September 4, 2013
Freddie Mac and its DUS Lenders have specific requirements for their version of the Property Condition Report. The Freddie Mac Property Condition Report scope of work, as specified in the Freddie Mac Multifamily Seller/Servicer Guide and Chapter 15 Engineering and Property Condition Requirements, is similar to an ASTM E2018 Property Condition Assessment, but also has distinct differences.
The DUS Guide currently requires the Lender to provide a termite inspection report or a termite bond or other evidence of adequate coverage. The Lender is not required to submit a termite inspection report or bond if the project construction is steel or concrete and the Lender provides documentation of such fact. If the project construction is not steel or concrete, then in lieu of a termite report or bond the Lender must submit one of the following: –
-A letter from the current pest control company providing regular service to the Property, stating that the Property has been regularly treated to prevent termite and other wood boring insect infestation and, to its knowledge, there is no current infestation, or
-A letter from a qualified engineer (which must be the same engineer performing the physical needs assessment) indicating that there is no evidence of termite or wood boring insect infestation. In order to be a “qualified” engineer, such engineer must have completed termite inspection training and certification and must provide evidence of such.
– See more at: http://www.partneresi.com/fannie-mae-freddie-mac.php
See more at: http://www.partneresi.com/fannie-mae-freddie-mac.php
August 21, 2013
Fannie Mae and its DUS Lenders require a Physical Needs Assessment which is their version of the Property Condition Report. The Physical Needs Assessment is defined in the Fannie Mae Delegated Underwriting and Servicing guide, Part 111, Chapter 3, 308. The Physical Needs Assessment is required for Fannie Mae financing on many types of residential properties, including apartment communities, assisted living facilities, skilled nursing facilities, student housing, and manufactured housing communities. The Physical Needs Assessment is similar to an ASTM E2018 Property Condition Assessment in many respects, though there are distinct differences.
Read more about Fannie Mae Physical Needs Assessments.
August 8, 2013
A Property Condition Assessment, also called a Property Condition Report, is an evaluation of the capital expenses that will likely be required to maintain an asset in the short- and long-term.
The standard scope of work for the Property Condition Assessment is defined by ASTM E2018 and includes a walk-through survey of the property to assess the condition of building systems, components and other property improvements, and interviews and documents review regarding the age and condition of property improvements. The Property Condition Report includes tables of the short-term capital expenses (Immediate Repairs Table) and long-term capital expenses (Replacement Reserves Table).
PCAs can help lenders or buyers understand how the condition of the building and site improvements will impact the asset’s financial performance.
Learn more about Property Condition Assessments
Watch a video about Property Condition Assessments
July 10, 2013
The ASTM E2018-08 Standard is the industry standard for baseline Property Condition Assessments. Fully named “ASTM E2018-08 Standard Guide for Property Condition Assessments: Baseline Property Condition Assessment Process,” the Standard outlines the purpose and scope of the Property Condition Assessment including the walk-through survey, document reviews and interviews, as well as the contents of the Property Condition Report. According to ASTM E2018, the goal of the Property Condition Assessment is to identify and communicate physical deficiencies of the subject property.
The ASTM E2018-08 Standard was created by the American Society for Testing and Materials (now simply ASTM International). The E2018 Standard was originally published in 1999 and updated in 2001 and 2008 (now called E2018-08). The standard is reviewed and revised by the ASTM Committee E50 on Environmental Risk Assessment, Risk Management and Corrective Action.
June 27, 2013
Controlled Recognized Environmental Condition (CREC) is a proposed new term for the ASTM E1527 standard for Phase I Environmental Site Assessments (ESAs). The Controlled REC concept was introduced to address contaminated sites that have received risk-based regulatory closure, where no further remediation is required but residual contamination still exists at a site and the property is subject to activity and use limitations or “AULs.” These sites, where contamination is controlled but could still pose ongoing or future obligations on the owner (such as special precautions during construction or grading activities), have been a source of some confusion to the environmental due diligence industry with regards to how they should be classified. The Controlled Recognized Environmental Condition or “CREC”, if accepted, would be a distinct classification from Historical Recognized Environmental Condition (HREC) and Recognized Environmental Condition (REC). The environmental professional would be required to list any CRECs identified in the findings and conclusions section of the Phase I Environmental Site Assessment report.
June 20, 2013
A Recognized Environmental Condition (REC) is defined by ASTM as “the presence or likely presence of any hazardous substances or petroleum products on a property under conditions that indicate an existing release, a past release, or a material threat of a release of any hazardous substances or petroleum products into structures on the property or into the ground, ground water, or surface water of the property. The term includes hazardous substances or petroleum products even under conditions in compliance with laws.” The term REC does not include de minimis conditions.
June 18, 2013
A Historical Recognized Environmental Condition is defined by ASTM as “an environmental condition which in the past would have been considered a recognized environmental condition, but which may or may not be considered a recognized environmental condition currently.” The determination of whether an environmental condition is a recognized environmental condition (REC) or a historical recognized environmental condition (HREC) lies with the environmental professional, and depends upon how the condition impacts the current or future use of the property. A release that was remediated and given regulatory closure may be considered an HREC unless it is determined to have a significant current or future impact on the property, at which point the environmental professional may deem it a REC.