All You Need To Know About Property Inspection Reports

Do you intend to purchase commercial property? Then you are most likely to encounter property condition assessment (PCA) in the processes. A PCA is the home inspection equivalent for commercial properties. Largely, the PCA enables both the lender and the buyer to do due diligence on a property before purchase. The process is typically complex and requires a professional inspector. This post offers insights on what to expect from a property condition inspection. 

What Is a Property Condition Inspection?

A property condition inspection is also known as a commercial building inspection. The PCA is an evaluation process for a commercial property involving a thorough inspection. Typically, the PCA includes all improvements on the commercial real estate asset and systems available in each property building. Usually, the PCA process takes place during the sale or transfer of a commercial property. As such, the buyer may request for assessment before purchasing a property, or a lender may require a PCA before giving a loan financing. Notably, a commercial building inspector conducts the PCA and may be joined by mechanical or electrical engineers for complex assessments.

Property Condition Inspection Process

Ordinarily, the property buyer or lender may commission the PCA process. In the case of lenders, the PCA occurs once the borrower applies for a loan. The lender will then identify a qualified commercial building inspector. The inspector begins the task by asking several questions related to the building. The initial survey allows the inspector to estimate the scope of the PCA process. Then, the inspector organizes a site visit for the property inspection. The duration of the assessment varies considerably based on the size of the property. 

The following are the significant inspection areas in a typical PCA process: 

• Building structure including foundation, walls, floor, and roof 
• Electrical system 
• Plumbing system 
• HVAC system 
• Interior finishes 

Property Condition Inspection Report 

In the end, the inspector prepares and submits a PCA report. The report provides a detailed description of each of the evaluated components. Then, it identifies any deficiency discovered on the property. Importantly, the report contains a table of costs necessary for correcting the identified deficiencies. The costs include immediate repairs expenses and the replacement reserve for long-term capital expenditures on routine maintenance. 

Notably, the report helps the buyer and lender to make the necessary decisions. The conclusions may include rejecting or reducing loan financing and negotiating or turning down the property offer. The property buyer can use the report to estimate the necessary maintenance needs and cost should they proceed with the purchase. 

In summary, a property condition inspection informs the purchasing and lending decisions for commercial property. The PCA process establishes the structural integrity of a building and its systems. Make sure you engage a professional and experienced commercial building inspector for a quality and reliable assessment.