Reviewed by Craig Hoebing, Capital Market Funds, LLC - CBK-2007014 - Commercial Mortgage Banker · Updated October 2026
Commercial lenders order a property condition assessment because the rent roll does not show a roof that is near the end of its life or a parking lot that has failed. The baseline many of them name is ASTM E2018. The current public designation is E2018-24. This note paraphrases the standard's own categories. It does not copy the standard, and it does not quote a dollar threshold. This note is general information. It is not tax advice, not legal advice, and not an environmental or engineering opinion. A CPA, an attorney, or the licensed professional named in the report decides how the rule applies to a given property.
Immediate costs, in that standard's frame, are opinions about conditions that are an imminent life-safety matter, conditions expected to cause a system to fail or to cause remedial cost to rise sharply, and recorded or reported building or fire code violations. Long-term costs are opinions of what it will cost to replace systems over an evaluation period the user of the report defines, often set out in a table. They are not, unless the engagement says so, a list of upgrades the borrower would like. The opinions are preliminary and order-of-magnitude. They are not contractor bids. The observation is visual, of components that are readily accessible. A hidden defect the walker could not see is outside what the visit claimed to see.
Holdbacks, reserves, and the reserve this note will not repeat
When a lender accepts the report, immediate-repair opinions often become a holdback or a requirement to fix the item before or just after closing. Long-term tables often become a replacement reserve the borrower deposits monthly. The amount is whatever that lender and that report support. This page will not publish a reserve per square foot or a roof age that 'always' fails. A roof, an HVAC unit, and a parking surface are the systems sponsors ask about because a walk-through can see them. They are examples of building systems, not a required list beyond what the standard's user and the lender put in the scope.
Money set aside for future tenants and their improvements is a different reserve. It is already explained on tenant-improvement and leasing reserves. Do not add that page's discussion onto a roof table and call it one number. The appraisal, which values the property rather than pricing a repair, is commercial appraisals. The closing order is Arizona commercial closings. The checklist is commercial loan documents.
What to send with the report
Send the full PDF, including the cost table and the list of immediate items, not a one-page summary that drops the caveats. If a code violation is noted, say whether it has been cleared. If you disagree with an opinion of cost, the answer is a contractor bid or a revised assessment, not a debate about a benchmark this site does not publish. An engineer or an architect of your choosing can review the report. This office will not substitute its judgment for theirs.
The office is 7373 E Doubletree Ranch Rd #255, Scottsdale, AZ 85258. The phone is (480) 495-8072. Capital Market Funds, LLC - CBK-2007014 - Commercial Mortgage Banker and NMLS 1445066. Arranging the loan includes telling the lender the report exists. It does not include sealing the report.
A condition report does not clear environmental liability
The walk-through prices systems a person can see. It does not replace a Phase I, and it does not satisfy the all appropriate inquiries rule described on what a Phase I does in a loan file. If both reports are in the file, the reserve comes from the condition table and the environmental question stays with the environmental professional. Adding those two opinions into one holdback is how a closing gets surprised.
Send the full condition PDF, the immediate-repair list, and the long-term table. A disagreement with an opinion of cost is a contractor bid or a revised assessment, not a reserve-per-foot rule. This page does not publish that rule. The lender decides the holdback. Capital Market Funds arranges the loan and does not overrule the assessor.
Sources
Questions
- Is ASTM E2018-24 a guarantee that the building has no hidden defects?
- No. The assessment observes components that are readily accessible. A concealed failure is outside a visual visit. The standard's opinions of cost are also not bids.
- Will you state the roof age that forces a replacement reserve?
- No. The report's immediate and long-term opinions, and the lender's guide, set the reserve. An age quoted as a universal rule is not on this page.
- Are tenant-improvement reserves part of the property condition table?
- They are a different reserve. Leasing costs are covered on the tenant-improvement page. A property condition table is about building systems, not about the next tenant's paint and carpet, unless the scope says otherwise.
- Can Capital Market Funds waive a repair the report calls immediate?
- No. The lender decides whether to hold back funds or require the repair. We arrange the financing. We do not overrule the assessor or the lender.