Is A Property Condition Assessment Necessary?

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Is A Property Condition Assessment Necessary?

A property condition assessment is sometimes thought of as sort of the equivalent of a home inspection but for a commercial building. That's an understatement, however, as a PCA covers all the major systems in the building and many components even in the surrounding property. Hiring a property condition assessment consultant is a commitment to a fairly extensive project, and you might wonder if it's necessary. Here's what you should know about the necessity of a PCA.

Due Diligence

A PCA is not required in the strict sense that a government agency will make you conduct one. However, it's widely considered a critical component of due diligence for a wide array of interests in commercial properties. From buying a place to preparing to remodel one, there are plenty of compelling reasons why a PCA is a good idea.

Financial Interests

One of the simplest arguments for the necessity of a PCA is that it is often required by another entity, if not the government. Particularly, banks, insurance companies, investors, and other financial interests often require a property condition assessment report before they'll consider getting involved with a customer or client.

A bank might need a PCA to confirm that a building is worth its supposed value before offering a loan to a business. The structure is likely to be collateral, and the bank needs to know it will be whole on its investment if the borrower falls through on payments. Similarly, an insurance company can't make reasonable risk assessments without knowing the condition of a property.

Preparing for Projects

Sometimes, a PCA is a purely internal review. This is especially the case if you're trying to get a sense of what the state of a property is before beginning a project. From major remodeling to simple landscaping, many jobs can't start until you know what you're up against.

Notably, a PCA often extends up to the boundaries of a property. For example, a company that wants to add a parking garage to a location may need an assessment of where the nearest roadway access is. Likewise, a property condition assessment consultant can help them determine what will be necessary to comply with local regulations for connecting the parking area to the road.


It's also wise to conduct a PCA as a way of protecting yourself if you're leaving a property. A company that's renting a space, for example, should document the location's condition before exiting. Also, a seller may want to guard against the possibility of a lawsuit for misrepresentation by sending the seller a report.

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