The Importance of Commercial Building Inspections
Robert S. Michaud, P.E.
July 29, 2020
Nearly ever new home purchase, certainly those to be purchased with any sort of loan from a bank or mortgage broker, requires a home inspection prior to the completion of the purchase process. The reason for such an inspection is clear and understandable – the home buyer and / or lender want to make sure there are no surprises with the house. A qualified and effective home inspector will be able to find those things that an untrained eye might not, and then decisions or negotiations can take place on how best to address them before the property changes hands. This is a prudent step in the process and should probably be done even if it isn’t required by the lender. Any major purchase – homes, automobiles, etc. can benefit by having a trained, independent evaluator inspect the “goods” first. After all, by definition, a lot of money is at stake.
Oddly, the same is not always the case with commercial building transactions, but it should be. Commercial buildings are frequently far more complex and expensive than residential properties. In addition, they are subject to far more code and legal requirements – especially if they are open to the public – than homes. Consider that commercial buildings are subject to all sorts of building codes – local, state and federal, plus other requirements dictated by the Americans with Disabilities Act (ADA), or Occupational Safety and Health Administration (OHSA) and perhaps others depending on the building location, use, occupancy, and more, it can be very difficult for the purchaser to fully understand the risks associated with a building that is up for sale. Add to that the much more complex construction methods used for commercial buildings, whether from a structural standpoint, building envelope, mechanical systems, electrical systems, fire alarm and prevention, security, plumbing and conveyance systems, there is far more that needs evaluation in a commercial building as compared to a residential building.
Yet, very few commercial building transactions are contingent upon completion of a pre-purchase inspection. Why is that? One would think that since commercial building transactions are fundamentally more business focused than a home purchase, and therefore are much more about the “numbers” rather than more subjective decision making criteria, that commercial building inspections would be de rigueur in the industry.
If you should find yourself in the position of purchasing a new building or buildings for your business, the money spent on a due diligence pre-purchase inspection could be the difference between a successful move for your business and a disastrous money sink.
Consider an example of a 20 year old building that appears to have been well maintained. You take the tour through it and note some cosmetic changes that need to be made. Perhaps the finishes are a little outdated and need to be freshened up a bit. The previous owner has good records of maintenance services that have been performed on the building and everything seems solid. You buy the property and move in. At first, everything seems to be going well, but then the seasons change and the packaged rooftop unit has issues and keeps shutting off. You bring in a mechanical service company and learn that it is approaching the end of its rated life, and while they can patch it up for you, repairs are likely to continue to be more frequent until you replace it. Then you notice that you routinely get trouble alarms from the fire alarm panel. When that service company arrives they explain that that particular model is no longer supported and that parts are hard to come by. You receive a letter from a lawyer explaining that a recent customer couldn’t enter your building without assistance because your front entrance was not ADA compatible and there was no wheelchair ramp for her to use. You notice that a ceiling tile in the break room has a stain on it that seems to be new. You have your maintenance technician look into it. He moves the ceiling tile and after a looking around a bit, determines that the leak is coming from the roof. You hire a roofing contractor to inspect the roof and he comes back with a detailed report which shows the location of several recommended areas to patch and also notes that this particular roof material is rated for 20 years and is now beyond its rated life and should be replaced.
If the above list of “what-ifs” sounds extreme, it isn’t. We see this sort of thing all the time. Building systems that are approaching or have sometimes exceeded their expected lifespan may not exhibit many obvious signs of impending failure to the untrained eye, but an experienced inspector will make note of current and potential risks and help quantify them for you. Whether they are age related, use and abuse, or code requirements that need to be addressed, items like those mentioned above can and should be identified and addressed prior to the purchase of a building. The decision to correct them or make allowances for the cost in the purchase price is all negotiable, but only if you have the information beforehand. Once the purchase is complete, it is very difficult to go back and get compensation even if the previous owner was aware of the problem.
For the sake of your company and the bottom line, make sure you insist on a detailed pre-purchase inspection. You will be glad you did.
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