Standard Guide for Property Condition Assessments...

Designation: E 2018 – 01

Standard Guide forProperty Condition Assessments: Baseline PropertyCondition Assessment Process1

This standard is issued under the fixed designation E 2018; the number immediately following the designation indicates the year oforiginal adoption or, in the case of revision, the year of last revision. A number in parentheses indicates the year of last reapproval. Asuperscript epsilon (e) indicates an editorial change since the last revision or reapproval.

1. Scope

1.1 Purpose—The purpose of this guide is to define goodcommercial and customary practice in the United States ofAmerica for conducting a baseline property condition assess-ment (PCA) of the improvements located on a parcel ofcommercial real estate by performing a walk-through surveyand conducting research as outlined within this guide.

1.1.1 Physical Deficiencies—In defining good commercialand customary practice for conducting a baseline PCA, thegoal is to identify and communicate physical deficiencies to auser. The term physical deficiencies means the presence ofconspicuous defects or material deferred maintenance of asubject property’s material systems, components, or equipmentas observed during the field observer’s walk-through survey.This definition specifically excludes deficiencies that may beremedied with routine maintenance, miscellaneous minor re-pairs, normal operating maintenance, etc., and excludes deminimis conditions that generally do not present materialphysical deficiencies of the subject property.

1.1.2 Walk-Through Survey—This guide outlines proce-dures for conducting a walk-through survey to identify thesubject property’s material physical deficiencies, and recom-mends various systems, components, and equipment thatshould be observed by the field observer and reported in theproperty condition report (PCR).

1.1.3 Document Reviews and Interviews—The scope of thisguide includes document reviews, research, and interviews toaugment the walk-through survey so as to assist the consult-ant’s understanding of the subject property and identification ofphysical deficiencies.

1.1.4 Property Condition Report—The work product result-ing from completing a PCA in accordance with this guide is aPCR. The PCR incorporates the information obtained duringthe Walk-Through Survey, the Document Review and Inter-views sections of this guide, and includes opinions of probablecosts for suggested remedies of the physical deficienciesidentified.

1.2 Objectives—Objectives in the development of this guideare: (1) define good commercial and customary practice for thePCA of primary commercial real estate improvements; (2)facilitate consistent and pertinent content in PCRs; (3) developpractical and reasonable recommendations and expectations forsite observations, document reviews and research associatedwith conducting PCAs and preparing PCRs; (4) establishreasonable expectations for PCRs; (5) assist in developing anindustry baseline standard of care for appropriate observationsand research; and (6) recommend protocols for consultants forcommunicating observations, opinions, and recommendationsin a manner meaningful to the user.

1.3 Considerations Beyond Scope—The use of this guide isstrictly limited to the scope set forth in this section. Section 11and Appendix X1 of this guide identify, for informationalpurposes, certain physical conditions that may exist on thesubject property, and certain activities or procedures (not an allinclusive list) that are beyond the scope of this guide but maywarrant consideration by parties to a commercial real estatetransaction.

1.4 Organization of This Guide—This guide consists ofseveral sections, an Annex and two Appendixes. Section 1 isthe Scope. Section 2 on Terminology contains definitions ofterms both unique to this guide and not unique to this guide,and acronyms. Section 3 sets out the Significance and Use ofthis guide, and Section 4 describes the User’s Responsibilities.Sections 5 through 10 provide guidelines for the main body ofthe PCA, including the scope of the Walk-Through Survey,preparation of the Opinions of Probable Costs to RemedyPhysical Deficiencies, and preparation of the PCR. Section 11provides additional information regarding out of scope consid-erations (see 1.3). Annex A1 provides requirements relating tospecific asset types, and where applicable, such requirementsare to be considered as if integral to this guide. Appendix X1provides the user with additional PCA scope considerations,whereby a user may increase this guide’s baseline scope of duediligence to be exercised by the consultant. Appendix X2outlines the ADA Accessibility Survey.

1.5 Multiple Buildings—Should the subject property consistof multiple buildings, it is the intent of this guide that only asingle PCR be produced by the consultant to report on all of thebuildings on the subject property.

1 This guide is under the jurisdiction of ASTM Committee E50 on EnvironmentalAssessment and is the direct responsibility of Subcommittee E50.02 on CommercialReal Estate Transactions.

Current edition approved Dec. 10, 2001. Published March 2002. Originallypublished as E 2018–99. Last previous edition E 2018–99.

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Copyright by ASTM Int'l (all rights reserved); Sun Jul 16 15:38:31 EDT 2006Reproduction authorized per License Agreement with Arthur Bagirov ();

1.6 Safety Concerns—This guide does not purport to ad-dress all of the safety concerns, if any, associated with thewalk-through survey. It is the responsibility of the consultantusing this guide to establish appropriate safety and healthpractices when conducting a PCA.

TABLE OF CONTENTS1 Scope

1.1 Purpose1.2 Objectives1.3 Considerations Beyond Scope1.4 Organization of This Guide1.5 Multiple Buildings1.6 Safety Concerns

2 Terminology2.2 Definitions2.3 Definitions of Terms Specific to This Standard2.4 Abbreviations and Acronyms

3 Significance and Use3.1 Use3.2 Clarification of Use3.3 Who May Conduct3.4 Principles3.5 Prior PCR Usage3.6 Rules of Engagement

4 User’s Responsibilities4.1 Access4.2 User Disclosure

5 Property Condition Assessment5.1 Objective5.2 PCA Components5.3 Coordination of Components5.4 Consultant’s Duties

6 The Consultant6.1 Qualifications of the Consultant6.2 Staffing of the Field Observer6.3 Independence of the Consultant6.4 Qualifications of the Field Observer6.5 Qualifications of the PCR Reviewer6.6 The Field Observer and PCR Reviewer May Be a Single Individual6.7 Not a Professional Architecture or Engineering Service

7 Document Review and Interviews7.1 Objective7.2 Reliance7.3 Accuracy and Completeness7.4 Government Agency Provided Information7.5 Pre-Survey Questionnaire7.6 Owner/User Provided Documentation and Information7.7 Interviews

8 Walk-Through Survey8.1 Objective8.2 Frequency8.3 Photographs8.4 Scope8.5 Additional Considerations

9 Opinions of Probable Costs to Remedy Physical Deficiencies9.1 Purpose9.2 Scope9.3 Opinions of Probable Costs Attributes

10 Property Condition Report10.1 Format10.2 Writing Protocols10.3 Documentation10.4 Credentials10.5 Executive Summary10.6 Purpose and Scope10.7 Walk-Through Survey10.8 Document Reviews and Interviews10.9 Additional Considerations10.10 Opinions of Probable Costs10.11 Qualifications10.12 Limiting Conditions10.13 Exhibits

11 Out of Scope Considerations11.1 Activity Exclusions11.2 Warranty, Guarantee, and Code Compliance Exclusions11.3 Additional/General Considerations

Annex A1A1.1 Multifamily PropertiesA1.2 Commercial Office BuildingsA1.3 Retail Buildings

Appendix X1X1.1 QualificationsX1.2 Verification of Measurements and QuantitiesX1.3 ResearchX1.4 Flood Plain DesignationX1.5 Recommended Table of Contents

Appendix X2X2.1 Overview of The Americans with Disabilities ActX2.2 Overview of the Americans with Disabilities Act Accessibility Guide-

lines (ADAAG)X2.3 Variable Levels of Due DiligenceX2.4 Definitions of Terms Specific to Understanding the Americans with

Disabilities ActX2.5 Presentation of Opinions of Probable CostsX2.6 Tier I: Visual Accessibility SurveyX2.7 Tier II: Abbreviated Accessibility SurveyX2.8 Tier III: Full Accessibility Survey

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2Copyright by ASTM Int'l (all rights reserved); Sun Jul 16 15:38:31 EDT 2006Reproduction authorized per License Agreement with Arthur Bagirov ();

2. Terminology

2.1 This section provides definitions, descriptions of terms,and a list of acronyms, where applicable, for the words used inthis guide. The terms are an integral part of the guide and arecritical to an understanding of this guide and its use.

2.2 Definitions:2.2.1 architect, n—designation reserved by law for a person

professionally qualified, examined, and registered by the ap-propriate governmental board having jurisdiction, to performarchitectural services including, but not limited to, analysis ofproject requirements and conditions, development of projectdesign, production of construction drawings and specifications,and administration of construction contracts.

2.2.2 building codes, n—rules and regulations adopted bythe governmental authority having jurisdiction over the com-mercial real estate, which govern the design, construction,alteration and repair of such commercial real estate. In somejurisdictions trade or industry standards may have been incor-porated into, and made a part of, such building codes by thegovernmental authority. Building codes are interpreted toinclude structural, HVAC, plumbing, electrical, life-safety, andvertical transportation codes.

2.2.3 building department records, n—records maintainedby or in possession of the local government authority withjurisdiction over the construction, alteration, use, or demolitionof improvements on the subject property, and that are readilyavailable for use by the consultant within the time framerequired for production of the PCR and are practically review-able by exercising appropriate inquiry. Building departmentrecords also may include building code violation notices.Often, building department records are located in the buildingdepartment of a municipality or county.

2.2.4 building systems, n—interacting or independent com-ponents or assemblies, which form single integrated units, thatcomprise a building and its site work, such as, pavement andflatwork, structural frame, roofing, exterior walls, plumbing,HVAC, electrical, etc.

2.2.5 component, n—a fully functional portion of a buildingsystem, piece of equipment, or building element.

2.2.6 dismantling, n—to take apart or remove any compo-nent, device or piece of equipment that is bolted, screwed,secured, or fastened by other means.

2.2.7 engineer, n—designation reserved by law for a personprofessionally qualified, examined and licensed by the appro-priate governmental board having jurisdiction, to performengineering services.

2.2.8 engineering, n—analysis or design work requiringextensive formal education, preparation and experience in theuse of mathematics, chemistry, physics, and the engineeringsciences.

2.2.9 fire department records, n—records maintained by orin the possession of the local fire department in the area inwhich the subject property is located. These records should bepractically reviewable and readily accessible for use by theconsultant by exercising an appropriate inquiry within the timeframe required for production of the PCR.

2.2.10 guide, n—a series of options and instructions that donot recommend a specific course of action.

2.2.11 interviews, n—discussions with those knowledgeableabout the subject property.

2.2.12 material, adj—having significant importance or greatconsequence to the subject property’s intended use or physicalcondition.

2.2.13 practice, n—a definitive procedure for performingone or more specific operations or functions that does notproduce a test result.

2.2.14 publicly available, adj—the source of the informa-tion allows access to the information by anyone upon request.

2.2.15 recreational facilities, n—facilities for exercise, en-tertainment or athletics including, without limitation, swim-ming pools, spas, saunas, steam baths, tennis, volleyball, orbasketball courts; jogging, walking, or bicycle paths; andplayground equipment.

2.2.16 structural frame, n—the components or buildingsystem that supports the building’s nonvariable forces orweights (dead loads) and variable forces or weights (liveloads).

2.2.17 standard, n—as used by ASTM, a document that hasbeen developed and established within the consensus principlesof the Society and that meets the approval of the ASTMprocedures and regulations.

2.2.18 system, n—a combination of interacting or interde-pendent components assembled to carry out one or morefunctions.

2.3 Definitions of Terms Specific to This Standard:2.3.1 actual knowledge, n—the knowledge possessed by an

individual rather than an entity. Actual knowledge, as used inthis guide, is to be distinguished from knowledge provided byothers, or information contained on documents obtained duringthe course of conducting a PCA.

2.3.2 appropriate inquiry, n—a request for informationconducted by Freedom of Information Letter (FOIL), verbalrequest, or by other written request made either by fax,electronic mail, overnight courier, or U.S. mail. Appropriateinquiry includes a good-faith effort conducted by the consultantto obtain the information considering the time constraints toprepare and deliver the PCR.

2.3.3 base building, n—the core (common areas) and shellof the building and its systems that typically are not subject toimprovements to suit tenant requirements.

2.3.4 baseline, n—the minimum level of observations, duediligence, inquiry/research, documentation review, and prepa-ration of opinions of probable costs to remedy materialphysical deficiencies for conducting a PCA as described in thisguide.

2.3.5 building envelope, n—the enclosure of the buildingthat protects the building’s interior from outside elements,namely the exterior walls, roof and soffit areas.

2.3.6 commercial real estate, n—improved real property,except a dwelling or property with four or less dwelling unitsexclusively for residential use. This term includes, but is notlimited to, improved real property used for industrial, retail,office, hospitality, agriculture, other commercial, medical, oreducational purposes; property used for residential purposesthat has more than four residential dwelling units, and property

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with four or less dwelling units for residential use when it hasa commercial function, as in the operation of such dwellingsfor profit.

2.3.7 commercial real estate transaction, n—a transfer oftitle to or possession of improved real property or receipt of asecurity interest in improved real property, except that it doesnot include transfer of title to or possession of improved realproperty with respect to an individual dwelling or buildingcontaining four or less dwelling units.

2.3.8 consultant, n—the entity or individual that preparesthe PCR and that is responsible for the observance of andreporting on the physical condition of commercial real estate inaccordance with this guide. The consultant generally is anindependent contractor; however, the consultant may be anemployee of the user. The consultant may be an individual thatis both the field observer and PCR reviewer as described inSection 6.

2.3.9 dangerous or adverse conditions, n—conditions,which may pose a threat or possible injury to the field observer,and which may require the use of special protective clothing,safety equipment, access equipment, or any other precaution-ary measures.

2.3.10 deferred maintenance, n—physical deficiencies thatcannot be remedied with routine maintenance, normal operat-ing maintenance, etc., excluding de minimis conditions thatgenerally do not present a material physical deficiency to thesubject property.

2.3.11 due diligence, n—the process of conducting a walk-through survey and appropriate inquiries into the physicalcondition of a commercial real estate’s improvements, usuallyin connection with a commercial real estate transaction. Thedegree and type of such survey or other inquiry may vary fordifferent properties and different purposes.

2.3.12 easily visible, adj—describes items, components andsystems that are conspicuous, patent, and which may beobserved visually during the walk-through survey withoutintrusion, removal of materials, exploratory probing, use ofspecial protective clothing, or use of special equipment.

2.3.13 expected useful life (EUL), n—the average amount oftime in years that an item, component or system is estimated tofunction when installed new and assuming routine maintenanceis practiced.

2.3.14 field observer, n—the individual that conducts thewalk-through survey.

2.3.15 immediate costs, n—opinions of probable costs thatrequire immediate action as a result of any of the following: (1)material existing or potential unsafe conditions, (2) materialbuilding or fire code violations, or (3) conditions that if leftunremedied, have the potential to result in or contribute tocritical element or system failure within one year or will resultmost probably in a significant escalation of its remedial cost.

2.3.16 observation, n—the visual survey of items, systems,conditions, or components that are readily accessible and easilyvisible during a walk-through survey of the subject property.

2.3.17 observe, v—to conduct an observation pursuant tothis guide.

2.3.18 obvious, adj—plain, evident and readily accessible; acondition or fact not likely to be ignored or overlooked by a

field observer when conducting a walk-through survey or thatwhich is practically reviewable and would be understood easilyby a person conducting the PCA.

2.3.19 opinions of probable costs, n—determination ofprobable costs, a preliminary budget, for a suggested remedy.

2.3.20 owner, n—the entity holding the title to the commer-cial real estate that is the subject of the PCA.

2.3.21 PCR reviewer, n—the individual that both exercisesresponsible control over the field observer and who reviews thePCR prior to delivery to the user.

2.3.22 physical deficiency, n—conspicuous defects or sig-nificant deferred maintenance of a subject property’s materialsystems, components, or equipment as observed during thefield observer’s walk-through survey. Included within thisdefinition are material life-safety/building code violations and,material systems, components, or equipment that are approach-ing, have reached, or have exceeded their typical EUL orwhose RUL should not be relied upon in view of actual oreffective age, abuse, excessive wear and tear, exposure to theelements, lack of proper or routine maintenance, etc. Thisdefinition specifically excludes deficiencies that may be rem-edied with routine maintenance, miscellaneous minor repairs,normal operating maintenance, etc., and excludes de minimisconditions that generally do not constitute a material physicaldeficiency of the subject property.

2.3.23 practically reviewable, adj—describes informationthat is provided by the source in a manner and form that, uponreview, yields information relevant to the subject propertywithout the need for significant analysis or calculations.Records or information that feasibly cannot be retrieved byreference to the location of the subject property are notgenerally considered practically reviewable.

2.3.24 primary commercial real estate improvements,n—the site and building improvements that are of fundamentalimportance with respect to the commercial real estate. Thisdefinition specifically excludes ancillary structures, that mayhave been constructed to provide support uses such as main-tenance sheds, utility garages, pool filter and equipmentbuildings, etc.

2.3.25 property, n—the site improvements, which are inclu-sive of both site work and buildings.

2.3.26 property condition assessment (PCA), v—the processby which a person or entity observes a property, interviewssources, and reviews available documentation for the purposeof developing an opinion and preparing a PCR of a commercialreal estate’s current physical condition. At the option of theuser, a PCA may include a higher level of inquiry and duediligence than the baseline scope described within this guideor, at the user’s option, it may include a lower level of inquiryor due diligence than the baseline scope described in this guide.Such deviations from this guide’s scope should be disclosed inthe PCR’s executive summary.

2.3.27 property condition report (PCR), n—a written report,prepared in accordance with the recommendations contained inthis guide, that outlines the consultant’s observations, opinionsas to the subject property’s condition, and opinions of probablecosts to remedy any material physical deficiencies observed.

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2.3.28 readily accessible, adj—describes areas of the sub-ject property that are promptly made available for observationby the field observer at the time of the walk-through survey anddo not require the removal of materials or personal property,such as furniture, and that are safely accessible in the opinionof the field observer.

2.3.29 readily available, adj—describes information orrecords that are easily and promptly provided to the consultantupon making a request in compliance with an appropriateinquiry and without the need for the consultant to researcharchive files.

2.3.30 reasonably ascertainable, adj—describes informa-tion that is publicly available, as well as readily available,provided to the consultant’s offices from either its source or aninformation research/retrieval service within reasonable time,practically reviewable, and available at a nominal cost foreither retrieval, reproduction or forwarding.

2.3.31 remaining useful life (RUL), n—a subjective estimatebased upon observations, or average estimates of similar items,components, or systems, or a combination thereof, of thenumber of remaining years that an item, component, or systemis estimated to be able to function in accordance with itsintended purpose before warranting replacement. Such periodof time is affected by the initial quality of an item, component,or system, the quality of the initial installation, the quality andamount of preventive maintenance exercised, climatic condi-tions, extent of use, etc.

2.3.32 representative observations, n—observations of areasonable number of samples of repetitive systems, compo-nents, areas, etc., which are conducted by the field observerduring the walk-through survey. The concept of representativeobservations extends to all conditions, areas, equipment, com-ponents, systems, buildings, etc., to the extent that they aresimilar and representative of one another.

2.3.33 short-term costs, n—opinions of probable costs toremedy physical deficiencies, such as deferred maintenance,that may not warrant immediate attention, but require repairs orreplacements that should be undertaken on a priority basis inaddition to routine preventive maintenance. Such opinions ofprobable costs may include costs for testing, exploratoryprobing, and further analysis should this be deemed warrantedby the consultant. The performance of such additional servicesare beyond this guide. Generally, the time frame for suchrepairs is within one to two years.

2.3.34 shutdown, n—equipment, components or systemsthat are not operating at the time of the field observer’swalk-through survey. For instance, equipment, components,and systems that may be shutdown as a result of seasonaltemperatures.

2.3.35 site visit, n—the visit to the subject property duringwhich observations are made pursuant to the walk-throughsurvey section of this guide.

2.3.36 specialty consultants, n—individuals or entities ei-ther in the fields of engineering or in any particular buildingcomponent, equipment, or system that have acquired detailed,specialized knowledge and experience in the design, evalua-tion, operation, repair, or installation of same.

2.3.37 subject building, n—referring to the primary buildingor buildings on the subject property, and that are within thescope of PCA.

2.3.38 subject property, n—the commercial real estate con-sisting of the site and primary real estate improvements that arethe subject of the PCA described by this guide.

2.3.39 suggested remedy, n—an opinion as to a course ofaction to remedy or repair a physical deficiency. Such anopinion may also be to conduct further research or testing forthe purposes of discovery to gain a better understanding of thecause or extent of a physical deficiency (whether observed orhighly probable) and the appropriate remedial or reparatoryresponse. A suggested remedy may be preliminary and does notpreclude alternate methods or schemes that might be moreappropriate to remedy the physical deficiency or that may bemore commensurate with the user’s requirements.

2.3.40 survey, n—observations made by the field observerduring a walk-through survey to obtain information concerningthe subject property’s readily accessible and easily visiblecomponents or systems.

2.3.41 technically exhaustive, adj—describes the use ofmeasurements, instruments, testing, calculations, exploratoryprobing or discovery, or other means to discover, or a combi-nation thereof, or troubleshoot physical deficiencies or developarchitectural or engineering findings, conclusions, and recom-mendations, or combination thereof.

2.3.42 timely access, n—entry provided to the consultant atthe time of the site visit.

2.3.43 user, n—the party that retains the consultant for thepreparation of a baseline PCA of the subject property inaccordance with this guide. A user may include, withoutlimitation, a purchaser, potential tenant, owner, existing orpotential mortgagee, lender, or property manager of the subjectproperty.

2.3.44 walk-through survey, n—conducted during the fieldobserver’s site visit of the subject property, that consists ofnonintrusive visual observations, survey of readily accessible,easily visible components and systems of the subject property.This survey is described fully in Section 8. Concealed physicaldeficiencies are excluded. It is the intent of this guide that sucha survey should not be considered technically exhaustive. Itexcludes the operation of equipment by the field observer andis to be conducted without the aid of special protectiveclothing, exploratory probing, removal of materials, testing, orthe use of equipment, such as scaffolding, metering/testingequipment, or devices of any kind, etc. It is literally the fieldobserver’s visual observations while walking through thesubject property.

2.4 Abbreviations and Acronyms:2.4.1 ADA, n—The Americans with Disabilities Act.2.4.2 ASTM, n—ASTM International.2.4.3 BOMA, n—Building Owners and Managers Associa-

tion.2.4.4 BUR, n—Built-up Roofing.2.4.5 EIFS, n—Exterior Insulation and Finish System.2.4.6 EMF, n—Electro Magnetic Fields.2.4.7 EMS, n—Energy Management System.2.4.8 EUL, n—Expected Useful Life.

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2.4.9 FEMA, n—Federal Emergency Management Agency.2.4.10 FFHA, n—Federal Fair Housing Act.2.4.11 FIRMS, n—Flood Insurance Rate Maps.2.4.12 FOIA, n—U.S. Freedom of Information Act (5 USC

552 et seq.)5 and similar state statutes.2.4.13 FOIL—Freedom of Information Letter.2.4.14 FM—Factory Mutual.2.4.15 HVAC—Heating, Ventilating and Air Conditioning.2.4.16 IAQ—Indoor Air Quality.2.4.17 NFPA—National Fire Protection Association.2.4.18 PCA—Property Condition Assessment2.4.19 PCR—Property Condition Report.2.4.20 PML—Probable Maximum Loss.2.4.21 RTU, n—Rooftop Unit.2.4.22 RUL, n—Remaining Useful Life.2.4.23 STC, n—Sound Transmission Class.

3. Significance and Use

3.1 Use—This guide is intended for use on a voluntary basisby parties who desire to obtain a baseline PCA of commercialreal estate. This guide also recognizes that there are varyinglevels of property condition assessment and due diligence thatcan be exercised that are both more and less comprehensivethan this guide, and that may be appropriate to meet theobjectives of the user. Users should consider their require-ments, the purpose that the PCA is to serve, and their risktolerance level before selecting the consultant and the level ofdue diligence to be exercised by the consultant. The usershould also review or establish the qualifications, or both, ofthe proposed field observer and PCR reviewer prior to engage-ment. A PCR should identify any deviations or exceptions tothis guide. Furthermore, no implication is intended that use ofthis guide be required in order to have conducted a propertycondition assessment in a commercially prudent and reason-able manner. Nevertheless, this guide is intended to reflect areasonable approach for the preparation of a baseline PCA.

3.2 Clarification of Use:3.2.1 Specific Point in Time—A user should only rely on the

PCR for the point in time at which the consultant’s observa-tions and research were conducted.

3.2.2 Site-Specific—The PCA performed in accordance withthis guide is site-specific in that it relates to the physicalcondition of real property improvements on a specific parcel ofcommercial real estate. Consequently, this guide does notaddress many additional issues in real estate transactions suchas economic obsolescence, the purchase of business entities, orphysical deficiencies relating to off-site conditions.

3.3 Who May Conduct—The walk-through survey portionof a PCA should be conducted by a field observer, and the PCRshould be reviewed by a PCR reviewer; both qualified assuggested in X1.1.1.1 and X1.1.1.2, respectively.

3.4 Principles—The following principles are an integralpart of this guide. They are intended to be referred to inresolving ambiguity, or in exercising discretion accorded theuser or consultant in conducting a PCA, or in judging whethera user or consultant has conducted appropriate inquiry or hasotherwise conducted an adequate PCA.

3.4.1 Uncertainty Not Eliminated—No PCA can whollyeliminate the uncertainty regarding the presence of physical

deficiencies and the performance of a subject property’sbuilding systems. Preparation of a PCR in accordance with thisguide is intended to reduce, but not eliminate, the uncertaintyregarding the potential for component or system failure and toreduce the potential that such component or system may not beinitially observed. This guide also recognizes the inherentsubjective nature of a consultant’s opinions as to such issues asworkmanship, quality of original installation, and estimatingthe RUL of any given component or system. The guiderecognizes a consultant’s suggested remedy may be determinedunder time constraints, formed without the aid of engineeringcalculations, testing, exploratory probing, the removal ofmaterials, or design. Furthermore, there may be other alternateor more appropriate schemes or methods to remedy thephysical deficiency. The consultant’s opinions generally areformed without detailed knowledge from those familiar withthe component’s or system’s performance.

3.4.2 Not Technically Exhaustive—Appropriate due dili-gence according to this guide is not to be construed astechnically exhaustive. There is a point at which the cost ofinformation obtained or the time required to conduct the PCAand prepare the PCR may outweigh the usefulness of theinformation and, in fact, may be a material detriment to theorderly and timely completion of a commercial real estatetransaction. It is the intent of this guide to attempt to identifya balance between limiting the costs and time demandsinherent in performing a PCA and reducing the uncertaintyabout unknown physical deficiencies resulting from complet-ing additional inquiry.

3.4.3 Representative Observations—The purpose of con-ducting representative observations is to convey to the user theexpected magnitude of commonly encountered or anticipatedconditions. Recommended representative observation quanti-ties for various asset types are provided in Annex A1; however,if in the field observer’s opinion such representative observa-tions as presented in Annex A1 are unwarranted as a result ofhomogeneity of the asset or other reasons deemed appropriateby the field observer, the field observer may survey sufficientunits, areas, systems, buildings, etc. so as to comment withreasonable confidence as to the representative present condi-tion of such repetitive or similar areas, systems, buildings, etc.To the extent there is more than one building on the subjectproperty, and they are homogeneous with respect to approxi-mate age, use, basic design, materials, and systems, it is not arequirement of this guide for the field observer to conduct awalk-through survey of each individual building’s systems todescribe or comment on their condition within the PCR. Thedescriptions and observations provided in the PCR are to beconstrued as representative of all similar improvements.

3.4.3.1 User-Mandated Representative Observations—Auser may mandate the representative observations required fora given property. Such representative observations may bemore or less than this guide’s recommended representativeobservations as provided in Annex A1.

3.4.3.2 Extrapolation of Findings—Consultant may reason-ably extrapolate representative observations and findings to alltypical areas or systems of the subject property for the purposes

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of describing such conditions within the PCR and preparing theopinions of probable costs for suggested remedy of materialphysical deficiencies.

3.4.4 Level of Due Diligence is Variable—Not every prop-erty will warrant the same level of property condition assess-ment. Consistent with good commercial and customary prac-tice, the appropriate level of property condition assessmentgenerally is guided by the type of property, the age of theimprovements, the expertise and risk tolerance level of theuser, and the time available for preparing the PCR andreviewing the opinions to be contained in the PCR.

3.4.5 Comparison With a Subsequent PCR—It should notbe concluded or assumed that a previous PCR was deficientbecause the previous PCA did not discover a certain orparticular physical deficiency, or because opinions of probablecosts in the previous PCR are different. A PCR contains arepresentative indication of the property condition at the timeof the walk-through survey and is dependent on the informa-tion available to the consultant at that time; therefore, a PCRshould be evaluated on the reasonableness of judgments madeat the time and under the circumstances in which they aremade. Time available, hindsight, new or additional informa-tion, enhanced visibility as a result of improved weather or siteconditions, equipment visibility as a result of improvedweather or site conditions, equipment not in a shutdown mode,and other factors influence the PCA and the opinions containedin the PCR.

3.5 Prior PCR Usage—This guide recognizes that PCRsperformed in accordance with this guide may include informa-tion that subsequent users and consultants may want to use toavoid duplication and to reduce cost; therefore, this guideincludes procedures to assist users and consultants in deter-mining the appropriateness of using such information. Inaddition to the specific procedures contained elsewhere in thisguide, the following should be considered:

3.5.1 Use of Prior PCR Information—Information con-tained in prior property condition reports may be used by theconsultant if, in the consultant’s opinion, it is relevant; how-ever, users and consultants are cautioned that information fromprior property condition reports should only be used if suchinformation was generated or obtained through procedures ormethods that met or exceeded those contained in this guide.Such information should serve only as an aid to a consultant infulfilling the requirements of this guide and to assist the fieldobserver in the walk-through survey, research, and the fieldobserver’s understanding of the subject property. Furthermore,the PCR should identify the previously prepared propertycondition report if information from the prior report was usedby the consultant in preparing the PCR.

3.5.2 Conducting Current Walk-Through Surveys—Exceptas provided in 3.5.1, prior property condition reports shouldnot be used without verification. At a minimum, for a PCR tobe consistent with this guide, a new walk-through survey,interviews, and solicitation and review of building and firedepartment record for recorded material violations should beperformed.

3.5.3 Actual Knowledge Exception—If the user or consult-ant conducting a PCA has actual knowledge that the informa-

tion from a prior property condition report is not accurate, or ifit is obvious to the field observer that the information is notaccurate, such information from a prior property conditionreport should not be used.

3.5.4 Contractual Issues—This guide recognizes that con-tractual and legal obligations may exist between prior andsubsequent users of property condition reports, or consultantswho prepared prior property condition reports, or both. Con-sideration of such contractual obligations is beyond the scopeof this guide. Furthermore, prior property condition reportsmay have been prepared for purposes other than the currentdesired purpose of the PCR.

3.6 Rules of Engagement—The contractual and legal obli-gations between a consultant and a user (and other parties, ifany) are outside the scope of this guide. No specific legalrelationship between the consultant and the user was consid-ered during the preparation of this guide.

4. User’s Responsibilities

4.1 Access—User should arrange for the field observer toreceive timely access, which is complete, supervised, and safeto the subject property’s improvements (including roofs). Inaddition, access to the subject property’s staff, vendors, andappropriate documents should be provided by owner, owner’srepresentative, or made available by the user, or a combinationthereof. In no event should the field observer seek access to anyparticular portion of the property, interview property manage-ment staff, vendors, or tenants, or review documents, if theowner, user, or occupant objects to such access or attempts torestrict the field observer from conducting any portion of thewalk-through survey, research or interviews, or taking ofphotographs. Any conditions that significantly impede orrestrict the field observer’s walk-through survey or research, orthe failure of the owner or occupant to provide timely access,information, or requested documentation should be timelycommunicated by the consultant to the user. If such conditionsare not remedied, the consultant is obligated to state within thePCR all such material impediments that interfered with theconducting of the PCA in accordance with this guide.

4.2 User Disclosure—The user should disclose in a timelymanner all appropriate information in the user’s possession thatmay assist the consultant’s efforts. The user should notwithhold any pertinent information that may assist in identify-ing a material physical deficiency including, but not limited to,previously prepared property condition reports; any studyspecifically prepared on a system or component of the subjectproperty; any knowledge of actual or purported physicaldeficiencies; or, any information such as costs to remedyknown physical deficiencies.

5. Property Condition Assessment

5.1 Objective—The purpose of the PCA is to observe andreport, to the extent feasible pursuant to the processes pre-scribed herein, on the physical condition of the subject prop-erty.

5.2 PCA Components—The PCA should have four compo-nents:

5.2.1 Documentation Review and Interviews; refer to Sec-tion 7.

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5.2.2 Walk-Through Survey; refer to Section 8.5.2.3 Preparation of Opinions of Probable Costs to Remedy

Physical Deficiencies; refer to Section 9.5.2.4 Property Condition Report; refer to Section 10.5.3 Coordination of Components:5.3.1 Components Used in Concert—The Documentation

Review, Interviews and Walk-Through Survey components ofthis guide are interrelated in that information obtained fromone component may either indicate the need for more infor-mation from another, or impact the consultant’s findings,opinions, opinions of probable costs, or recommendations, or acombination thereof.

5.3.2 Information Provided by Others—The consultantshould note in the PCR the source of information used by theconsultant that were material in identifying any physicaldeficiencies encumbering the subject property that is notreadily observed by the consultant or that supplemented theconsultant’s observations.

5.4 Consultant’s Duties:5.4.1 Who May Conduct Portions of the PCA—The inquir-

ies, interviews, walk-through survey, interpretation of theinformation upon which the PCR is based, the preparation ofopinions of probable costs, and the writing of the PCR are alltasks and portions of the PCA that may be performed by theconsultant, field observer, members of the consultant’s staff, orthird party contractors engaged by the consultant.

5.4.2 Responsibility for Lack of Information—The consult-ant is not responsible for providing or obtaining informationshould the source contacted fails to respond, to respond only inpart, or fails to respond in a timely fashion.

5.4.3 Opinions of Probable Costs Contingent on FurtherDiscovery—The consultant is not required to provide opinionsof probable costs to remedy physical deficiencies, which mayrequire the opinions of specialty consultants or the results oftesting, exploratory probing, or further research to determinethe cause of the physical deficiency and the appropriateremedy, scope, and scheme for repair or replacement unlessuser and consultant have agreed to such an expansion of thescope of work.

5.4.4 Representative Observations—The field observer isnot expected to survey every component of every systemduring a walk-through survey. For example, it is not the intentto survey every RTU, balcony, window, roof, toilet roomfacility, every square foot of roofing, etc. Only representativeobservations of such areas are to be surveyed. The concept ofrepresentative observations extends to all conditions, areas,equipment, components, systems, buildings, etc., to the extentthat they are similar and representative of one another.

6. The Consultant

6.1 Qualifications of the Consultant—This guide recognizesthat the competency of the consultant is highly dependent onmany factors that may include professional education, training,experience, certification, or professional licensing/registration,of both the consultant’s field observers and the PCR reviewer.It is the intent of this guide to identify factors that should beconsidered by the user when retaining a consultant to conducta PCA and by the consultant in selecting the appropriate fieldobserver and PCR reviewer. No standard can be designed to

eliminate the role of professional judgment, competence, andthe value and need for experience during the walk-throughsurvey and to conduct the PCA. Consequently, the qualifica-tions of the field observer and the PCR reviewer are critical tothe performance of the PCA and the resulting PCR. This guidefurther recognizes that the consultant has the responsibility toselect, engage, or employ the field observer and the PCRreviewer; therefore, each PCR should include as an exhibit astatement of qualifications of both the field observer and thePCR reviewer.

6.2 Staffıng of the Field Observer—This guide recognizesthat for the majority of commercial real estate subject to aPCA, the field observer assigned by the consultant to conductthe walk-through survey most likely will be a single individualhaving a general, well rounded knowledge of pertinent build-ing systems and components; however, a single individual willseldom have comprehensive knowledge, expertise or experi-ence with all building codes, building systems and asset types,which are applicable in all locales. Therefore, any decision tosupplement the field observer with specialty consultants, build-ing system mechanics, specialized service personnel, or anyother specialized field observers should be a mutual decisionmade by the consultant and the user. This decision should bemade in accordance with the requirements, risk tolerance level,and budgetary constraints of the user, the purpose the PCA isto serve, the expediency of report delivery, and the complexityof the subject property. The level of due diligence conductedduring a PCA is often adjusted to the risk tolerance of the user.

6.3 Independence of the Consultant—This guide recognizesthat the consultant normally is a person or entity, acting as anindependent contractor, who has been engaged by the user toconduct a PCA. In the event the consultant, the field observer,the PCR reviewer, or members of the consultant’s staff areemployees of, or subsidiary of, the user, such affiliation orrelationship should be disclosed in the Executive Summary ofthe PCR.

6.4 Qualifications of the Field Observer—Refer to X1.1.1for nonmandatory guidance on the qualifications of the fieldobserver.

6.5 Qualifications of the PCR Reviewer—Refer to X1.1.2for nonmandatory guidance on the qualifications of the PCRReviewer.

6.6 The Field Observer and PCR Reviewer May Be a SingleIndividual—The PCR reviewer also may act as the fieldobserver and conduct the walk-through survey. In such anevent, the PCR reviewer should identify such dual responsi-bilities and sign the PCR indicating that he or she hasperformed both functions.

6.7 Not a Professional Architecture or EngineeringService—It is not the intent of this guide that by conducting thewalk-through survey or reviewing the PCR that the consultant,the field observer, or the PCR reviewer is practicing architec-ture or engineering. Furthermore, it is not the intent of thisguide that either the PCR reviewer or the field observer, if theyare an architect or engineer, must either sign or seal the PCR asan instrument of professional service or identify their signa-tures as being that of an architect or engineer.

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7. Document Review and Interviews

7.1 Objective—The objective of the document review andinterviews is to augment the walk-through survey and to assistthe consultant’s understanding of the subject property andidentifying of physical deficiencies. Records or documents, ifreadily available, may be reviewed to specifically identify, orassist in the identification of, physical deficiencies, as well asany preceding or ongoing efforts, or costs to investigate orremediate the physical deficiencies, or a combination thereof.Such review is not to include commentary on the accuracy ofsuch documents but merely to determine the existence of suchdocuments.

7.2 Reliance—The consultant is not required to indepen-dently verify the information provided and may rely oninformation provided to the extent that the information appearsreasonable to the consultant.

7.3 Accuracy and Completeness—Accuracy and complete-ness of information varies among information sources. Theconsultant is not obligated to identify mistakes or insufficien-cies in the information provided; however, the consultantshould make reasonable effort to compensate for mistakes orinsufficiencies of information reviewed that are obvious in lightof other information obtained in the process of conducting thePCA or otherwise known to the consultant.

7.4 Government Agency Provided Information:7.4.1 Documents to Be Reviewed—Consultant is to solicit

and review: base building certificate of occupancy, outstandingand recorded material building code violations, and recordedmaterial fire code violations.

7.4.2 Reasonably Ascertainable/Standard GovernmentRecord Sources—Availability of record or document informa-tion varies from information source to information source,including governmental jurisdictions. The consultant shouldmake appropriate inquiry and review only such record infor-mation that is reasonably ascertainable from standard sources.If information is not practically reviewable or not provided tothe consultant in a reasonable time for the consultant toformulate an opinion and complete the PCR, such fact shouldbe stated in the PCR, and the consultant is to have no furtherobligation of retrieving such documentation or reviewing it ifit is subsequently provided. Nevertheless, if pursuant to theconsultant’s appropriate inquiry, material information is re-ceived by the consultant contemporaneous to the preparation ofthe PCR (within 30 days) but too late to be included in thePCR, the consultant should forward it to the user.

7.4.3 Publicly Available Documents—Information from agovernment agency, department or other source of information,which typically is reproduced and provided to the consultantupon appropriate inquiry and is reasonably ascertainable.

7.4.4 Drawings—Obtaining a set of drawings, which maybe available publicly, is an exception to the requirement thatPublicly Available Documents be provided, due to delivery andcost constraints. If readily available, such documents should beprovided and identified to the consultant by the owner, owner’srepresentative, or user as construction, as-built, or other design/construction documents. Nonetheless, the review of drawingsof the subject property is not a requirement of this guide.Drawings may serve as an aid to the consultant in describing

the subject property’s improvements, in developing quantitiesfor opinions of probable costs for suggested remedies ofphysical deficiencies, and to assist in preparing brief descrip-tions of the subject property’s major systems.

7.4.5 Reasonable Time and Cost—It is the intent of thisguide that information will be provided to the consultant withinten business days of the source receiving appropriate inquiry,without an in-person request by the consultant being required,and at no more than a nominal cost to cover the source’s costof retrieving and duplicating the information. Generally, anin-person request by the consultant is not required. However,this is not to preclude the consultant from personally research-ing such files if, in the opinion of the consultant, this could bereasonably accomplished at the time of the site visit.

7.5 Pre-Survey Questionnaire—The consultant may providethe owner or owner’s representative, or both, with a pre-surveyquestionnaire (the questionnaire). Such a questionnaire, com-plete with the owner’s or owner’s representative’s responses,should be included as an exhibit within the PCR unless directedotherwise by user.

7.6 Owner/User Provided Documentation andInformation—If readily available, the consultant should reviewthe following documents and information that may be in thepossession of or provided by the owner, owner’s representa-tive, user, or combination thereof, as appropriate. Such infor-mation also could aid in the consultant’s knowledge of thesubject property’s physical improvements, extent and type ofuse, or assist in identifying material discrepancies betweenreported information and observed conditions, or a combina-tion thereof. The consultant’s review of documents submittedshould not include commenting on the accuracy of suchdocuments or their preparation, methodology, or protocol. Ifthe consultant discovers a significant discrepancy, it should bedisclosed within the PCR.

7.6.1 Appraisal, either current or previously prepared.7.6.2 Certificate of Occupancy.7.6.3 Safety inspection records.7.6.4 Warranty information (roofs, boilers, chillers, cooling

towers, etc.).7.6.5 Records indicating the age of material building sys-

tems such as roofing, paving, plumbing, heating, air condition-ing, electrical, etc.

7.6.6 Historical costs incurred for repairs, improvements,recurring replacements, etc.

7.6.7 Pending proposals or executed contracts for materialrepairs or improvements. Descriptions of future work planned.

7.6.8 Outstanding citations for building, fire and zoningcode violations.

7.6.9 The ADA survey and status of any improvementsimplemented to effect physical compliance.

7.6.10 Previously prepared property condition reports orstudies pertaining to any aspect of the subject property’sphysical condition.

7.6.11 Records indicating building occupancy percentage.7.6.12 Records indicating building turnover percentage.7.6.13 Building rent roll.

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7.6.14 Leasing literature, listing for sale, marketing/promotional literature such as photographs, descriptive infor-mation, reduced floor plans, etc.

7.6.15 Drawings and specifications (as-built or construc-tion).

7.7 Interviews—Prior to the site visit, the consultant shouldask the owner or user to identify a person or persons knowl-edgeable of the physical characteristics, maintenance, andrepair of the property. If a property manager or agent of theowner is identified, the consultant should contact such indi-vidual so as to inquire about the subject property’s historicalrepairs and replacements and their costs, level of preventivemaintenance exercised, pending repairs and improvements,frequency of repairs and replacements, and existence of ongo-ing or pending litigation related to subject property’s physicalcondition. In connection with the consultant’s research orwalk-through survey, the consultant also may question otherswho are knowledgeable of the subject property’s physicalcondition and operation. It is within the discretion of theconsultant to decide which questions to ask before, during, orafter the site visit.

7.7.1 Reliance—The consultant may rely on the informationobtained as a result of the interviews, provided that in theconsultant’s opinion such information appears to be reason-able.

7.7.2 Method—Questions to be asked pursuant to this sec-tion are at the discretion of the consultant and may be asked inperson, by telephone, or in writing.

7.7.3 Incomplete Answers—While the consultant shouldmake inquiries in accordance with this section, the persons towhom the questions are addressed may have no obligation tocooperate. Should the owner or the property manager, building/facility engineer, or maintenance supervisor not be availablefor an interview, whether by intent or inconvenience, or notrespond in full or in part to questions posed by the consultant,the consultant should disclose such within the PCR. Further-more, should any party not grant such authorization to inter-view, restrict such authorization, or should the person to whomthe questions are addressed not be knowledgeable about thesubject property, this should be disclosed within the PCR.

8. Walk-Through Survey

8.1 Objective—The objective of the walk-through survey isto visually observe the subject property so as to obtaininformation on material systems and components for thepurposes of providing a brief description, identifying physicaldeficiencies to the extent that they are observable, and obtain-ing information needed to address such issues in the PCR asoutlined within Section 10.

8.2 Frequency—It is not expected that more than one sitevisit to the subject property be made by the field observer inconnection with a PCA. The site visit constituting part of thePCA is referred to as the walk-through survey.

8.3 Photographs—Consultant should document representa-tive conditions with photographs and use reasonable efforts todocument typical conditions present including material physi-cal deficiencies, if any. Photographs should include as aminimum: front and typical elevations and exteriors, site work,parking areas, roofing, structural systems, plumbing, HVAC

systems, and electrical systems, conveyance systems, lifesafety systems, representative interiors, and any special orunusual conditions present.

8.4 Scope—During the site visit, the field observer shouldobserve the general physical condition of the subject property,observe material systems and components, and identify mate-rial physical deficiencies and any unusual features or inadequa-cies observed or reported by conducting specific or represen-tative observations, as appropriate. Testing, measuring, orpreparing calculations for any system or component to deter-mine adequacy, capacity, or compliance with any standard isoutside the scope of this guide. The listing of specific items ofthe material building systems and components to be observed,which are presented in the succeeding subsections, should notbe considered all-inclusive, and the consultant should utilizeprofessional judgment regarding adding or deleting subsectionsas necessary to complete the PCR. Similarly, subsectionsidentified as “out of scope issues” are provided for clarificationand should not be construed as all-inclusive.

8.4.1 Site:8.4.1.1 Topography—Observe the general topography and

any unusual or problematic features or conditions.8.4.1.2 Storm Water Drainage—Observe the storm water

collection and drainage system and note the presence of on-sitesurface waters, and retention or detention basins.

8.4.1.3 Ingress and Egress—Observe the major means ofingress and egress.

8.4.1.4 Paving, Curbing, and Parking—Observe the mate-rial paving and curbing systems. Identify the types of parking,that is, garage, surface, subsurface, etc., the number and typesof parking spaces, and any reported parking inadequacies. Notethe source of the preceding information.

8.4.1.5 Flatwork—Observe sidewalks, plazas, patios, etc.8.4.1.6 Landscaping and Appurtenances—Observe land-

scaping (trees, shrubs, lawns, fences, retaining walls, etc.) andmaterial site appurtenances (irrigation systems, fountains,lighting, signage, ponds, etc.).

8.4.1.7 Recreational Facilities—Observe on-site recre-ational facilities.

8.4.1.8 Utilities:(1) Observations—Identify type and provider of the mate-

rial utilities provided to the property (water, electricity, naturalgas, etc.).

(2) Special Utility Systems—Identify the presence of anymaterial special on-site utility systems such as water orwastewater treatment systems, special power generation sys-tems, etc. Identify material system information, such as systemtype, manufacturer, system capacity, system age, system op-erator, etc.

(3) Out of Scope Issues—Operating conditions of anysystems or accessing manholes or utility pits.

8.4.2 Structural Frame and Building Envelope:8.4.2.1 Observations—Identify the material buildings, in-

cluding parking structures, on the subject property, and identifythe type of structure for each. Observe the building substruc-ture, including the foundation system (noting the presence ofcellars, basements, or crawl spaces), building’s superstructureor structural frame (floor framing system and roof framing

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system), building envelope including facades or curtain wallsystem, glazing system, exterior sealants, exterior balconies,doors, stairways, parapets, etc. Observations of the building’sexterior generally are to be limited to vantage points that areon-grade or from readily accessible balconies or rooftops.

8.4.2.2 Out of Scope Issues—Entering of crawl or confinedspace areas (however, the field observer should observe con-ditions to the extent easily visible from the point of access tothe crawl or confined space areas), determination of previoussubstructure flooding or water penetration unless easily visibleor if such information is provided.

8.4.3 Roofing:8.4.3.1 Observations—Identify and observe the material

roof systems (exposed membrane and flashings) including,parapets, slope, drainage, etc. Observe for evidence and/or theneed for material repairs, evidence of significant ponding, orevidence of roof leaks. Inquire as to the age of the materialroofing system(s) and whether a roof warranty or bond isreported to be in effect.

8.4.3.2 Out of Scope Issues—Walking on pitched roofs, orany roof areas that appear to be unsafe, or roofs with no built-inaccess, or determining any roofing design criteria.

8.4.4 Plumbing:8.4.4.1 Observations—Identify and observe the material

plumbing systems including piping (sanitary, storm and supplywater), fixtures, domestic hot water production, and note anyspecial or unusual plumbing systems.

8.4.4.2 Out of Scope Issues—Determining adequate pres-sure and flow rate, fixture-unit values and counts, verifyingpipe sizes, or verifying the point of discharge for undergroundsystems.

8.4.5 Heating:8.4.5.1 Observations—Identify the material heat generating

and distribution systems, and the apparent or reported age ofthe equipment, past material component replacements/upgrades, the apparent level of maintenance exercised, andwhether a maintenance contract is reported to be in place. Ifheating equipment is shutdown or not operational at the time ofthe walk-through survey, provide an opinion of the condition tothe extent observed. Also, observe any special or unusualheating systems or equipment present, such as solar heat.Identify in general terms reported material tenant-owned sys-tems that are outside the scope of the PCA.

8.4.5.2 Out of Scope Issues—Observation of flue connec-tions, interiors of chimneys, flues or boiler stacks, or tenant-owned or maintained equipment.

8.4.6 Air Conditioning and Ventilation:8.4.6.1 Observations—Identify the material air-

conditioning and ventilation systems including cooling towers,chillers (include type of reported refrigerant used), packageunits, split systems, air handlers, thermal storage equipment,material distribution systems, etc. Identify the apparent orreported age of the material equipment, past material compo-nent upgrades/replacements, apparent level of preventivemaintenance exercised, and whether a maintenance contract isreported to be in place. If air conditioning and ventilationsystems are shutdown or not operational at the time of thewalk-through survey, provide an opinion of the condition to the

extent observable. Identify any special or unusual air condi-tioning and ventilation systems or equipment, such as refrig-eration equipment for ice skating rinks, cold storage systems,special computer cooling equipment, etc. Identify in generalterms reported material tenant-owned systems that are outsidethe scope of the PCA.

8.4.6.2 Out of Scope Issues—Process related equipment orcondition of tenant owned/maintained equipment.

8.4.7 Electrical:8.4.7.1 Observations—Identify the electrical service pro-

vided and observe the electrical distribution system includingdistribution panels, transformers, meters, emergency genera-tors, general lighting systems, and other such equipment orsystems. Observe general electrical items, such as distributionpanels, type of wiring, energy management systems, emer-gency power, lighting protection, etc. Identify any observed orreported special or unusual electrical equipment, systems, ordevices at the subject property.

8.4.7.2 Out of Scope Issues—Removing of electrical paneland device covers, except if removed by building staff, EMFissues, electrical testing, or operating of any electrical devices,or opining on process related equipment or tenant ownedequipment.

8.4.8 Vertical Transportation:8.4.8.1 Observations—Identify equipment type, number of

cabs/escalators, capacity, etc. Observe elevator cabs, finishes,call and communication equipment, etc. Identify whether amaintenance contract is reported to be in place, and if so,identify the service contractor.

8.4.8.2 Out of Scope Issues—Examining of cables, sheaves,controllers, motors, inspection tags, or entering elevator/escalator pits or shafts.

8.4.9 Life Safety/Fire Protection:8.4.9.1 Observations—Identify and observe life safety and

fire protection systems, including sprinklers and standpipes(wet or dry, or both), fire hydrants, fire alarm systems, waterstorage, smoke detectors, fire extinguishers, emergency light-ing, stairwell pressurization, smoke evacuation, etc.

8.4.9.2 Out of Scope Issues—Determining NFPA hazardclassifications, classifying, or testing fire rating of assemblies.

8.4.10 Interior Elements:8.4.10.1 Observations—Observe typical common areas in-

cluding, but not limited to, lobbies, corridors, assembly areas,and restrooms. Identify and observe typical finishes, that is,flooring, ceilings, walls, etc., and material building amenitiesor special features, that is spas, fountains, clubs, shops,restaurants, etc.

8.4.10.2 Out of Scope Issues—Operating appliances or fix-tures, determining or reporting STC (Sound TransmissionClass) ratings, and flammability issues/regulations.

8.5 Additional Considerations—There may be additionalissues or conditions at a property that users may wish to assessin connection with commercial real estate that are outside thescope of this guide (Out of Scope considerations).

8.5.1 Outside Standard Practices—Whether or not a userelects to inquire into non-scope considerations in connectionwith this guide or any other PCA is not required for complianceby this guide.

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8.5.2 Other Standards—Other standards or protocols forassessment of conditions associated with non-scope conditionsmay have been developed by governmental entities, profes-sional organizations, or other private entities.

8.5.3 Additional Issues—Following are several non-scopeconsiderations that users may want to assess in connection withcommercial real estate. No implication is intended as to therelative importance of inquiry into such non-scope consider-ations, and this list of non-scope considerations is not intendedto be all-inclusive:

8.5.3.1 Seismic Considerations,8.5.3.2 Design Consideration for Natural Disasters (Hurri-

canes, Tornadoes, High Winds, Floods, Snow, etc.),8.5.3.3 Insect/Rodent Infestation,8.5.3.4 Environmental Considerations,8.5.3.5 ADA Requirements,2

8.5.3.6 FFHA Requirements,3

8.5.3.7 Indoor Air Quality, and8.5.3.8 Property Security Systems.

9. Opinions of Probable Costs to Remedy PhysicalDeficiencies

9.1 Purpose—Based upon the walk-through survey andinformation obtained in accordance with following this guide,general-scope opinions of probable costs are to be prepared forthe suggested remedy of the material physical deficienciesobserved. These opinions of probable costs are to assist theuser in developing a general understanding of the physicalcondition of the subject property.

9.2 Scope—Opinions of probable costs should be providedfor material physical deficiencies and not for repairs orimprovements that could be classified as: (1) cosmetic ordecorative; (2) part or parcel of a building renovation programor tenant improvements/finishes; (3) enhancements to reposi-tion the subject property in the marketplace; (4) for warrantytransfer purposes; or (5) routine or normal preventive mainte-nance, or a combination thereof.

9.3 Opinions of Probable Costs Attributes:9.3.1 Threshold Amount for Opinions of Probable Costs—It

is the intent of this guide that the material physical deficienciesobserved and the corresponding opinions of probable costs (1)be commensurate with the complexity of the subject property;(2) not be minor or insignificant; and (3) serve the purpose ofthe user in accordance with the user’s risk tolerance level.Opinions of probable costs that are either individually or in theaggregate less than a threshold amount of $3,000 for like itemsare to be omitted from the PCR4. If there are more than fourseparate items that are below this threshold requirement, butcollectively total over $10,000, such items should be included.

The user may adjust this cost threshold amount provided thatthis is disclosed within the PCR’s Executive Summary underthe heading “Deviations from the Guide.”

9.3.2 Actual Costs May Vary—Opinions of probable costsshould only be construed as preliminary budgets. Actual costsmost probably will vary from the consultant’s opinions ofprobable costs depending on such matters as type and design ofsuggested remedy, quality of materials and installation, manu-facturer and type of equipment or system selected, fieldconditions, whether a physical deficiency is repaired or re-placed in whole, phasing of the work (if applicable), quality ofcontractor, quality of project management exercised, marketconditions, and whether competitive pricing is solicited, etc.

9.3.3 Extrapolation of Representative Observations—Opinions of probable costs may be based upon: the extrapola-tion of representative observations, conditions deemed by theconsultant as highly probable, results from information re-ceived, or the commonly encountered EULs or RULs of thecomponents or systems, or a combination thereof.

9.3.4 Estimating of Quantities—It is not the intent of thisguide that the consultant is to prepare or provide exactquantities or identify the exact locations of items or systems asa basis for preparing the opinions of probable costs.

9.3.5 Basis of Costs—The source of cost information uti-lized by the consultant may be from one or more of thefollowing resources: (1) user provided unit costs; (2) owner’shistorical experience costs; (3) consultant’s cost database orcost files; (4) commercially available cost information such aspublished commercial data; (5) third party cost informationfrom contractors, vendors, or suppliers; or (6) other qualifiedsources that the consultant determines appropriate. Opinions ofprobable costs should be provided with approximate quantities,units, and unit costs by line item. If in the reasonable opinionof the consultant, a physical deficiency is too complex ordifficult to develop an opinion of probable cost using thequantity and unit cost method, the consultant may apply a lumpsum opinion of probable costs for that particular line item.Opinions of probable costs should be limited to construction-related costs; those types of costs that commonly are providedby contractors who perform the work. Business related, design,management fees, and other indirect costs should be excluded.

9.3.6 Costs for Additional Study—For some physical defi-ciencies, determining the appropriate suggested remedy orscope may warrant further study/research or design, testing,exploratory probing, and exploration of various repairschemes, or a combination thereof, all of which are outside thescope of this guide. In these instances, the opinions of probablecosts for additional study should be provided.

9.3.7 Cost Segregation—Opinions of probable costs shouldbe segregated within the PCR into the categories of immediatecosts and short-term costs.

10. Property Condition Report

10.1 Format—This guide does not present a specific PCRformat to be followed. This should be determined between theuser and the consultant; however, the PCR may follow theRecommended Table of Contents provided as Fig. X1.1.

10.2 Writing Protocols:

2 It is recognized that most PCAs include some level of assessment of ADAcompliance. This guide recognizes that there are numerous acceptable levels ofADA assessment that can be conducted as part of the PCA. The level of assessmentis mutually agreed upon by the user and the consultant.

3 This guide recognizes that some PCAs for residential properties include somelevel of assessment of FFHA compliance. The level of assessment is mutuallyagreed upon by the user and the consultant.

4 This guide recognizes that most PCRs include material life-safety/buildingcode violations regardless of cost.

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10.2.1 Suggested Remedy—For each material physical de-ficiency, the consultant should provide a suggested remedy,which may include recommending further research or testing,or both, if appropriate in the consultant’s opinion.

10.2.2 Significance of Physical Deficiency—If the signifi-cance of the physical deficiency is not readily discernible, theconsultant should explain its significance in a simple mannermeaningful to a user. For example, stating that “the subjectproperty has aluminum distribution wiring” may be insufficientto the user, since this statement reveals nothing about thesignificance of this condition.

10.2.3 Disclosure of Information Source—The consultantshould differentiate between material information obtained bythe field observer’s actual knowledge and that reported orprovided by others or obtained from documents provided. Thesource of such nonobserved material information should bereported.

10.2.4 Representative Description and ObservedConditions—The PCR’s descriptions of systems and compo-nents and their general physical condition may be based uponextrapolations of representative observations conducted by thefield observer during the walk-through survey.

10.3 Documentation—The PCR should include pertinentdocumentation such as photographs, copies of material build-ing department records, material fire department records, andbuilding code violation notices to the extent reasonable,certificates of occupancy, copies of repair cost documentationsubmitted by owner or owner’s representative, contractors oragents, and tenant schedules (if applicable). All photographsshould be numbered and labeled or correlated to the PCR’stext.

10.4 Credentials—The PCR should name the field observerand the PCR reviewer and should include their statement ofqualifications.

10.5 Executive Summary—The general content for the PCRExecutive Summary is discussed in this section.

10.5.1 General Description—The opening paragraphshould indicate that this is a PCR, identify the subject property,and provide pertinent information such as use, size, age,location, construction type, design style, and apparent occu-pancy status. Also identify the name of the consultant thatprepared the PCR, the name of the user, the user’s positionwith respect to the subject property (if known), the purpose thePCR is to serve (if known), and the date of the site visit.

10.5.2 General Physical Condition—In 10.5.1, the subjectproperty’s general physical condition, the apparent level ofpreventive maintenance exercised, and any significant deferredmaintenance is summarized. A schedule of material physicaldeficiencies, any significant capital improvements that arepending, in-progress, or were recently implemented, and anysignificant findings resulting from research should be pro-vided.5

10.5.3 Opinions of Probable Costs—Present the aggregatesum of opinions of probable costs segregated between imme-diate and short-term costs.

10.5.4 Deviations from this Guide—Present all materialdeviations and deletions from this guide, if any, listed indi-vidually along with all additional consultant services that haveexceeded this guide’s suggested requirements.

10.5.5 Consultant/Field Observer Relationship—If the con-sultant or field observer, or both are not at arms-length with theuser, such a relationship should be disclosed.

10.5.6 Recommendations/Discussions—Briefly identifythose components and systems necessitating further study,research, testing, or exploratory probing. This section also maybe used to discuss any obvious major deviations from thesubject property description provided by the user to theconsultant, ongoing repairs or improvements, or other relevantissues.

10.6 Purpose and Scope:10.6.1 Purpose—Provide a short paragraph specifically

stating the purpose the PCR should serve, if disclosed by user.If the user does not disclose the purpose of the PCR to theconsultant, the PCR should so state.

10.6.2 Scope—Identify the improvements that comprise thesubject property. Provide an outline of the scope of workcompleted for the PCA and methods utilized. Should either thePCA or the PCR materially deviate from this guide or if therewere any constraints preventing the consultant from perform-ing the PCA in accordance with this guide, these constraintsshould be identified.

10.7 Walk-Through Survey—Provide the information that isoutlined in Section 8. Such information should include a briefdescription of each system or component and observed physi-cal deficiencies, if any. Both the brief descriptions and theobserved physical deficiencies may be based upon the fieldobserver’s representative observations. A general descriptionof material tenant-owned equipment that is outside the scope ofthe PCA should be provided in this section.

10.8 Document Reviews and Interviews—Identify any ma-terial information relating to physical deficiencies of thesubject property resulting from the review of documents andinterviews conducted.

10.9 Additional Considerations—Identify any material ad-ditional considerations or Out of Scope considerations whichare included in the PCR.

10.10 Opinions of Probable Costs—Identify the materialphysical deficiencies and provide suggested remedies, com-plete with opinions of probable costs.

10.11 Qualifications—Both the field observer’s and thePCR reviewer’s statement of qualifications should be provided.

10.12 Limiting Conditions—Provide all limiting conditionsof the PCR.

10.13 Exhibits:10.13.1 Representative photographs (may be correlated di-

rectly into text or numbered and labeled in exhibit).10.13.2 Questionnaire.10.13.3 User/owner submitted documents.10.13.4 Photocopied plot plans, sketches, etc.10.13.5 Other exhibits considered appropriate by the con-

sultant.5 This should include material life-safety/building code violations.

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11. Out of Scope Considerations

11.1 Activity Exclusions—The activities listed below gener-ally are excluded from or otherwise represent limitations to thescope of a PCA prepared in accordance with this guide. Theseshould not be construed as all-inclusive or imply that anyexclusion not specifically identified is a PCA requirementunder this guide.

11.1.1 Removing or relocating materials, furniture, storagecontainers, personal effects, debris material or finishes; con-ducting exploratory probing or testing; dismantling or operat-ing of equipment or appliances; or disturbing personal items orproperty, that obstructs access or visibility.

11.1.2 Preparing engineering calculations (civil, structural,mechanical, electrical, etc.) to determine any system’s, com-ponent’s, or equipment’s adequacy or compliance with anyspecific or commonly accepted design requirements or buildingcodes, or preparing designs or specifications to remedy anyphysical deficiency.

11.1.3 Taking measurements or quantities to establish orconfirm any information or representations provided by theowner or user, such as size and dimensions of the subjectproperty or subject building; any legal encumbrances, such aseasements; dwelling unit count and mix; building property linesetbacks or elevations; number and size of parking spaces; etc.

11.1.4 Reporting on the presence or absence of pests such aswood damaging organisms, rodents, or insects unless evidenceof such presence is readily apparent during the course of thefield observer’s walk-through survey or such information isprovided to the consultant by the owner, user, property man-ager, etc. The consultant is not required to provide a suggestedremedy for treatment or remediation, determine the extent ofinfestation, nor provide opinions of probable costs for treat-ment or remediation of any deterioration that may haveresulted.

11.1.5 Reporting on the condition of subterranean condi-tions, such as underground utilities, separate sewage disposalsystems, wells; systems that are either considered process-related or peculiar to a specific tenancy or use; wastewatertreatment plants; or items or systems that are not permanentlyinstalled.

11.1.6 Entering or accessing any area of the premisesdeemed to pose a threat of dangerous or adverse conditionswith respect to the field observer or to perform any procedure,that may damage or impair the physical integrity of theproperty, any system, or component.

11.1.7 Providing an opinion on the condition of any systemor component, that is shutdown, or whose operation by the fieldobserver may increase significantly the registered electricaldemand-load; however, the consultant is to provide an opinionof its physical condition to the extent reasonably possibleconsidering its age, obvious condition, manufacturer, etc.

11.1.8 Evaluating acoustical or insulating characteristics ofsystems or components.

11.1.9 Providing an opinion on matters regarding security ofthe subject property and protection of its occupants or usersfrom unauthorized access.

11.1.10 Operating or witnessing the operation of lighting orother systems typically controlled by time clocks or that arenormally operated by the building’s operation staff or servicecompanies.

11.1.11 Providing an environmental assessment or opinionon the presence of any environmental issues such as asbestos,hazardous wastes, toxic materials, the location and presence ofdesignated wetlands, IAQ, etc.

11.2 Warranty, Guarantee, and Code ComplianceExclusions—By conducting a PCA and preparing a PCR, theconsultant merely is providing an opinion and does not warrantor guarantee the present or future condition of the subjectproperty, nor may the PCA be construed as either a warranty orguarantee of any of the following:

11.2.1 Any system’s or component’s physical condition oruse, nor is a PCA to be construed as substituting for anysystem’s or equipment’s warranty transfer inspection;

11.2.2 Compliance with any federal, state, or local statute,ordinance, rule or regulation including, but not limited to,building codes, safety codes, environmental regulations, healthcodes or zoning ordinances or compliance with trade/designstandards or the standards developed by the insurance industry;however, should there be any conspicuous material presentviolations observed or reported based upon actual knowledgeof the field observer or the PCR reviewer, they should beidentified in the PCR;

11.2.3 Compliance of any material, equipment, or systemwith any certification or actuation rate program, vendor’s ormanufacturer’s warranty provisions, or provisions establishedby any standards that are related to insurance industryacceptance/approval, such as FM, State Board of Fire Under-writers, etc.

11.3 Additional/General Considerations:11.3.1 Further Inquiry—There may be physical condition

issues or certain physical improvements at the subject propertythat the parties may wish to assess in connection with acommercial real estate transaction that are outside the scope ofthis guide. Such issues are referred to as non-scope consider-ations and if included in the PCR, should be identified under10.9.

11.3.2 Out of Scope Considerations—Whether or not a userelects to inquire into non-scope considerations in connectionwith this guide is a decision to be made by the user. Noassessment of such non-scope considerations is required for aPCA to be conducted in compliance with this guide.

11.3.3 Other Standards—There may be standards or proto-cols for the discovery or assessment of physical deficienciesassociated with non-scope considerations developed by gov-ernment entities, professional organizations, or private entities,or a combination thereof.

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ANNEX

(Mandatory Information)

A1. SPECIFIC PROPERTY TYPES

INTRODUCTION

This annex is to be used to supplement or complement previous sections of this guide for variousasset types as if integral to the preceding sections.

A1.1 Multifamily Properties:

A1.1.1 Representative Observations—For complexes withmultiple buildings, the exterior envelopes of all residentialbuildings should be surveyed. For complexes built in phases,each construction phase should be surveyed. Representativeobservations of the interiors should include a mix of units,which are occupied, vacant, damaged, and under renovation orrepair. Representative observations of the interiors of eachconstruction phase should include a sufficient number of thetop and bottom floors. If not specified in the agreementbetween consultant and user, the number of units, buildings,and components surveyed in each construction phase should besufficient to allow the field observer to develop an opinion withreasonable confidence regarding the present condition of thebuilding systems and should be determined using the profes-sional judgment and experience of the field observer at the timeof the walk-through survey. The number of reported units thatare not available for occupancy and the reported reasons theyare not available should be included in the PCR. The PCRshould contain the consultant’s rationale for determining thenumber of units surveyed and for selecting the units that aresurveyed. In addition, the PCR should disclose the specificunits surveyed.

A1.1.2 Patios and Balconies—The field observer shouldconduct representative observations of patios, balconies, en-closures, railings, etc., and report on the observed condition.

A1.1.3 Plumbing—The field observer should identify thetype of supply piping material (to the extent that it is easilyvisible) and note any replacement or historical breakagereported. General conditions and historical leakage of othersystems and apparent causes should also be discussed in thePCR.

A1.1.4 Electrical—The field observer should note the sizeof the electrical service serving representative units, andwhether units are individually metered. To the extent readilyaccessible and easily visible, which for purposes of this clauseincludes the removal of switch or outlet covers by buildingstaff for representative observations, the type of distributionwiring for 120-V circuits should be provided in the PCR. If

aluminum wiring is observed, the presence or absence ofproperly rated connection devices should be noted.

A1.1.5 Attic—The presence or lack of an attic should bespecifically addressed. If the attic(s) is readily accessible, thefield observer should note observations such as means ofaccess, ventilation, evidence of water leakage, daylight enter-ing through defects, the amount and type of insulation and thepresence and condition of draft stops.

A1.1.6 Roof Sheathing—The field observer should note FireResistant Treated (FRT) plywood, if observed.

A1.1.7 Interviews—For multifamily properties, residentialoccupants do not need to be interviewed unless appropriate andwith the consent of the owner or user. If the subject propertyalso has nonresidential uses and the owner or user providesauthorization, the field observer should interview nonresiden-tial occupants in accordance with this guide.

A1.2 Commercial Offıce Buildings:A1.2.1 Representative Observations—For complexes of

buildings built in phases, each construction phase should besurveyed. For a subject property that contains a complex ofmultiple buildings, the concept of representative observationsextends to each building individually and not to all buildings asa whole. Representative observations should include a mix oftenant (occupied and unoccupied) and common areas. Repre-sentative observations of the interiors of each constructionphase should include a sufficient number of the top and bottomfloors. If not specified in the agreement between consultant anduser, the quantity of floor area and the number of components,and systems surveyed in each construction phase should besufficient to allow the field observer to develop an opinion withreasonable confidence regarding the present condition of thebuilding systems. Such representative observations should bedetermined using the professional judgment and experience ofthe field observer at the time of the walk-through survey. Thequantity of reported floor area, which is not available foroccupancy and the reasons it is reportedly not available, shouldbe included in the PCR. The PCR should contain the consult-ant’s rationale for determining the quantity of floor areasurveyed and for selecting the specific floors, that weresurveyed.

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A1.3 Retail Buildings:

A1.3.1 General Exclusions—The consultant is not requiredto survey the interior condition of shell-finish tenancies or theinterior/base building conditions of anchor stores, unless in-cluded in the subject property.

A1.3.2 Representative Observations—For complexes ofbuildings built in phases, each construction phase should besurveyed. For a subject property that contains a complex ofmultiple buildings, the concept of representative observationsextends to each building individually and not to all buildings asa whole. Representative observations should include a mix oftenant (occupied and unoccupied) and common areas. Repre-sentative observations of the interiors of each constructionphase should include a sufficient number of the top and bottomfloors. If not specified in the agreement between consultant anduser, the quantity of floor area and the number of components,and systems surveyed in each construction phase should besufficient to allow the field observer to develop an opinion withconfidence as to the present condition of the building systems.Such representative observations should be determined usingthe professional judgment and experience of the field observerat the time of the walk-through survey. The quantity of reportedfloor area, which is not available for occupancy and the reasons

it is reportedly not available, should be included in the PCR.The PCR should contain the consultant’s rationale for deter-mining the quantity of floor area surveyed and for selecting thespecific floors, that were surveyed.

A1.3.3 Interviews—The field observer should interviewproprietors or store managers of the tenant spaces surveyed asto the subject property’s general condition in addition to otherknowledgeable persons identified by the owner or user asdescribed in 7.7. The consultant should use discretion andshould not disclose the purpose of the PCA to tenants unlessthe user grants permission. This guide recognizes that there isno obligation for the proprietors or store managers to cooper-ate.

A1.3.4 Roofing—In addition to the observations made ofthe main roofs of buildings, a description and observedcondition of canopy roofs, viewed either from the main roof or,if appropriate, from the ground should be reported along withany generally observed physical deficiencies with the parapets,canopies, soffit, or fascia system.

A1.3.5 Flatwork—Loading dock areas, if any, should beobserved along with the condition of any flatwork, such as theloading dock platform, loading dock exterior stairs, and con-crete trailer pads.

APPENDIXES

(Nonmandatory Information)

X1. GUIDANCE AND ENHANCED DUE DILIGENCE SERVICES

INTRODUCTION

The information presented in this appendix is not necessary for completing a baseline PCA pursuantto this guide; however, a user and consultant may wish to utilize some or all of the informationpresented in this appendix to increase or supplement the extent of due diligence to be exercised by theconsultant.

X1.1 Qualifications—This guide recognizes that the qualityof a PCR is highly dependent on the qualifications of the fieldobserver and PCR reviewer. These qualifications include suchfactors as experience, education, training, certification, andprofessional registration/licensure in architecture or engineer-ing. Additionally, this guide recognizes that appropriate quali-fication levels may vary for different PCAs depending on suchfactors as asset type and scope (size, age, complexity, etc.) aswell as the specific needs, purpose the PCR is to serve, and risktolerance level of the user.

X1.1.1 Qualifications of the Field Observer—The fieldobserver is the person or entity engaged by the consultant toperform the walk-through survey; the field observer also maybe the PCR reviewer. The consultant should establish thequalifications of the field observer, but as the accuracy andcompleteness of the walk-through survey will determine thequality of the PCR, the consultant should carefully considereducation, training and experience when selecting the fieldobserver.

X1.1.1.1 Due to the scope or complexity of the subjectproperty or the purpose of the PCA, the user may direct theconsultant to augment the field observer with specialty con-sultants, or the user may define the level of qualifications of thefield observer.

X1.1.1.2 The field observer, as a representative of theconsultant, should be identified in the PCR. As required by 6.1,the statement of qualifications of the field observer should beincluded in the PCR.

X1.1.2 Qualifications of the PCR Reviewer—The PCRreviewer is the qualified individual designated to exerciseresponsible control over the field observer on behalf of theconsultant and to review the PCR. This guide recognizes thatthe consultant is ultimately responsible for the PCA process.

X1.1.2.1 As indicated in the main body of the guide, allPCRs prepared in accordance with this guide should bereviewed and signed by the PCR reviewer. In addition, asrequired by 6.1, the statement of qualifications of the PCRreviewer should be included in the PCR.

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X1.1.2.2 It is recommended that the user consider a PCRreviewer who possesses a professional designation in architec-ture or engineering, or appropriate experience and/or certifica-tions in the construction fields. The PCR reviewer should haveexperience commensurate with the subject property type andscope (size, complexity, etc.), and experience in the preparationof PCRs. Generally, professional architecture or engineeringlicensure/registration, and/or certifications, education, or ap-propriate construction experience related to these disciplinesare recognized as acceptable qualifications for reviewingPCRs. However, the user and the consultant may mutuallyagree to define qualifications for the PCR reviewer, that maydepend on the specific experience of the PCR reviewer and thescope of the subject property.

X1.2 Verification of Measurements and Quantities:

X1.2.1 Parking Spaces:X1.2.1.1 Based Upon Review of Drawings—The field ob-

server should review the subject property’s submitted as-builtsite drawings and survey for the purposes of identifying thenumber of parking spaces provided and compare to an actualfield count.

X1.2.1.2 Actual Field Count—The field observer shouldphysically count each delineated parking space that has beenprovided for the subject property.

X1.2.2 Count of Multifamily Units:X1.2.2.1 Based Upon Review of Drawings, Schedules,

etc.—The field observer should review documents submittedby the owner to determine the number of multifamily dwellingunits.

X1.2.2.2 Actual Field Count—The field observer shouldphysically count each dwelling unit. This implies that awalk-through survey of each building and the floor of eachbuilding should be conducted by the field observer.

X1.2.3 Building Areas:X1.2.3.1 Gross Areas:

(1) Based Upon Review of As-Built Drawings—The con-sultant should review as-built drawings submitted by the ownerto determine the gross building area on a floor-by-floor basis.Such review of drawings may consist of a review of schedulesor dimensions. For purposes of this clause, gross building areashould be that definition as required by the local zoning boardat the time of the building’s construction and as presented onthe drawings’ zoning schedule, if any.

(2) Actual Field Measurement—The field observer shouldtake measurements and prepare calculations physically todetermine gross area. Current BOMA definition of gross area isto be used unless the user provides the consultant with analternate definition/protocol for the method of calculating suchareas. The consultant should state the criteria under which thecalculations are prepared and submit all quantities on a perfloor basis.

X1.2.3.2 Net Usable Areas:(1) Based Upon Review of As-Built Drawings—The user

should provide the consultant with a set of as-built drawingsfor all space available for lease. Based solely on such drawings,the consultant should determine usable area by use of digitizeror other means. Current BOMA definition of usable area is tobe used unless user provides the consultant with an alternatedefinition/protocol for the method of calculating such areas.

(2) Actual Field Measurement—The field observer shouldtake measurements and prepare calculations physically todetermine usable area. Current BOMA definition of usable areais to be used unless the user provides the consultant with analternate definition/protocol for the method of calculating suchareas. The consultant should state the criteria under which thecalculations are prepared and submit all quantities on a perfloor basis.

X1.3 Research:

X1.3.1 Service Companies—The consultant should conductan appropriate inquiry of the subject building’s major plumb-ing, HVAC, fire protection, electrical and elevator servicecompanies, if any, to inquire of the system’s or equipment’sgeneral condition; the extent of major or chronic repairs andreplacements; pending repairs and replacements; and, out-standing proposals to provide repairs and replacements, etc.Within the PCR, the consultant should provide the name of theparties contacted and pertinent information received.

X1.4 Flood Plain Designation—Note whether the propertyencroaches upon a 100-year flood area designated as “SpecialFlood Hazard Areas Inundated by 100-year Flood” on FEMAmaps, as amended.

X1.5 Recommended Table of Contents—The sample Tableof Contents (see Fig. X1.1) is a suggestion and may be tailoredby a user or consultant for the subject property’s attributes ortheir particular PCR protocol or requirements.

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FIG. X1.1 Sample Table of Contents

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X2. AMERICANS WITH DISABILITIES ACT (ADA) ACCESSIBILITY SURVEY

X2.1 Overview of The Americans with Disabilities Act—The Americans with Disabilities Act is a civil rights law thatwas enacted in 1990 to provide persons with disabilities withaccommodations and access equal to, or similar to, thatavailable to the general public. Title III of the ADA requiresthat owners of buildings that are considered to be places ofpublic accommodations remove those architectural barriers andcommunications barriers that are considered readily achievablein accordance with the resources available to building owner-ship to allow use of the facility by the disabled. The obligationto remove barriers where readily achievable is an ongoing one.The determination as to whether removal of a barrier or animplementation of a component or system is readily achievableis often a business decision, which is based on the resourcesavailable to the owner or tenants, and contingent upon thetiming of implementation as well. Determination of whetherbarrier removal is readily achievable is on a case-by-case basis;the United States Department of Justice did not providenumerical formulas or thresholds of any kind to determinewhether an action is readily achievable.

X2.2 Overview of the Americans with Disabilities Act Ac-cessibility Guidelines (ADAAG)—As required by the ADA, theU.S. Architectural and Transportation Barriers ComplianceBoard promulgated the Americans with Disabilities Act Acces-sibility Guidelines. ADAAG provides guidelines for imple-mentation of the ADA by providing specifications for design,construction, and alteration of facilities in accordance with theADA. These guidelines specify quantities, sizes, dimensions,spacing, and locations of various components of a facility so asto be in compliance with the ADA.

X2.3 Variable Levels of Due Diligence—For many users,especially those acquiring or taking an equity interest in aproperty, a complete accessibility survey in accordance withADAAG may be desired. For other users, however, an abbre-viated accessibility survey may serve to identify most of themajor costs to realize ADA compliance without assessing everyaccessible element and space within and without a facility, andwithout taking measurements and counts. Any accessibilitysurvey should be based on ADAAG, however. Appendix X2provides the user with three tiers of ADA due diligence, whichmay be supplemented or revised in accordance with the user’srisk tolerance level for ADA deficiencies and the resulting coststo realize compliance. These tiers are: Tier I-Visual Accessi-bility Survey (a limited scope visual survey, which excludesthe taking of measurements or counts); Tier II-AbbreviatedAccessibility Survey (an abbreviated scope survey entailing thetaking of limited measurements and counts); and Tier III-FullAccessibility Survey in compliance with ADAAG. ADAAGprovides guidance only concerning federal requirements forADA compliance. Some states and localities may have addi-tional compliance requirements that will not be addressed byany of the levels of due diligence enumerated in this document.The user may desire a site-specific accessibility survey, insome instances.

X2.4 Definitions of Terms Specific to Understanding theAmericans with Disabilities Act:

X2.4.1 alteration—a change to a building or facility madeby, on behalf of, or for the use of a public accommodation orcommercial facility, that affects or could affect the usability ofthe building or facility or part thereof. Alterations include, butare not limited to, remodeling, renovation, rehabilitation,reconstruction, historic restoration, change or rearrangement ofthe structural parts or elements, and changes or rearrangementin the plan configuration of walls and full-height partitions.Normal maintenance, reroofing, painting or wallpapering, orchanges to mechanical and electrical systems are not alter-ations unless they affect the usability of the building or facility.An alteration to a place of public accommodation or acommercial facility shall comply with the ADA guidelines fornew construction and alterations.

X2.4.2 architectural barriers—a physical object that im-pedes a disabled person’s access to, or use of, a facility.

X2.4.3 commercial facility—a facility intended for nonresi-dential use by private entities and their employees only andwhose operations affect commerce such as single-tenant officebuildings, factories, warehouses, etc. A commercial facilitymay contain areas of both public accommodations and non-public accommodations.

X2.4.4 communication barriers—a part of a building sys-tem intended to communicate to the public and which, due toits design or construction, fails to meet the communicationsneeds of a disabled person. Taken together with architecturalbarriers, they are often referred to as physical barriers.

X2.4.5 public accommodations—facilities operated by pri-vate entities offering goods and services to the public, forexample multi-tenanted office buildings, places of lodging,restaurants and bars, theaters, auditoriums, retail, serviceestablishments, terminals for public transportation, place ofpublic display or collection, places of recreation, social ser-vices centers, apartment leasing offices, educational centers,etc.

X2.4.6 readily achievable—defined by the ADA as anaction that is “easily accomplishable and able to be carried outwithout much difficulty or expense.”6

X2.5 Presentation of Opinions of Probable Costs—Regardless of the tier of accessibility survey selected by theuser, the accessibility survey report should include opinions ofprobable costs to remedy each existing item of noncompliance,as identified within the scope of the tier selected, if the item isfeasible and practical to implement with respect to consideringphysical constraints. Nonetheless, noncompliant items identi-fied by the consultant should be reported. The opinions ofprobable costs to remedy ADA deficiencies should be identifiedseparately and not combined with other physical deficienciesidentified with a building system, to the extent reasonable.

6 Federal Register, 28 CFR Part 36, Subpart A, 36.104, Definitions, July 26,1991.

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These opinions of probable costs should also be presentedseparately in the PCR, unless otherwise directed by the user.Opinions of probable costs should be categorized with approxi-mate quantities, units, and unit costs by line item. This guidealso recognizes that the nature of many accessibility improve-ments may require services beyond the scope of this guide suchas the preparation of design studies, exploratory probing anddiscovery, detailed measurements, and space planning/alteration studies to determine the feasibility, efficacy, andappropriate cost to implement such improvements.

X2.6 Tier I: Visual Accessibility Survey—The scope of thislimited visual survey is specifically limited to the followingfive areas. Some of the information required in this scope maybe obtained from the owner, such as the number of standardand ADA parking spaces, or the number of total and ADAcompliant guestrooms. The user should be aware that due to thevisual nature of the Tier I survey, the reliability of the resultswill be less accurate than a Tier II survey, which includesrepresentative sampling measurements and counts. Prior toperforming the visual survey, the consultant should review forhistorical information and any previous ADA survey reportsthat were prepared for the facility and that are readily availablefor review prior to the site visit.

X2.6.1 Path-of-Travel:X2.6.1.1 Observations—To identify material physical bar-

riers to the disabled from accessible parking, public transpor-tation stops, accessible passenger loading zones, and publicstreets or sidewalks to the accessible building entrance theyserve. With respect to multifamily facilities, congregate carefacilities (nursing homes, assisted living centers, etc.), mobilehome parks, and the like, path-of-travel should be construed tobe that path from on-site designated disabled parking spaces (ifany) to the leasing office and any facility available for use bythe general public. Missing or noncompliant curb ramps, lackof or noncompliant ramps or railings, stair or step barriers, andinadequate or noncompliant main entrance doors and thresh-olds should be noted.

X2.6.1.2 Out of Scope Issues —The taking of measurementsor counts.

X2.6.2 Parking:X2.6.2.1 Observations—If applicable, opine whether the

reported number of on-site ADA designated parking spaces issufficient with respect to the total number of reported parkingspaces provided. Provide an opinion as to the number ofadditional ADA designated spaces required, per the reportednumber of spaces. (See Table X2.1.)

X2.6.2.2 Out of Scope Issues—Measuring of parking areaor space dimensions or any calculations to determine whether

the existing parking lot can accommodate additional parkingspaces, if warranted; the determination as to whether theexisting or proposed parking (quantity, layout, etc.) is compli-ant with government approvals (site plan, zoning, etc.) grantedat the time of construction permitting or with current zoningregulations, if any.

X2.6.3 Public Toilet Rooms:X2.6.3.1 Observations—Determine whether public toilet

room facilities can accommodate the disabled with respect to:the existence of toilet stalls that appear to be designed foraccessibility, whether lavatories or the designated sink for thedisabled are at apparent lower heights with adequate clearanceunderneath, and determine whether compliant emergency firealarms and strobes are present within the toilet room facilities.

X2.6.3.2 Out of Scope Issues—Taking of any measurementswithin the public toilet room(s), determining whether theexisting fire alarm control panel, if any, can accommodateadditional sensing device points, additional alarm devices, etc.Conducting surveys in excess of representative observations oftoilet room facilities.

X2.6.4 ADA Compliant Guestrooms:X2.6.4.1 Observations—Hospitality use facilities are re-

quired to have guestrooms designed and constructed to accom-modate the disabled. Based upon the total number of reportedguestrooms, and the number of reported ADA compliantguestrooms, provide an opinion as to whether the facility has asufficient number of ADA compliant guestrooms per thereported number. (See Table X2.2.)

X2.6.4.2 Out of Scope Issues—Taking of measurementswithin an ADA designated guestroom, conducting surveys inexcess of representative observations of guestrooms.

X2.6.5 Elevators:X2.6.5.1 Observations—This abbreviated survey is limited

to identifying whether the elevator(s) have (1) hall call buttonswith visual signals to indicate when a call is registered andanswered; (2) interior control buttons designated by Braille andby raised standard alphabet characters for letters and Arabicsymbols for numerals; (3) emergency controls grouped at thebottom of the control panel; (4) interior panel floor buttonswith visual signals which light when each call is registered andextinguish when each call is answered; (5) visual and audiblesignaling provided at each floor stop; (6) doors with areopening device that will stop and reopen a car door if thedoor becomes obstructed; and (7) an emergency two-waycommunications system, which does not require voice com-munication.

X2.6.5.2 Out of Scope Issues—Taking of measurementseither within a representative cab or within elevator corridors,

TABLE X2.1 Parking

Total ParkingSpaces Provided

1-25

26-50

51-75

76-100

101-150

151-200

201-300

301-400

401-500

501-1000

1001& over

Minimum Number ofAccessible Spaces Required

1 2 3 4 5 6 7 8 9 2% of total 20 plus 1 for each100 over 1000

Minimum Number ofAccessible Spaces Requiredto be “Van Accessible”

1 1 1 1 1 1 1 1 2 1 in every 8accessible spaces

1 in every 8accessible spaces

Total Required 1 2 3 4 5 6 7 8 9 2% of total 20 plus 1 for each100 over 1000

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surveying more than one representative cab per elevator bank,determining whether the existing fire alarm control panel canaccommodate additional sensing points or alarms, etc.

X2.7 Tier II: Abbreviated Accessibility Survey—This tier isan abbreviated accessibility survey subject to representativesampling. This tier does not have the depth, scope, or detailedmeasurements and counts required to comply with a Tier III:Full Accessibility Survey. The consultant is to take appropriatemeasurements and counts to complete the checklist in Fig.X2.1. However, many of the questions posed by the checklistmay be answered by the owner, such as the number of existingparking spaces and the number of standard and ADA compliant

guestrooms. It is outside the scope of this Tier II AbbreviatedAccessibility Survey for the consultant to verify all counts andmeasurements provided by the owner.

X2.8 Tier III: Full Accessibility Survey—The consultantshould conduct a full in-depth accessibility survey in fullcompliance with the Americans with Disabilities Act - Title IIIand ADAAG. Such survey should address each accessibleelement and space within and without a facility, which willentail the taking of measurements and counts. The results of thesurvey may be provided in either a checklist or narrative reportformat, or both, within the PCR, or as a separate survey andreport.

TABLE X2.2 ADA Compliant GuestroomsA

Number ofSleeping Rooms

Number of ADAFully Accessible Guestrooms Required

Number of ADAAccessible Guestrooms with Roll-in Showers Required

Total Required

1 - 25 1 ... 126–50 2 ... 251–75 3 1 476–100 4 1 5101–150 5 2 7151–200 6 2 8201–300 7 3 10301–400 8 4 12401–500 9 4 plus 1 for each

100 over 400varies

501–1000 2% of total ... ...1001 and over 20 plus 1 for each

100 over 1000... ...

A The number of required ADA accessible guestrooms is derived by adding the Number of ADA Fully Accessible Guestrooms Required (Column 2) to the Number ofADA Accessible Guestrooms with Roll-in Showers Required (Column 3).

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FIG. X2.1 Abbreviated Accessibility Survey

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FIG. X2.1 Abbreviated Accessibility Survey (continued)

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Standard Guide for Property Condition Assessments...

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