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General Instructions Commercial Property Inspections
Ruth Johnson - Training
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CONTENTS
General Instructions – Covius Commercial Property Inspections ...................................................................... 3
Introduction: ......................................................................................................................................................................... 3
Inspection Scheduling Protocol: ................................................................................................................................... 3
Overview of the Inspection Process: .......................................................................................................................... 3
What Documents are Required: ................................................................................................................................... 4
Completing Property Inspection Form: ..................................................................................................................... 5
Prior Deferred Maintenance/Repairs to Verify: ............................................................................................... 5
Deferred Maintenance and Health and Safety Issues: .................................................................................... 5
Hazard or Catastrophic Loss ..................................................................................................................................... 5
Submitting Inspections: ................................................................................................................................................... 6
General Photo Requirements: ....................................................................................................................................... 6
Recommended Photos for Inspection Reports: ..................................................................................................... 7
Definitions of Multifamily Property Types: ............................................................................................................. 8
Form Specific Instructions: ............................................................................................................................................. 8
Client Specific Instructions: ............................................................................................................................................ 9
Tips for Performing Better Inspections: ........................................................................................................................ 9
Introduction: ......................................................................................................................................................................... 9
Tips: .......................................................................................................................................................................................... 9
Photo Tips: ........................................................................................................................................................................... 11
Final Tips for Inspections: ............................................................................................................................................. 11
Recruiting, Follow up, and Training Contact Information ............................................................................... 12
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GENERAL INSTRUCTIONS – COVIUS COMMERCIAL PROPERTY INSPECTIONS
INTRODUCTION:
The purpose of these instructions is to inform you (the inspector) of all the general requirements for
every property inspection you agree to perform for Specialty Inspections – Spectrum Field Services.
These General Instructions apply to ALL Commercial inspections and you are required to abide by
these instructions.
In addition to these General Instructions there will be Form Specific Instructions for the main
inspection form types required by our clients. The Form Specific Instructions will include all of the
instructions that are common to each inspection form type. There will be Client Specific Instructions
attached to each inspection in CSI. The Client Specific Instructions provide any additional or unusual
instructions that apply to each individual inspection as requested by the Client.
You should keep these General Instructions, the Form Specific Instructions, and the Client
Specific Instructions with you during every site inspection you perform. It would be wise to print out
the instructions. Failure to follow the instructions and provide the required items may result in a repeat
trip to the subject property at your own expense.
One final type of instructions you need to be aware of are Special Instructions which are included
inside the Order Details for each specific order in CSI. These instructions pertain specifically to the
individual inspection and must be complied with. Often Special Instructions contain repairs you are
required to verify, but other information may be included and other requirements requested here, so
ALWAYS check for, read, and comply with Special Instructions.
INSPECTION SCHEDULING PROTOCOL:
Call contact to schedule appointment (Unless this is a No Contact inspection).
Inform the contact of the requirements for the inspection (Unless this is a No Contact inspection).
Request that the on-site contact has a minimum of 6 months tenure with the Subject Property.
Request that contact notify all tenants of the inspection date (Unless this is a No Contact inspection).
Inquire as to how many vacant and down units there are (Unless this is a No Contact inspection).
Confirm appointment with Property Contact just prior to the inspection (Unless this is a No Contact inspection).
Update CSI with the appointment date and time: o Within 48 hours of accepting the order for regular inspections. o Within 24 hours of accepting the order for Rush inspections.
OVERVIEW OF THE INSPECTION PROCESS:
The inspection actually begins when you arrive in the city or town where the Subject Property is located. You should note your observations concerning the state of the market, commercial/retail/recreational facilities, and properties considered comparable to the Subject Property.
Arrive with sufficient time to drive the neighborhood and the Subject Property and note: o Traffic patterns o Accessibility of the Subject Property
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o Condition, accessibility, traffic flow, etc. of other properties o Condition and effectiveness of signage at Subject Property o Any new construction in area o Are the surrounding homes/properties well maintained? o Does the Subject Property fit the neighborhood?
Walk partial Subject Property exterior (general first impressions of the Subject Property).
Meet with on-site Property Contact and: o Note the name and number of person that accompanied you – if applicable (in applicable
places in the form and/or in a comment box). o Verify information previously received or collect any additional information needed to
complete the inspection process. o Complete the Management Interview questions if applicable to the scope of the inspection. o Review the inspection process with the on-site Property Contact. o Discuss units to be inspected. You should determine the units to be inspected. o Inquire regarding any special conditions identified by the Client or noticed prior to or while
meeting with the Property Contact (e.g., comparable development, deferred maintenance/construction issues).
o If the Property Contact is unable or unwilling to provide any required information you must explain this in the inspection report along with the name and number of this individual.
o If the Property Contact is unable or unwilling to allow inspection of any area of the subject property you must explain this in the report along with the name and number of this individual.
Tour Subject Property with Property Contact (or individually, if applicable). o Inspect required number of units you have chosen (see Client Specific Instructions for
particulars specific to each inspection you are asked to perform). o All DOWN units must be inspected, detailed comments must be provided to explain why the
unit(s) is/are down, and properly captioned photos must be provided. o All NON-Rentable guest rooms in a hospitality property must be inspected, explained, and
photographed. o When inspecting Hospitality properties NEVER inspect occupied guest rooms. o When inspecting Self-Storage facilities NEVER inspect occupied storage units. o Inquire regarding any resolution timing and any costs associated with issues discovered
during walk through (if accompanied). o Obtain an understanding of the Borrower’s commitment to Subject Property (e.g., on-site
contact, maintenance staff, or tenants’ concerns regarding needed improvements). o Obtain an understanding of on-site contact’s and if possible property management’s
knowledge and management of the Subject Property. Give the on-site contact a verbal summary of the inspection, if appropriate and within the scope of your agreement with the Client. The on-site Contact should not be surprised by your report.
Document everything in writing and with corresponding photos.
After completing the tour with the Property Contact (if applicable): o Address any issues not previously addressed. o Exchange business cards. o Understand and confirm any follow-up procedure for questions or gaps you may have in
information for the final report.
Address any Client questions by adding comments to the form where appropriate.
Complete the property inspection report, including any follow up with the Property Contact. Top of the Document
WHAT DOCUMENTS ARE REQUIRED:
When documents, such as the rent roll, are required they should be uploaded with the inspection report in CSI (preferred) or faxed to Spectrum when the report is submitted or before. Please
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send the documents to the fax number provided below. ALWAYS include the CSI Order # at the top of any documents you fax to us so the documents can be included with the correct inspection reports. o Spectrum Field Service Fax # 801-461-8220
COMPLETING PROPERTY INSPECTION FORM:
Thoroughly complete all sections of the form including detailed comments.
Some information may already be entered in the online form when you receive the order. o This information is from a previous inspection. o Please verify the information. o If you find that the information is different, please change it, and explain in the Deferred
Maintenance comments or in the Additional Collateral Description comments.
When answering Market or Neighborhood questions: o The area in question consists of a one-three mile radius around the subject property. o Competition, however, can be found within a 100-mile radius.
Competition can be found on the internet (www.yellowpages.com, www.superpages.com or by doing a Google search for the type of property you are inspecting near the subject property address), from the contact, or visually while in the area.
Competition is for the property type, not the business itself. (Retail center, mall, office building, warehouse, restaurant, etc.)
PRIOR DEFERRED MAINTENANCE/REPAIRS TO VERIFY:
Clients often provide us with lists of prior deferred maintenance or repairs that need to be verified.
These lists will be found in Special Instructions in CSI.
When provided, you must provide photos of the current status or condition of each item on the list, whether repaired or not.
DEFERRED MAINTENANCE AND HEALTH AND SAFETY ISSUES:
All items of deferred maintenance must be identified and commented on.
You must provide the exact location of each item of deferred maintenance in the comments and photo captions.
You must accurately describe each item of deferred maintenance.
All health and safety issues must also be described, photographed, and the location on the property specified in the report.
Any items that pose an immediate threat to life safety must be properly noted in the report, photographed, the location specified, and you must immediately inform Spectrum of the problem so the client can be contacted within 24 hours.
HAZARD OR CATASTROPHIC LOSS
In the event of a Hazard Loss such as a Fire or other disaster we need the following information: o Date of loss o Cause o Was insurance claim filed o Claim amount o Any displaced tenants o Number of affected units o Details on the nature of the loss o When units will be back online
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o Photos of damaged units (if possible) o If the contact does not know these details, please ask for the name of the individual who can
supply this information and follow up with that person.
Down units for other reasons – we need the following information: o Unit numbers of down units o Cause o Cost to bring unit(s) back online o Approximate date when unit(s) will be back online o Photos of down units
SUBMITTING INSPECTIONS:
Submit the inspection: o Within 72 hours (3 days) of on-site inspection or by the due date – whichever comes first –
unless otherwise instructed within Special Instructions or by a Rep Follow-up Issue for regular inspections.
o The next day for Rush inspections. o If you are not able to submit the inspection within the allotted time you must update CSI with
a cause for the delay.
Please call Spectrum at 800-700-1701 and ask to speak to someone with any questions or problems.
If the inspection is ordered as a Rush, but is not completed by the due date, the Rush fee will not be paid. (This could change depending on unique circumstances.)
If the inspection must be scheduled on or after your due date, please notify Spectrum immediately so the client can be informed that the inspection will be late.
Please do not assume that an inspection is a RUSH based on the due date. If it is not designated a rush, then a rush fee will not be assessed, and we will likely extend your due date rather than pay a rush fee.
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GENERAL PHOTO REQUIREMENTS:
Use a digital camera.
Size: 640 x 480 or 50K to 150K - minimum (be sure to set your camera to this size before taking the photos).
Orientation: All photos must be horizontal.
The correct number of good quality photos must be included even if you are not allowed to access portions of the property (see Client Specific Instructions).
Take photos of all required components as listed in Client Specific Instructions.
Turn OFF the Date function in your digital camera. Otherwise you will be asked to: o Return to the property to take new photos
OR o Edit the Date out of the photos
All items of deferred maintenance must be photographed – captions must state location on the property and description of the problem. Some clients and reports require two photos of each item of DM, a close-up photo and a photo to show location. (See examples below for captions) o “DM - Hole in living room wall - Unit 16B” o “DM - Missing rain gutter - West side of Building H”
All health and safety issues must be photographed – captions must state location on the property and what the health and safety concern is.
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All photos must be captioned with a description of the component(s) in the photo and must include the exact location on the property: o Exterior photos must have building number or location on the property and N, S, E, or W
direction. o Unit photo captions must have unit name (Commercial Unit) or number (Multifamily,
Hospitality, Healthcare Unit) if occupied and unit number (all property types) if vacant. o Caption Examples:
North side of Building 2 – Parking Ingress/egress on the west side of the property Swimming pool south of the leasing office Hollywood Video – Showroom Occupied Unit 265 – Kitchen Vacant Unit 3 – Dining room Vacant Unit 1b – Interior (Commercial unit)
If you must email photos rather than attach online: o Include a list of detailed photo captions in the text of the email o Enter the Order ID in the subject line of the email o Submit emailed photos within 12 hours of the submitted order o Send the photos in several emails to ensure delivery
Dark and/or blurry photos are not acceptable.
View your photos in full size format before uploading them into CSI to verify they are acceptable.
When you are unable to take photos of a required component you must explain this in the report.
RECOMMENDED PHOTOS FOR INSPECTION REPORTS:
Property signage – If possible, show the Subject Property signage in relation to the street and/or to the Subject Property.
Street scenes – One or two directional photos are usually sufficient to show the makeup of the neighborhood and the type of street and traffic volume. Also include photos of surrounding properties (within a block or two) that would have a major impact on the Subject Property (e.g., a regional mall, hospital, etc.). The street scene should also show any traffic lights, median cuts, or center turn lanes that would affect ingress/egress at the main Subject Property entrance. Your photo captions should identify the direction which you are facing (e.g. “Street view of Elm Street looking north”).
Entrance – If possible the main entrance photo should be taken in relation to either ‘Property Signage’ or ‘Street Scenes’ or both. Again, captions should identify directions (N, S, E, and W – not left or right).
Overview – Try to take a general overview of the Subject Property from the entrance drive or from across the street to show the building, parking, and landscaping. If a Subject Property is quite large (regional or community shopping center with pad sites, etc. a comprehensive general view is not always possible, but generally an overview is possible from across the street or at a 45 degree angle from an extreme corner of the parking lot.
Exterior Structure – These photographs should include walls, roofs, doors, and exterior Subject Property amenities.
Interior – Interior photographs should contain lobbies, hallways, stairs, elevators, mechanical rooms, ceilings, floor coverings, and resident or tenant unit interiors.
Deferred Maintenance – The Inspector should photograph each deferred maintenance item identified in the report. The location of the item must be identified in the photo caption.
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o For instance, if you encounter water damaged ceiling tiles, the specific location must be identified, e.g., ‘DM – Stained ceiling tiles - Northwest corner of Unit B’ or, ‘DM – Damaged fascia - Southeast corner of the north building’.
o It is not necessary to take multiple photos of deficiencies of the same type. If paint is peeling throughout, or there is damaged fascia throughout, the Inspector should take a few representative photos of the deficiencies, indicate the specific location of those photos, and then indicate in the caption that this is the typical condition throughout. (Some clients require more than one photo when deferred maintenance is throughout the property – always refer to Client Specific Form Instructions.
While keeping the above recommendations in mind, please refer to the Client Specific Form
Instructions found in CSI for the list of items to photograph (as provided by the Client) for each
inspection you perform.
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DEFINITIONS OF MULTIFAMILY PROPERTY TYPES:
There are various types of multi-unit rental housing, including Multifamily, Manufactured Home/Mobile
Home Communities, Cooperative Housing (also referred to as Co-Ops) and Student Housing. Below
are the definitions of each:
Multifamily – Rental housing with five or more residential units. A multifamily property may consist of a single building or multiple buildings. Subtypes include mid- to high-rise buildings and garden apartments. A building with up to six stories is generally considered mid-rise while a building with seven stories or more is considered high-rise, each type usually having at least one elevator. Mid- and high-rise buildings may stand alone or form a single complex of multiple buildings some of which may contain commercial spaces. Garden style apartments may be defined as a one- to three-story development, with one or more buildings, built in a garden or park-like setting. Senior Apartments (also termed Independent Living) or retirement communities are multifamily developments that target senior residents who are able to function independently. These residences are typically age-restricted to residents 55 and older (or 62 and older). Senior Apartments may provide some social and recreational amenities, but do not provide any health care services.
Manufactured Home/Mobile Home Communities – A manufactured home is a factory-assembled residence consisting of one or more modules in which a chassis and wheels are an integral part of the structure, and which can be readied for occupancy without removing the chassis and/or the wheels. Manufactured homes come in one or two modules, with the two module type often referred to as a “double-wide”. The term “Mobile Home” refers to manufactured homes built prior to June 15, 1976, when the HUD code that now regulates manufactured housing went into effect. The owners of these mobile or manufactured homes lease lots in a community or development that provides utility services and other common amenities. The community may own some of the homes and rent out the home and lot together.
Cooperative Housing (or Co-Ops) – A type of multiple ownership in which the residents of a multi-unit housing complex own shares in the cooperative corporation that owns the entire Subject Property, giving each resident the right to occupy a specific apartment or unit.
Student Housing – Multi-unit housing not owned by any school affiliate, but due to its proximity to a university, college, or trade school, has a resident profile that is primarily, if not solely, made up of students.
FORM SPECIFIC INSTRUCTIONS:
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These are the instructions that will explain the requirements and procedures that are applicable to all
inspections completed on a specific type of form. They are or will be available in the Training Materials
Section in CSI along with other training items created specifically for inspectors.
CLIENT SPECIFIC INSTRUCTIONS:
These are instructions that are available in CSI with each inspection form. These instructions contain
the specific and unique requirements for the client who has requested the inspection. The Client
Specific Instructions do NOT include the General Instructions found in this document or any Form
Specific Instructions that are applicable to all inspections for a specific form type such as Fannie Mae,
MBA, Freddie Mac, or CMSA inspections.
Top of the Document
TIPS FOR PERFORMING BETTER INSPECTIONS:
INTRODUCTION:
The information provided here, if followed, will help you perform better property inspections. These are
general tips that apply to most, if not all, Commercial Property Inspections you perform for Spectrum
Specialty Inspections. Please read through these tips and utilize the information in the inspections you
are asked to perform.
TIPS:
For multifamily, use the Internet to check apartment rental websites for comments from current and past tenants about the Subject Property before your visit. Most managers monitor these sites and are more than willing to address shortcomings or negative comments that are posted.
Drive or walk the complex before going to the Office to meet the manager. This will give you an opportunity to form a first impression of the Subject Property. If you note deferred maintenance, you will be able to ask questions about the issues during the interview section of the inspection or during your walk through (if accompanied).
The best case scenario is to interview the manager and walk the Subject Property with the maintenance supervisor. You will receive a different perspective on the Subject Property from the maintenance supervisor. The maintenance supervisor and his team are the people performing the work at the Subject Property and typically will be proud to show off their work or inform you of work that should be done.
If part of the scope of the inspection and if the information is provided to you, you should confirm that repairs reimbursed from the repair account or replacement reserve account were completed in a good and workmanlike manner.
Does the owner have a plan to repair the deferred maintenance? If so, is the plan realistic? Do they have the funds to complete the plan? Do they have the staff to complete the plan?
If part of the scope of the inspection and if the information is provided to you, confirm that the Borrower has completed the repairs needed according to the last inspection report (or engineer’s report for first inspections).
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Ask the maintenance supervisor if she/he faces any particular challenges in maintaining the Subject Property. Ask the manager or maintenance supervisor if she/he is aware of any deferred or otherwise unaddressed maintenance issues.
Listen carefully to what the maintenance supervisor says and/or doesn’t say. Maintenance supervisors can be one of the best sources for property level information.
Pay particular attention to properties that are self-managed by the Borrower. Typically, these owners tend to replace carpets, fixtures, appliances, etc. later than the Client prefers. Borrowers who self-manage properties tend to perform some or much of the maintenance work themselves.
Down Units:
o Check to see if the down unit is being cannibalized (appliances and/or fixtures being removed from the down unit to be used in another unit).
o Down units are clear indicators of management problems including a lack of owner commitment, and cash flow strain. As a result, the Subject Property may suffer from lack of market appeal, potential reputation problems, increased vandalism potential, and are cause for further deterioration.
o You should select the units, rooms, and/or bays to be walked. Prior to the inspection, Management should be told that all tenants should be notified of the coming inspection. That way, you can select any unit, room, and/or bay on the Subject Property including any unit, room, or bay that appears to have physical issues or concerns.
o When selecting units, rooms, or bays to inspect, you might consider last year’s vacant and down units, this year’s vacant and down units, random sampling of occupied units, including all unit types, and units in any area the manager seems to be directing you away from. An inspection of ceilings in top floor units, rooms, or bays can reveal whether or not there are roof leaks.
o Carefully document your observations of the Subject Property conditions with photographs and notes. Establish a consistent method of taking detailed notes.
o Gauge the level of tenant complaints while walking the Subject Property. Talk to tenants when given the opportunity. Note the familiarity between manager or maintenance supervisor and tenants.
o If appropriate and within the policies and procedures of the Client, share your findings with the manager and/or maintenance supervisor before departing the Subject Property. Do not surprise the property staff with your findings. If possible, discuss any deferred maintenance with the person escorting you around the Subject Property when you note the problem. Ask for plans on repairing the problem and ask if funds are available to complete the project. Be sure to take photographs of all deferred maintenance noted. Frame the photographs to give the viewer the best perspective of the situation, e.g., is there a small mildew problem or is the room overrun with mold.
o Ask follow-up questions to understand the situation at the Subject Property.
o Check your camera periodically during the inspection, to assure you actually have photographs, that they are in focus, and that the pictures tell the story, before leaving the Subject Property.
o For all deferred maintenance or life safety issues – you should provide enough detail in your comments so that the Borrower can be given detailed information that can be tracked, e.g., if there is a sagging gutter/pothole/heaved sidewalk include the location in your comments or photo caption. Even if there is an endemic problem, cite location(s) of example(s).
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o Allow enough time to thoroughly inspect the Subject Property. Walk all common areas including amenities. Carefully follow client requirements for inspecting the Subject Property.
o Do not allow the manager/maintenance supervisor to steer you around the Subject Property. You should insist upon going into the areas you have chosen for the inspection. If the manager’s key will not open a unit you requested to see, make any reasonable attempts to view the unit/area while at the Subject Property. If you are unable to gain access after a reasonable attempt, make a note in the inspection report about the lack of access; be as specific as possible about the location of the blocked unit/area and the attempt to gain entry.
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PHOTO TIPS:
The primary purpose of the inspection photos is to give the reader an encompassing, general idea of the exterior and interior condition of the Subject Property, to support the Inspector’s findings, and to emphasize any deferred maintenance issues.
The number of photos required is determined by the various clients who order inspections. Refer to CSI and the Client Specific Instructions for the actual number of photos required.
When photographing a Subject Property, the Inspector should start with the approach, including signage, street views, and entrances; then include the grounds (parking/landscaping/lighting), building exterior (front, sides, and rear), major properties within a two- or three-block radius that impact the Subject Property, exterior deferred maintenance, and interior units or spaces, followed by any interior deferred maintenance issues.
FINAL TIPS FOR INSPECTIONS:
Try to give borrower/property contact advance notice of the inspection.
Request the on-site contact to be the individual(s) with the most knowledge of the property condition and operations.
Be realistic with the number of inspections scheduled in a day
o Allow adequate time for the management interview as well as the property inspection.
o Review form questions before inspection.
Before the site visit
o Find the Subject Property
o Drive the neighborhood
o Make notes of questions to ask regarding submarket
o Drive the Subject Property
o Go to the office
Management Interview
o Build a rapport, but keep control of the interview
o Learn about management’s viewpoint of the asset and operations
o Evaluate Management Performance
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o Ask questions in a friendly manner – remember, it’s not an interrogation
o Ask follow-up questions – don’t just complete the form. Understand the situation at the Subject Property.
Are there any “down” units or bays?
o “Down” unit or bay – any unit or bay that cannot be made rent ready with routine maintenance.
o “Down” units or bays are obvious indicators of problems
Lack of owner commitment
Cash flow strain
Lack of market appeal; potential reputation problems
Increased vandalism potential
Cause for further deterioration
o Are units being “cannibalized”?
Share your findings with the manager before departing the Subject Property
Before leaving the site, check your camera to assure you have pictures and write quick notes.
Drive the neighborhood again to test your initial impressions.
RECRUITING, FOLLOW UP, AND TRAINING CONTACT INFORMATION
When you have questions, please call the office or send an email to one of the following individuals. We are happy to help you.
Shonnie Schmidt – Recruiting & Follow-up Supervisor: o Direct: 801-461-8232 o Email: [email protected]
Lorrinda Christensen – Training/Tech Writer Support: o Direct: 801-461-8253 o Email: [email protected]
Amy Peterson – CSI Follow-up Coordinator: o Direct: 801-461-8229 o Email: [email protected]
Brandy Sala – CSI Follow-up Coordinator: o Direct: 801-461-8248 o Email: [email protected]
Amy Gutierrez – Vender Recruiter: o Direct: 801-461-8275 o Email: [email protected]
Ruth Johnson – Training and Technical Writing Supervisor: Semi retired – only available on Tuesday and Wednesday
o Direct: 801-461-8266 o Email: [email protected]
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