M id A tlantic Real Estate Journal — Owners, Developers & Managers — April 22 - May 19, 2022 — 3C
www.marej.com
O wners , D evelopers & M anagers By Michael Doyle, AIA, ECS Mid-Atlantic, LLC Why you need a Property Condition Assessment before closing
A
brochure shows up on your desk. Someone is selling a property and
• Amajor tenant is planning to remodel their space within the next six months. As the owner, you are required to bring the facility up to code to meet ADA requirements. You don’t even know what’s involved, or how much that will cost. There are so many items – expensive items – you didn’t plan on. What could you have done to avoid this costly, dis - appointing situation? Before closing, lenders will require an updated survey, an environmental report, and a title insurance binder, but
they usually don’t require a Property Condition Assess - ment (PCA). Why? Because once the purchase is complete, the property – and its condi - tion – becomes your responsi - bility. While a PCA may seem like an unnecessary additional expense, it can save you thou - sands of dollars. So what is a PCA? It’s an assessment and report that provides information on the property’s condition. A writ - ten report is prepared out - lining the observations and findings. For items requir - ing remedial work, opinions
of cost for immediate and short-term repairs can be provided. A table of capital expense reserve costs for a specified length of time may be provided. And after you’ve purchased the property, this information can also help you develop budgets and sched - ules to maintain or upgrade your property. The next time a slick prop - erty brochure hits your desk, Be proactive and have a PCA completed prior to finalizing your purchase. The PCA can be used as an effective nego - tiating tool with the seller. A
third-party assessment of the condition of the property and estimated costs will allow you to negotiate a lower price, and/ or require the owner to make some repairs before closing. If necessary, the report can also be revised to meet lending re - quirements once your purchase negotiations are complete. And once you’re the proud new own - er, the information will help guide your future maintenance and improvement activities. Michael Doyle, AIA serves as a principal architect in the Chantilly, VA office of ECS Mid-Atlantic, LLC. MAREJ
has provided you with in - formation on tenants, the great loca - tion, and ba - sic building information. This piques your interest.
Michael Doyle
Lenders usually require a Phase I Environmental Site Assessment (ESA) as part of a typical due-diligence pro - cess. So, the ESA is ordered, completed, and the report says there are no environmental concerns. The lender is happy – their concerns have been ad - dressed. You’re happy because the lender has just issued your mortgage commitment letter. You go to closing, sign your name, and now you own the 20-year-old building. You visit the property with an industry professional to look at your new asset. Un - fortunately, the items that are pointed out don’t make you very happy now: • The roof is leaking, and the insulation is wet; the contrac - tor recommends replacement. • The pavement was re - cently seal coated. The coat - ing covered up a large area of alligator cracking. Numerous areas need to be patched. • The HVAC system is origi - nal and will require complete replacement within the next two years. Your jaw drops at the cost. JDA Group promotes Smith to VP of operations HOBOKEN, NJ — JDA Group LLC (JDA) has pro - moted Robyn Smith to VP of operations, the Hoboken-based development firm announced. The move supports the compa - ny’s plan to expand its portfolio of commercial and residential properties through both acqui - sition and development. Smith previously served as property manager of the pri - vately held commercial and res - idential developer and owner. She will work in tandem with JDA VP Timothy Con- nell , who facilitates all as - pects of JDA’s development, portfolio management, and investment initiatives with an eye towards expansion. MAREJ
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