Short answer: lenders want an ASTM E2018 Property Condition Report with a signed Property Condition Assessor's opinion, an immediate-repair table, a 12-year replacement reserve table, photo documentation, and a reliance letter naming the lender. Typical turnaround is 10 to 15 business days; typical fee for a single commercial building runs $2,500 to $8,000 depending on size, age and asset type.
The standard the report is written to
ASTM E2018 Standard Guide for Property Condition Assessments: Baseline Property Condition Assessment Process is the framework nearly every commercial lender references. It defines the walk-through survey, the document and interview review, and the content of the Property Condition Report (PCR). It is a guide, not a rigid checklist, so lenders layer their own scope on top — which is exactly where reports go wrong.
Report sections a lender expects to see
| Section | What underwriting uses it for |
|---|---|
| Executive summary | The one page credit committee reads. Property description, overall condition rating, total immediate repair cost, annual reserve per unit or per square foot. |
| Immediate repairs table | Life-safety, code and deferred-maintenance items needing attention within 12 months, each with a cost. Drives the repair escrow amount and holdback. |
| Replacement reserve table | Component-by-component remaining useful life and replacement cost over the loan term, usually 12 years. Drives the monthly reserve deposit. |
| System narratives | Site and paving, structure, envelope, roofing, plumbing, HVAC, electrical, fire and life safety, vertical transportation, interiors. |
| ADA and accessibility screening | Abbreviated Title III screening: parking, path of travel, entry, restrooms, signage. Not a full compliance survey unless scoped. |
| Code and permit review | Certificate of occupancy, open permits, unpermitted tenant improvements, jurisdictional records. |
| Photographs and appendices | Dated photo log, documents reviewed, interviewees, assessor qualifications and signature. |
Reserve tables: the part underwriting actually negotiates
Two numbers determine whether a deal pencils. Immediate repairs are escrowed at closing, often at 100 to 125 percent of the estimate. Replacement reserves are collected monthly for the life of the loan. An assessor who inflates remaining useful life makes the loan look cheaper and exposes the lender; one who is needlessly conservative kills deals. The defensible approach is component-level: age of the unit, observed condition, service history from the owner, and published expected useful life — stated openly so the number can be challenged with facts rather than opinion.
Program-specific overlays
- SBA 504 and 7(a). SOP requirements focus on the property meeting occupancy rules and on identifying repairs affecting collateral value; environmental review runs under the SBA's own environmental policy alongside the PCA.
- CMBS / conduit. Expect a 12-year reserve table, per-unit or per-square-foot reserve normalization, and a strict reliance letter with named originator, depositor and trustee. Rating-agency scrutiny is on immediate repairs and roof, parking and HVAC remaining life.
- Agency multifamily (Fannie Mae / Freddie Mac). Uses its own form and scope, including unit sampling percentages and a full accessibility screen. Our agency inspection service covers this form set.
- Bridge and life company. Usually ASTM baseline plus lender-specific add-ons: seismic PML (ASTM E2026 / E2557) in California, roof moisture survey, or elevator and fire-system specialist reports.
Seismic PML — the California add-on
Most California commercial loans over a threshold amount require a Probable Maximum Loss study, expressed as SEL or SUL for a 475-year event. Lenders commonly draw the line at 20 percent PML; above that, earthquake insurance or a structural upgrade becomes a loan condition. Order the PML with the PCA rather than after — it uses the same site visit and drawing review.
Why PCA reports get rejected
- No reliance letter, or the wrong entity named. The most common re-issue request, and entirely avoidable by naming the lender at authorization.
- Reserve table stops short of the loan term. A 10-year table on a 12-year loan gets sent back.
- Costs without a basis. Round numbers with no unit rate or source invite challenge.
- Roof deferred to "further evaluation." Underwriting needs a remaining-life number. If the roof needs a moisture survey to produce one, scope it up front — see how to read a commercial roof inspection report.
- Missing unpermitted work. An open permit or unpermitted TI found after closing is a title and value problem, not a maintenance one.
- Assessor qualifications not documented. The report must state who performed the walk and what qualifies them.
What to send us at authorization
Rent roll, building plans if available, capital improvement history, service contracts for HVAC, roof and elevators, warranty documents, certificate of occupancy, and the lender's scope letter. Sites that provide these get a tighter reserve table and fewer flagged data gaps.
See the property condition assessment service, and pair it with a Phase I ESA on any acquisition loan.
Need this scoped? USCBI performs commercial inspections across San Diego, Orange, Los Angeles, Riverside and San Bernardino counties. Request scope and fee and we normally reply the same business day.