Once you have acquired a clear understanding of what constitutes a baseline PCA performed according to ASTM E2018-15 Standard for Property Condition Assessments (PCAs), there will undoubtedly come a time when a baseline PCA appears to be unable to provide a reliable assessment of the property under consideration due to unforeseen extenuating circumstances over which you have little to no control. This often occurs at times you least anticipate in conducting a PCA whereby: 1) documentation deemed essential in conducting a baseline PCA is either not forthcoming or deemed inaccurate and unreliable, 2) the property owner/seller or authorized agent appear to be uncooperative and unable or unwilling to provide information or documentation requested/deemed essential for conducting the PCA, 3) the property owner or agent refuses to allow interviews for soliciting feedback from any of the building occupants/tenants familiar with the property given their desire to preserve confidentiality surrounding the potential sale thereof or for whatever reason provided, 4) the property owner or agent imposes unrealistic time constraints or other restrictions that serve to compromise the quality of a PCA yet to be provided. While this by no means serves as a complete list, I'm sure you get the picture. While a higher level due diligent PCA may not always be the resolve, it can often compensate for a baseline PCA deemed insufficient and unable to fill in the gaps under extenuating circumstances over which we have little to no control. And while it would be advantageous for everyone with a vested interest in the sale or lease of a commercial property to cooperate and work together in an effort to achieve a fair and equitable outcome for all, this often appears to be wishful thinking. Then again, if you have serious reservations about the property or a PCA yet to be provided, you can often choose to walk away rather than waste precious time and money on a baseline PCA with the potential of leaving you high and dry, and no better off than you were to begin with.
A Couple of Real Life Examples
The following represent a couple of real life examples encountered in conducting baseline PCAs under adverse or less than ideal
conditions making it difficult to provide an accurate and reliable assessment regarding the condition of one or more building
systems designated for evaluation under the scope of a baseline PCA performed according to document ASTM E2018-15 Standard for
Property Condition Assessments (PCAs).
The first example pertains to a mixed use commercial and industrial building complex consisting of a two-story multi-tenant office building and two one-story multi-tenant office/warehouse buildings. Unfortunately, once we had even begun the PCA, we were blindsided by several restrictions and limitations imposed by the seller/owner of the property including unrealistic time constraints, permission to access and inspect the roof in exchange for assuming liability for all/any roof leaks that could likely develop subsequent to conducting a roof inspection of a built-up roof overridden with small to large blisters/air pockets, and a blank, incomplete copy of a document purported to be a mechanical equipment legend provided by the seller/owner's agent in response to an earlier request we had made in anticipation of obtaining an accurate copy of an equipment legend for use in conducting the PCA. To further compound the situation, as a result of adverse weather conditions encountered on the day we were scheduled to perform a visual assessment of the exterior of the property, the seller/owner was downright vehemently opposed to allow us to complete an assessment thereof over the coming weekend without having his agent present—this in itself was a ridiculous request since we were not exactly examining the contents inside Fort Knox let alone a Brinks truck worth robbing not to mention that the majority of tenant spaces were under lock and key, and closed for business over the w/e. As for the documentation provided/passed off as an equipment legend for the property under consideration, while this may have been an unintentional faux pas by the property owner, his agent or whoever was responsible for submitting essentially worthless information in an email file attachment, this was both unprofessional and inexcusable apart from being yet another hurdle to overcome. As for the roof, since the seller/owner refused to release us from any liability for roof leaks subsequent to conducting a roof inspection, we decided to forego the inspection thereof since we were unwilling to assume any liability whatsoever in conducting a visual inspection of a built-up roof already considered to be well beyond its serviceable life and a prime candidate for replacement by a qualified, licensed independent roofing contractor contacted and hired by the seller's agent. All told, in light of extenuating circumstances in addition to a number of significant deficiencies disclosed during the PCA, our client wisely elected to take a pass in purchasing a commercial property with every indication of being a potential money pit requiring replacement of major building systems now and in time to come.
The second example pertains to a former bank owned property foreclosure that once served as a walk-in, drive-up bank facility now owned by a private party/real estate investor looking to sell the property. The downside in conducting a baseline PCA for this particular property was the simple fact that the present seller/owner, being totally unfamiliar with the property, was completely unaware (essentially clueless) of any recent, prior or ongoing issues with any of the building systems not to mention that the present owner had no documentation whatsoever pertaining to the installation, maintenance, repairs, or replacement of any of the building systems to date. Suffice it to say that, in the absence of documentation and interviews—normally required in conducting a baseline PCA according to ASTM E2018-15—this in itself posed a significant limitation in attempting to provide an accurate and reliable PCA for the property under consideration leaving us with two options to consider in an attempt to compensate for the lack of information able to be obtained, namely: 1) conduct a higher level due diligent PCA by engaging the services of qualified, licensed specialty contractors to provide a professional evaluation of building systems designated for assessment such as mechanical, electrical, plumbing, etc., 2) rely solely upon the knowledge and experience of the party conducting the PCA to fill in the gaps resulting from the lack of information available/unable to be obtained under these circumstances. In reality, we were fortunate to be able to solely rely upon the knowledge and expertise of the PCA observer in providing an accurate and reliable property condition assessment for the property under consideration to best serve our client's needs.
Brief Overview of Higher Level Due Diligent PCAs
No doubt you're probably already asking yourself when it may be beneficial to consider a higher level due diligent property condition assessment instead of a baseline PCA performed according to ASTM E2018 Standard for Property Condition Assessments. While it's important to understand that higher level due diligent property condition assessments are primarily designed and intended to provide an in depth assessment of specific building systems when requested or deemed necessary in order to compensate for shortcomings present in having to rely wholly or partially upon documentation and interviews in conducting a baseline PCA, not all PCAs require a higher level due diligent assessment than that provided by a typical baseline PCA. On another note, it stands to reason that a higher level due diligent assessment of a specific building system, i.e. mechanical heating/cooling system, can more often than not reveal existing deficiencies and maintenance needs not readily apparent in conducting a baseline PCA. Keeping in mind that a higher level due diligent property condition assessment of any building system lays well beyond the scope of a typical baseline PCA performed according to document ASTM E2018-15 Standard for PCAs, experience has shown time and again that higher level due diligent PCAs for vacant as well as occupied commercial property where there exists little to no documentation to verify recent/past service maintenance contract agreements, repairs, equipment and building product manufacturer warranties, etc., or when interviews are unable to be conducted, for whatever reason, for the purpose of soliciting feedback from those who may be familiar with the property under consideration, outsourcing the assessment of specific building systems to one or more qualified, licensed specialty contractors in an effort to obtain an accurate and reliable survey of the property can often prove beneficial.
Extenuating circumstances aside, experience has shown that baseline PCAs conducted according to ASTM E2018 Standard for Property Condition Assessments continue to have their place and can often prove sufficient when looking to purchase or lease a commercial property. Nonetheless, when confronted with unanticipated extenuating circumstances known to compromise a baseline PCA in looking to purchase/lease a commercial property, one's comfort or risk tolerance level will normally dictate whether or not to consider a higher level due diligent assessment of the property under consideration.