasked to conduct a PCA?
Consultants go through a process to qualify them for such a job. Although reputable Environmental Engineering Services providers may have people who are qualified for such a task or can even offer reasonable rates, it is not necessary to get consultants from those firms.
What does their job entail?
A consultant will usually conduct what is termed as a Walk-Through Survey of the property. As the term implies, the qualified personnel will enter the structure and inspect every area of the property then provide the proper documentation of their findings. He is not limited to one building. He needs to look into the condition of every structure in the property unless a specific request is otherwise placed on the job order.
Those who desiring a property condition assessment should bear in mind that the property condition report will contain observations during the actual period when the assessment was conducted. It is generally not a comprehensive report or a very detailed one delving on technicalities. Should these be needed, further specifications should be provided.
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