Existing Building Conditions - Standard

A general assessment of existing properties is obtained for commercial real estate projects to determine current conditions, immediate improvement needs, and replacement reserve recommendations. The property condition analysis determines the structural and operational integrity of real estate collateral and estimates the repair, replacement and reserve requirements that impact cash flow for operating expenses and debt service coverage.

General Information

An executive summary should be provided at the beginning of the property condition assessment, which includes the following information:

Owner/Borrower Name
Project name and location
Description of the project
Statement of scope of work performed and assumptions made
Overview of compliance with regulations and requirements of governing authorities (include licenses, permits, variances, etc.)
Summary of maintenance concerns or potential problems
Recommendations for additional investigations or exploratory work
Conclusions

Detailed Scope of Work

EVALUATION of structural integrity, capacity, condition and life expectancy, and efficiency of major systems (including but not limited to: mechanical, electrical, plumbing and roof components).
IDENTIFICATION of recent or ongoing improvements at the property (e.g. face lifts, new windows and doors, etc.) that is completed, underway, or anticipated.
ASSESSMENT of site conditions: maintenance, paving, curbs, sidewalks, drainage, landscaping, etc.
COMPLIANCE with applicable codes, ordinances and regulatory requirements; confirmation of status of building, occupancy and applicable operating permits and licenses necessary for the intended use of the property.
GENERAL CONFORMANCE to the American with Disabilities Act (ADA) or evaluation of proposed plans to conform.
IDENTIFICATION of possible environmental concerns (e.g., the existence of asbestos in the building and plans of abatement).
PROJECTION of minimum costs required to:
1. Repair or correct physical improvements of buildings and site.
2. Bring property into applicable code compliance.
3. Modify improvements to meet ADA regulatory conformity.
4. Investigate and remediate environmental issues; e.g., conduct asbestos abatement.
SUGGESTIONS for additional investigations or comprehensive analyses of possible concealed conditions as external observation warrants.
DOCUMENT REVIEW
1. Survey, title policy, easements and rights of way documentation, as available.
2. Original and updated plans and specifications, as available.
3. Utilities servicing the property.
4. Permits, variances, licenses, etc.
5. Third-party reports (e.g., Seismic, Environmental, Security and Safety, Geotechnical, etc.).
6. Evidence of insurance.
REPLACEMENT RESERVE ANALYSIS
1. 15-year analysis for the project type and locale.
2. Recommendation of annual reserve required to make future capital improvements.

Reporting Requirements:

Oral Report

The consultant should notify the PNC designate by oral report if there are substantive concerns about the condition of the property or if the requisite materials are not available to enable the consultant to complete the scope of service detailed above. If timing or material constraints prohibit delivery of the written report by the commissioned due date, the consultant must promptly notify REA or the PNC designate to determine how to proceed.

Written Report

Two written reports are required, unless otherwise specified. Periodically, an additional copy of the report may be requested by the Real Estate Administration contacts for quality control purposes. The written report should be delivered to the PNC designate (usually the Closing Administrator) within two to three weeks following the on-site visit. Comprehensive photographs of the project should be mounted, labeled and included with the written reports. The report should also include copies of relevant documents, such as certificates of occupancy, labor and industry certifications, building code violation notices, etc. Electronic or compact disk delivery of the report, exhibits, and photographs may be provided in lieu of hard copies, provided that these are easily accessible by PNC and fully legible.

Special Instructions

Variations in the report content and timing requirements would be identified in the Special Instructions field of the bid request or by subsequent email, fax or written communication.

Questions should be directed to Real Estate Administration.