Significance and Use
4.1 Use—This guide is intended to reflect a reasonable baseline process for the completion of PCAs for use on a voluntary basis. No implication is intended that use of this guide be required to have conducted a PCA in a commercially prudent and reasonable manner. The baseline process described in this guide is subject to a moderate level of uncertainty. Because the objectives, risk tolerance, schedule, and budget of users can be dramatically different there are varying levels of PCA and due diligence that can be exercised that are both more and less comprehensive than this guide that may be appropriate to meet the objectives of the user. In accordance with ASTM protocols, this guide does not recommend a specific course of action or scope of work. Users should consider their requirements, the purpose that the PCA is to serve, and their risk tolerance to refine the scope of assessment and consultant qualifications in order to establish appropriate objectives for the assessment.
4.2 Clarification of Use of Assessments:
4.2.1 Specific Point in Time—A user should only rely on the PCR for the point in time that the observations and research were conducted.
4.2.2 Site-Specific—The PCA prepared in accordance with this guide is site-specific in that it relates to the physical condition of primary improvements on a specific parcel of commercial real estate. Consequently, this guide does not address many additional issues in commercial real estate transactions such as economic obsolescence, the purchase of business entities, or physical deficiencies relating to off-site conditions.
4.2.3 Specific Objectives—PCAs are completed to address specific objectives identified to the consultant by the user. The consultant should be consulted prior to use of the PCA to address any other objective.
4.2.4 Intended Users—PCAs are typically completed for use by contracting parties. In some cases, the use of or reliance on reports may be extended to additional parties by mutual agreement of the contracting parties. Use of or reliance on PCAs by others may violate the rights of contracting parties and fail to satisfy the objectives of such unauthorized parties.
4.3 Principles—The following principles are an integral part of this guide. They are intended to be referred to in resolving ambiguity, or in exercising discretion accorded the user or consultant in conducting a PCA, or in judging whether a user or consultant has conducted appropriate inquiry or has otherwise conducted an adequate PCA.
4.3.1 Uncertainty Not Eliminated—No PCA can wholly eliminate the uncertainty regarding the presence of physical deficiencies and the performance of building systems or building components. Preparation of a PCR in accordance with this guide is intended to reduce, but not eliminate, the uncertainty regarding the potential for building system or building component failure and to reduce the potential that such building system or building component may not be initially observed. This guide also recognizes the inherent subjective nature of reported opinions as to such issues as workmanship, quality of original installation, and estimating the RUL of any given component or system. Users should work with their consultant to consider modifications to the scope of the PCA that may reduce uncertainties.
4.3.2 Suggested Remedies—The guide recognizes that a suggested remedy may be determined under time constraints, formed without the aid of engineering calculations, testing, exploratory probing, the removal or relocation of materials, design, or other technically exhaustive means. Furthermore, there may be other alternatives or more appropriate schemes or methods to remedy a physical deficiency. The suggested remedies are generally formed without detailed knowledge from those familiar with the historical or actual performance of the building system or building component.
4.3.3 Not Technically Exhaustive—The PCA is not intended to be construed as technically exhaustive. There is a point at which the cost of information obtained, or the time required to conduct the PCA and prepare the PCR, may outweigh the usefulness of the information and, in fact, may be a material detriment to the orderly and timely completion of a commercial real estate transaction. It is the intent of this guide to attempt to identify a balance between limiting the costs and time demands inherent in performing a PCA and reducing the uncertainty about unknown physical deficiencies resulting from completing additional inquiry.
4.3.4 Representative Observations—The purpose of conducting representative observations is to convey to the user the expected magnitude of commonly encountered or anticipated conditions. Recommended representative observation quantities for various asset types are provided in Annex A1; however, if in the consultant’s opinion, the recommended representative observations are unwarranted as a result of homogeneity of the asset or other reasons deemed appropriate, the field observer may survey sufficient units, areas, buildings, building systems, and building components so as to comment with reasonable confidence as to the representative presence of physical deficiencies at such repetitive or similar areas, building systems, and building components. If there is more than one building on the subject property, and they are homogeneous with respect to approximate age, use, basic design, materials, and systems, it is not a requirement of this guide for the field observer to observe the building systems and building components within each individual building to describe or comment on their condition within the PCR. The descriptions and observations provided in the PCR are to be construed as representative of all similar improvements.
4.3.4.1 User-Mandated Representative Observations—A user may mandate the representative observations required for a given subject property or a particular building system or building component. Such representative observations may be more or less detailed than this guide's recommended representative observations as provided in Annex A1.
4.3.4.2 Extrapolation of Findings—Consultant may reasonably extrapolate representative observations and findings to all typical areas or systems of the subject property for the purposes of describing such conditions within the PCR and preparing the opinions of costs for suggested remedies.
4.3.5 Level of Due Diligence is Variable—Not every subject property will warrant the same level of assessment. The appropriate level of assessment is guided by the purpose the PCA is to serve; type of subject property; age of the improvements; expertise and risk tolerance of the user; and time available for preparing and reviewing the opinions contained in the PCR.
4.4 Prior PCR Usage—This guide recognizes that PCRs prepared in accordance with this guide may include information that subsequent users and consultants may want to use to avoid duplication and to reduce cost. Therefore, this guide includes procedures to assist users and consultants in determining the appropriateness of using such information. In addition to the specific procedures contained elsewhere in this guide, the following should be considered:
4.5 Use of Prior PCR Information—Information contained in prior property condition reports may be helpful to assist in understanding the subject property and planning the walk-through survey and research for the completion of a current PCR. Such information should serve only as an aid to a consultant in fulfilling the requirements of this guide and to assist the field observer in the walk-through survey, research, and the field observer’s understanding of the subject property; and should be verified during the completion of a current assessment.
4.5.1 Comparison with a Previously Prepared PCR—Discrepancies between a PCR and a previously prepared PCR are not indicative that either PCR is deficient. User requirements and objectives, the purpose of the PCR, qualifications and experience of the assessment team, time available to complete the PCR, access to and availability of information, hindsight, new or additional information, enhanced visibility because of improved weather or site conditions, equipment not in a shutdown mode, specific building systems and building components observed, and other factors may significantly impact the findings and opinions of the PCR. It should not be concluded or assumed that a previous PCR was deficient because the previous PCA did not discover a certain physical deficiency, or because opinions of costs in the previous PCR are different. Because a PCR contains a representative indication of the condition of the subject property at the time of the walk-through survey and is dependent on the information available to the consultant at that time, the PCR should be evaluated on the reasonableness of judgments made at the time and under the circumstances in which they are made.
4.5.2 Conducting Current Walk-Through Surveys—At a minimum, for a PCR to be consistent with this guide, a new walk-through survey, interviews, and solicitation and review of building and fire department records for recorded material violations should be performed.
4.6 Actual Knowledge Exception—If the user or consultant conducting a PCA has actual knowledge that the information from a prior PCR is not accurate, or if it is obvious to the field observer that the information is not accurate, such information from a prior PCR should not be used.
4.7 Contractual Issues—This guide recognizes that contractual and legal obligations may exist between prior and subsequent users of PCRs, or between users and consultants who performed prior PCRs, or both. Consideration of such contractual obligations is beyond the scope of this guide. Furthermore, a subsequent user of a prior PCA should be apprised that the report may have been prepared for purposes other than the current desired purpose of the PCR and should determine the contractual purpose and scope of the prior PCA.
4.8 Rules of Engagement—The contractual and legal obligations between a user and consultant (and other parties, if any) are outside the scope of this guide. No specific legal relationship between the user and consultant was considered during the preparation of this guide.
Scope
1.1 Purpose—The purpose of this guide is to provide a framework for conducting a property condition assessment (PCA) of the primary improvements at commercial real estate properties by performing a walk-through survey and conducting research as outlined within this guide.
1.1.1 Physical Deficiencies—The goal of the baseline process for property condition assessments is to identify and communicate material physical deficiencies to a user.
1.1.2 Walk-Through Survey—This guide outlines procedures for conducting a walk-through survey to identify physical deficiencies, and recommends various building systems and building components that should be observed by the field observer.
1.1.3 Document Reviews and Interviews—The scope of this guide includes document reviews, research, and interviews to augment the walk-through survey to assist with understanding the subject property and identification of physical deficiencies.
1.1.4 Property Condition Report—The work product resulting from completing a PCA in accordance with this guide is a property condition report (PCR). The PCR incorporates the information obtained during the Walk-Through Survey, the Document Review and Interviews sections of this guide and includes opinions of costs for suggested remedies of observed physical deficiencies.
1.2 Objectives—Objectives in the development of this guide are to: (1) provide a framework for conducting a property condition assessment (PCA) of the primary improvements located on a parcel of commercial real estate; (2) facilitate consistent and pertinent content in PCRs; (3) develop pragmatic and reasonable recommendations and expectations for site observations, document reviews and research associated with conducting PCAs and preparing PCRs; (4) establish reasonable expectations for PCRs; (5) assist in developing an industry standard of care for appropriate baseline observations and research; and (6) recommend protocols for the consultants for communicating observations, opinions, and recommendations in a manner meaningful to the user.
1.3 Out of Scope Considerations and Excluded Activities—The use of this guide is strictly limited to the scope set forth herein. Section 12 and Appendix X1 of this guide identify, for informational purposes, certain considerations and physical conditions that may exist on the subject property, and certain activities or procedures (not an all-inclusive list) that are beyond the scope of this guide but may warrant consideration by parties to a commercial real estate transaction to enhance the PCA. Users should work with a knowledgeable consultant to identify additional considerations and concerns to be evaluated. The decision to inquire into out-of-scope considerations or extend the assessment to include excluded activities is to be made by the user. No assessment of out-of-scope considerations is required for a PCA to be conducted in conformance with this guide.
1.4 Organization of This guide—This guide consists of several sections, an Annex and two (2) Appendixes. Section 1 is the Scope. Section 3 on Terminology contains definitions of terms both unique to this guide and not unique to this guide, and acronyms. Section 4 sets out the Significance and Use of this guide, and Section 5 describes the User's Responsibilities. Sections 6 through 11 provide guidelines for the main body of the PCR, including the scope of the walk-through survey, preparation of the opinions of costs to address physical deficiencies, and preparation of the PCR. Section 12 provides additional information regarding out-of-scope considerations, activities, and procedures (see section 1.3). Annex A1 provides guidance relating to specific asset types that are considered as integral to this guide. Appendix X1 describes additional concerns a user may consider in modification of the scope of the PCR. Appendix X2 and Appendix X3 outline an approach to limited accessibility screenings.
|
|
|
|
| TABLE OF CONTENTS | ||
| 1 | Scope |
|
|
| 1.1 | Purpose |
|
| 1.2 | Objectives |
|
| 1.3 | Out of Scope Considerations and Excluded Activities |
|
| 1.4 | Organization of This guide |
|
| 1.5 | Multiple Buildings |
|
| 1.6 | Safety Concerns |
| 3 | Terminology | |
|
| 3.2 | Definitions |
|
| 3.3 | Abbreviations and Acronyms |
| 4 | Significance and Use | |
|
| 4.1 | Use |
|
| 4.2 | Clarification of Use of Assessments |
|
| 4.3 | Principles |
|
| 4.4 | Prior PCR Usage |
|
| 4.5 | Use of Prior PCR Information |
|
| 4.6 | Actual Knowledge Exception |
|
| 4.7 | Contractual Issues |
|
| 4.8 | Rules of Engagement |
| 5 | User's Responsibilities | |
|
| 5.1 | Objectives and Scope of Assessment |
|
| 5.2 | Point of Contact |
|
| 5.3 | Access |
|
| 5.4 | User Disclosure |
| 6 | Property Condition Assessment | |
|
| 6.1 | Objective |
|
| 6.2 | PCA Components |
|
| 6.3 | Coordination of Components |
|
| 6.4 | Consultant's Duties |
| 7 | The Consultant | |
|
| 7.1 | Qualifications of the Consultant |
|
| 7.2 | Staffing of the Field Observer |
|
| 7.3 | Independence of the Consultant |
|
| 7.4 | Qualifications of the Field Observer |
|
| 7.5 | Qualifications of the PCR Reviewer |
|
| 7.6 | The Field Observer and PCR Reviewer May Be a Single Individual |
|
| 7.7 | Not a Professional Architectural or Engineering Service |
| 8 | Document Review and Interviews | |
|
| 8.1 | Objective |
|
| 8.2 | Verification of Information Provided by Others |
|
| 8.3 | Accuracy and Completeness |
|
| 8.4 | Government Agency Provided Information |
|
| 8.5 | Pre-Survey Questionnaire |
|
| 8.6 | Owner/User Provided Documentation and Information |
|
| 8.7 | Interviews |
| 9 | Walk-Through Survey | |
|
| 9.1 | Objective |
|
| 9.2 | Frequency |
|
| 9.3 | Photographs |
|
| 9.4 | Scope |
|
| 9.5 | Additional Considerations |
| 10 | Opinions of Costs to Remedy Physical Deficiencies | |
|
| 10.1 | Purpose |
|
| 10.2 | Scope |
|
| 10.3 | Opinions of Costs Attributes |
| 11 | Property Condition Report | |
|
| 11.1 | Format |
|
| 11.2 | Writing Protocols |
|
| 11.3 | Documentation |
|
| 11.4 | Executive Summary |
|
| 11.5 | Purpose and Scope |
|
| 11.6 | Walk-Through Survey |
|
| 11.7 | Document Reviews and Interviews |
|
| 11.8 | Additional Considerations |
|
| 11.9 | Qualifications |
|
| 11.10 | Limiting Conditions |
|
| 11.11 | Exhibits |
| 12 | Out of Scope Considerations | |
|
| 12.1 | Activity Exclusions |
|
| 12.2 | Warranty, Guarantee, and Code Compliance Exclusions |
|
| 12.3 | Additional/General Considerations |
| 13 | Keywords | |
| Annex A1 | GUIDANCE AND ENHANCED DUE DILIGENCE SERVICES | |
|
| A1.1 | Multifamily Properties |
|
| A1.2 | Commercial Office Buildings |
|
| A1.3 | Retail Buildings |
|
|
| |
| Appendix X1 | GUIDANCE AND ENHANCED DUE DILIGENCE SERVICES | |
|
| X1.1 | Qualifications |
|
| X1.2 | Modifications to the Baseline Process |
| Appendix X2 | AMERICANS WITH DISABILITIES ACT (ADA) ABBREVIATED ADA SCREENING | |
| Appendix X3 | FAIR HOUSING ACT (FHA) ABBREVIATED FHA SCREENING | |
1.5 Multiple Buildings—If the subject property is comprised of multiple buildings, it is the intent of this guide that all of the primary improvements are discussed in one PCR.
1.6 This standard does not purport to address all of the safety concerns, if any, associated with its use. It is the responsibility of the user of this standard to establish appropriate safety, health, and environmental practices and determine the applicability of regulatory limitations prior to use.
1.7 This international standard was developed in accordance with internationally recognized principles on standardization established in the Decision on Principles for the Development of International Standards, Guides and Recommendations issued by the World Trade Organization Technical Barriers to Trade (TBT) Committee.
