ASTM International recently revised its Standard Guide for Property Condition Assessments: Baseline Condition Process E2018-08 (the “Guide”) for conducting a Property Condition Assessment (PCA) and preparing a Property Condition Report (PCR) on commercial real estate. The original Guide is the most widely recognized protocol within the U.S. and Canada for conducting such services and is one of the ASTM’s best selling standards. Since its original release in 1999, the Guide has been referenced as the PCA protocol for conducting approximately 400,000+ PCAs.
“Our committee has made over 200 edits and revisions to the original 31-page guide,” said Robert Barone, R.A., chairman of the ASTM PCA committee. The new guide provides defined terms, establishes the scope of components and systems to be observed, and provides the means and methods for conducting such observations and preparing opinions of probable costs to remedy physical deficiencies observed. Most importantly, its purpose is to define good commercial and customary practices for conducting a “baseline” PCA of commercial property and to assist in establishing a recognized standard of care for such services.
Soon after its release in 1999, the Guide was widely adopted as the standard of care by both the commercial mortgage backed security industry and by balance sheet lenders. Equity investors may use the guide to satisfy a de minimus level of due diligence, but usually they enhance the level of due diligence exercised due to their low risk tolerance level when compared to mortgagees, since they are at a position of incurring the first loss. Enhancing the due diligence exercised typically consists of augmenting the ASTM’s field observer with system specialty consultants in such systems as curtain walls, chillers, fire/life-safety, roofs, etc. and increasing the scope of representative observations conducted during the walk-through survey.