Red Flag Issues in Property Condition Assessments

By Joseph Derhake, CEO Partner Engineering and Science, Inc.

These five frequently identified problems can indicate big liability and costs.

Oh, the anticipation of receiving a Property Condition Report (PCR)—what will the assessor find and how much will it cost you? Of the thousands of Property Condition Assessments (PCAs) Partner performs each year, and all the various deficiencies we observe, these five frequently identified “red flag issues” may come with the biggest risks in terms of liability, cost and safety.

Metal Composite Materials (MCM)
Last summer’s catastrophic Grenfell Tower Fire in London brought this popular building material under worldwide scrutiny again. The Tower had recently been renovated with extensive use of MCM, which may have contributed to the rapid and deadly spread of the fire.

Favored by architects in the 1970s-1990s for its aesthetic properties, versatility and relatively low cost, this exterior cladding consists of aluminum skin covering a highly-flammable polyethylene core. Because of fire risk, the International Building Code adopted by the United States in 2000 essentially banned the use of MCM in applications over 40 feet, requiring fire-resistant materials on upper levels of commercial buildings.
If you are purchasing an older building that contains MCM, your best bet is to consider the building code at the time of construction and the intended use of the building, and engage a fire protection engineer to conduct an equivalency analysis and provide recommendations.

Accessibility
Non-compliance with The Americans with Disabilities Act (ADA) is a serious concern for owners of buildings defined as “Places of Public Accommodation” or “Commercial Facilities” by Title III of the ADA. Accessibility is not only a life safety consideration, but a liability issue, as non-compliant properties are often grounds for lawsuits and costly legal battles.

It is important to note that there is no “grandfather clause” in the ADA. Public Accommodations—i.e. restaurants, theaters, medical buildings, hotels—constructed prior to ADA enactment in 2000 must retrofit to be ADA-compliant “to the maximum extent possible.” Commercial Facilities—i.e. factories, warehouses, or office buildings—built prior to 2000 are not required to retrofit unless the building has been “altered.” The ambiguity of these retrofit clauses can make it difficult for a property owner to legally defend a non-compliant property.

The most common violations we identify include parking, restrooms, hallway clearance and appropriate door hardware. A standard PCA report will identify some of these problems, but for a more thorough understanding of liabilities related to accessibility compliance, a formal accessibility assessment is recommended.

Balconies and Stairs
Balconies, an often-overlooked exterior feature, require regular maintenance to stave off water intrusion. Seemingly innocuous cracks in plaster, pavement or wood allow water to seep in, which can cause corrosion of underlying structural support, resulting in a major life safety issue: the potential for collapse. The same problem exists with exterior stairways: water intrusion leads to deterioration and compromised structural integrity. Proper use of sealants, upkeep of spalling, replacing anchors and screws—these may seem like small details, but every commercial real estate owner should be concerned with the upkeep of balconies and stairs.

Garages
High-end properties often include post-tension concrete or double-tee garage structures. Smaller properties may use steel-frame construction. Regardless of the type of construction, garages can present maintenance headaches. Because loss of garage access means potential loss of revenue, owners may tend to defer maintenance and repair on garage structures—but preventive measures and regular maintenance can save millions in remediation expenses.

Assessors look for structural “tells” that indicate bigger problems in garages: deterioration or spalling of concrete, corrosion of steel members, or collapsed cables. Any of these may indicate water intrusion and/or structural problems.

Seismic Vulnerability
In earthquake-prone areas, many cities are mandating retrofit of vulnerable building types. The two most frequently identified types are wood-frame “soft story” buildings, a construction common to multifamily residential buildings, where the ground floor is used for parking and constructed with open walls on one face of the building; and non-ductile concrete buildings, which are prone to crumbling and collapse under seismic forces.
Property-owners in seismic zones should monitor these local ordinances as they become increasingly common, especially in the greater San Francisco and Los Angeles areas. Retrofit costs vary widely depending on the size and construction of the building and the objectives of the retrofit.