Commercial Property Condition Assessments Performed According to ASTM

Property Condition Assessments (PCAs) performed according to American Society of Testing Materials ASTM E 2018-08, are commonly referred to as ‘Baseline PCAs’. In order to understand the meaning of a Baseline PCA, we can refer to the definition of ‘baseline’ provided in ASTM E 2018 that states:

‘the minimum level of observations, due diligence, inquiry/research, documentation review, and preparation of opinions of probable costs to remedy material physical deficiencies for conducting a PCA as described in this guide. ‘

Given this definition, a Baseline PCA is essentially a cursory walk-through of a commercial property augmented by document reviews and interviews in an attempt to understand and determine the current physical condition of the property being surveyed.

While some may argue that a Baseline PCA is better than nothing at all, the fact remains that baseline PCAs continue to rely heavily upon documentation review and interviews for retrieving information from sellers, real estate agents, and other people we usually don’t know. Unfortunately, this information may later prove to be insufficient or inaccurate simply because it is often difficult if not impossible to verify the authenticity thereof in conducting a walk-through survey of the property as provided by a Baseline PCA.

The following depict some common conditions and repairs that can virtually go undetected and remain unknown in conducting a typical Baseline PCA according to ASTM E 2018:

  • Verify heat exchanger replacement inside a rooftop package unit
  • Verify replacement of compressor inside a rooftop package unit
  • Burnt control wiring inside a rooftop package unit
  • A cracked heat exchanger inside a rooftop package unit
  • A cracked or holed heat exchanger inside a gas fired unit heater mounted up high
  • Elevated or unsafe levels of carbon monoxide (CO) in flue gas
  • Electrical switch gear and panel code violations
  • Overheated bus bars, devices or electrical wiring inside power distribution equipment
  • Burned out electric heating elements when two or more are present

By this time, you’re no doubt probably asking yourself, ‘What does all of this mean and how does this apply to me in purchasing a commercial real estate property’. Well, the answer is quite simple in that if you’re looking to mitigate your risk of purchase to the fullest extent possible, you’ll want to opt for a PCA performed at a much higher level of due diligence and inquiry than that typically provided by a Baseline PCA.

My next article will continue this discussion by explaining what constitutes a PCA performed at a higher level of due diligence and inquiry than a typical Baseline PCA.

To learn more about Commercial Property Condition Assessments (PCAs), visit the author’s website at: