Inspections of Commercial Real Estate Come in a Variety of Shapes and Sizes

Inspections of Commercial Real Estate Come in a Variety of Shapes and Sizes

Do you own or plan to develop a structure for your small business, such as a warehouse, apartment, or office? If you answered “yes,” you should be informed that your structure may be subject to inspections. There are various sorts of property inspections, and just a few of them may apply to your structure. This post will go over the most common ones that business owners face.

 Important Points to Remember

  • Insurers, fire agencies, municipal building inspectors, and environmental professionals may all inspect the commercial property.
  • Current building codes currently in effect only apply to new construction and existing structures undergoing refurbishment.
  • A certificate of occupancy, a legal document declaring that the building is fit for the purpose for which it is being used, is required by many states and municipalities.
  • Before investing in residential property, business owners should get a home inspection and a pest inspection.

 What Are Property Inspections and How Do They Work?

The majority of property inspections are performed to discover dangers on the property or to verify whether the property fulfills government or insurer criteria. An engineer, an insurer, a private inspection company, or a state or local government building inspector may conduct an inspection. Some inspections are optional, while others are legally required.

The sorts of commercial property inspections performed differ from one region to the next.

 Inspections of many kinds

The majority of inspections of business-owned property fall into one of the following categories:

  • Inspections by the city and the state
  • Inspections are carried out by states and municipalities to ensure that buildings comply with state and local building codes. In most cases, new codes only apply to structures built after they go into effect. New codes will not apply to existing commercial buildings unless they are reconstructed, rehabilitated, or altered, or their occupancy is changed.
  • Building owners and renters are required by many state and local building rules to get a certificate of occupancy (C of O). A certificate of occupancy is a legal document issued by a building official certifying that the structure is suitable for intended use. The certificate must be displayed in a prominent place. It assures building owners, tenants, employees, and others that the structure complies with the safety criteria of the applicable code and is legally occupied.
  • A new certificate is required if the structure is renovated or the occupation changes (for example, from a retail store to a restaurant).
  • Owners of residential rental units in some towns are required to get a certificate of habitability. A certificate of occupancy is identical to this document. A new certificate may be required on a regular basis, such as every five years or if the tenants change, whichever occurs first.
  • Another sort of government inspection is a municipal fire department examination to assess whether a commercial building conforms to city and state fire codes. Fire dangers such as obstructed exits, missing fire extinguishers, and combustible materials kept in boiler rooms are all looked for by inspectors. The inspector usually gives the property owner a certain amount of time to fix any issues before returning for a second inspection. A fine may be imposed on property owners who do not follow fire codes.

 Inspections of buildings

Buildings that are being built or renovated must comply with current state or local building codes. To get a permit, the project owner typically submits an application to the building department along with drawings and specifications. Once the permit has been obtained, construction can commence.

Each phase of a construction project is inspected by the local building department as it is completed. The department conducts a final examination and issues a certificate of occupancy once the building is completed.

 Inspections by Insurance Companies

An insurance inspection’s primary goal is to ensure that the policyholder’s description of the property is correct. Another is to identify dangers on the property that could result in losses if the policyholder does not take action to minimize them. During an examination, an insurance company may look for the following items: 

  • The presence of hot spots on an electrical panel may indicate defective wiring.
  • Hail, wind, and wear and tear all cause damage to roofing materials, resulting in leaks.
  • Hazards of tripping and falling in parking lots and walkways
  • In areas rented to tenants, there may be poor housekeeping or other risks.
  • Issues with boilers or other equipment that may cause a breakdown.
  • Failures in fire suppression systems (such as sprinklers) or life safety equipment (such as emergency lighting)

 Environmental Site Evaluations

There’s a chance that when a company buys commercial or industrial property, the land or buildings will be contaminated by hazardous waste. By conducting an environmental site assessment (ESA) before purchasing the property, the buyer can prevent a costly cleanup. An ESA is a two-phase process that is carried out by an environmental professional.

An examination of records, a site visit, and interviews with owners, occupants, neighbors, and local government authorities are all part of Phase I. A Phase II evaluation is carried out if the Phase I examination reveals the presence of hazardous materials on the site. Samples of soil, water, and other materials are collected and evaluated for the presence of hazardous compounds during a Phase II inspection. If the tests are positive, the ESA should determine the remediation steps. 

 Inspections of Residential Properties

Assume you own a real estate investment firm that buys and sells properties. What kind of inspection are you looking for? The home inspection, which is an objective visual evaluation of a house’s physical structure and systems from the roof to the foundation, is probably the most significant. 

A house inspection gives potential purchasers an overview of the home’s condition and any current flaws, such as a broken furnace or foundation fractures.

A pest inspection is another crucial residential property check (also called a termite inspection). Its goal is to find termites, wood-boring insects, rodents, and other animals that have caused (or could cause) harm to the property. 

While house and pest inspections cover many areas of a home, they do not include the items listed below. Depending on the property’s age and location, the buyer or seller may choose to have one or more of these items inspected separately:

  • Well
  • Septic tank or sewer system?
  • Lead-based paint
  • Chimney
  • Asbestos
  • Radon
  • Mold

When purchasing a house with a Veterans Administration (VA) loan, the buyer is, in many areas, required to get a pest inspection.

Frequently Asked Questions (FAQs)

When should you hire a professional to inspect your home?

Before you build, renovate, buy, or sell a home, you should have a property inspection performed.

 What is the average cost of a home inspection?

The price ranges from $200 to over $600, with $330.5 being the average.

 What are some of the benefits of getting a home inspected?

An inspection can reveal dangers or flaws that must be remedied in order for your home to meet building rules or your insurer’s underwriting requirements.

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