ASTM PCA Standard Guide

A technical task group designated by the American Society for Testing and Materials (ASTM) continues to develop the Standard Guide for Property Condition Assessments: Baseline Property Condition Assessment Process E50.07.02. The guide's most recent draft version is dated October 28, 1998. The guide is not currently an ASTM standard; however, it will be submitted to an ASTM technical committee for consideration as a standard in April 1999.

Parallel to the ASTM Standard for Phase I Environmental Site Assessments, the guide's purpose is to "define good commercial and customary practice for conducting a baseline Property Condition Assessment (PCA)." The guide similarly lays out the basic goal of a PCA, "to identify and communicate physical deficiencies to a user," and also introduces and defines the terminology and acronyms unique to this area of due diligence. Recommendations are made with respect to objectives and levels of inquiry for field observations on the part of the inspector, or field observer; interviewing and information-gathering procedures and sources; and contents of the Property Condition Report (PCR), including a framework for developing and providing Opinions of Probable Costs to Remedy Physical Deficiencies. Guidance is also provided as an appendix in assessing various types of properties, such as multi-family, retail and office.

The guide defers the determination of levels of professional experience, education and licensure required on behalf of the field observer and PCR reviewer to the discretion of the report user and consultant. Report format and out-of-scope considerations are also left to be determined between the user and consultant. For example, environmental concerns, seismic studies, ADA issues, measurement and/or testing of items, are all considered non-integral to a baseline PCA but are offered as possibilities for inclusion in a PCA. The guide also outlines a key limitation to the user in that the PCR is intended only as an opinion and not a warrant or guarantee of the present or future condition of a property.

The guide is helpful in that it sets out a national minimum standard for conducting PCAs. As in the case of the ASTM guideline for Environmental Site Assessments, however, the guide is far less comprehensive than the Standard & Poor's guidelines, which require inclusion of ADA issues, the calculation of ongoing replacement cost reserves, and a discussion of seismic issues. Therefore, the importance of users identifying their lender, and lenders communicating their scope of work to the consultant, will be more important than ever. As always, good communication at the beginning of a deal is the most important step in ensuring smooth closings.

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