Three Things a Poor-Quality Property Condition Site Assessment Won’t Tell You

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Three Things a Poor-Quality Property Condition Site Assessment Won’t Tell You

Savvy commercial real-estate investors understand that when it comes time to add a new property to the portfolio, a high-quality inspection is an extremely prudent and cost-effective safeguard. Much like a thorough medical check-up, a professional Property Condition Assessment and/or Phase 1 Environmental Site Assessment concerns the health or reveals the minor concerns—or major disease—of the property. A poor-quality inspection, on the other hand, can be worse than no inspection if it lulls buyers and lenders into a false sense of security.

HERE ARE THREE THINGS AN UNPROFESSIONAL OR INCOMPLETE INSPECTION WON’T TELL YOU:

1 The property is more complicated than the inspector understands.

Commercial properties are often comprised of very complex and specialized components and building elements. Chillers, at-roofing drainage, air handlers, elevators, sprinklers, security elements—all of these components require specialized knowledge and analysis to properly inspect and report on. On the environmental front, an inspector needs to be experienced enough to look for and recognize red flags and know when and how to recommend specialized inspections for liabilities such as asbestos, groundwater contamination, and more.

2 The property has a sordid past…that you might be liable for.

A key component of a good quality property condition assessment or environmental inspection is a thorough review of the property’s history. A public records search can reveal whether the property in question
once housed a gas station or dry cleaner, for example—both of which are environmental-liability red ags. An experienced inspector also recognizes on-site clues, such as mediocre improvements and incomplete remodeling, or open permits that indicate the need for more historical sleuthing.

The EPA can order “potentially responsible parties” to pay for clean up of a hazardous site. You can
avoid this liability with a high-quality environmental inspection before the date of purchase of the property. Would an unprofessional inspection that failed to reveal hazards be considered good due diligence on the buyer’s part? Maybe. Maybe not.

3 The property’s old inspection report has been recycled.

Unscrupulous inspectors sometimes recycle old inspection reports on a property their rm has inspected in the past. After all—the fee’s the same, but the work’s a lot simpler. Simply pull up the last report, do a quick walk- through, and add a paragraph or two. High-quality inspections are bespoke. When an existing inspection is on le for a given property, the inspector should certainly read it and use it as part of his discovery process, but he should never assume that the information it contains is accurate. Conditions change, and reports need to re ect current conditions. What if the previous inspector’s records search didn’t turn up an important clue about the property’s prior use? What if an old mechanical system wasn’t replaced, as the old inspection notes, but instead merely received surface touch-ups? A commitment to reveal the objective, observed truth guides the experienced, professional inspector.