When you hear the words “Property Condition Report” or (PCR) you may not immediately think of Commercial Real Estate. Some Commercial Investors could argue that the make-good requirements in the lease are sufficient, but it isn’t always that simple.
A good Commercial Property Manager will always use a Property Condition Report, let us explain why:
Fair wear and tear
When tenants vacate a property, they often say the condition is better than when they moved in, sometimes this is the case, but sometimes it isn’t. Trying to determine what ‘fair wear and tear’ is, and what is ‘damage’ is almost impossible without a property condition report, especially when the owner, the tenant and the property manager all have different takes on the matter.
What happens when you have an issue with damage? The tenant insists the hole in the wall was already there when they moved in. You have a sneaking suspicion that the hole in the wall is from the air conditioner they installed and have since removed. It’s much easier to clarify a dispute such as this when you have a property condition report you can refer to.
The PCR photos from before they moved in show a perfectly polished concrete floor, but when it comes time for property handover, it’s discovered that carpet has been glued dow to the floor with adhesive. Lucky for you, you have a property condition report signed and dated by the tenant so there is no dispute about the condition of the floor upon lease commencement.
Maybe you had an expensive fit-out or maybe you had premium, platinum gold light fittings that are now suddenly cheap aluminium ones. If you want to ensure that the fixtures and fittings are the same when your tenant vacates, you’re in a much better position with an accurate Commercial Property Condition Report to reflect that.
You might remember your building having a beautiful misty rainforest at the entrance, complete with butterflies floating by each time anybody entered or exited the building… and then you turn up at the end of the lease to a few gum trees and some fake turf. One quick check of the Property Condition Report solves all your problems.
You would be surprised at what some people believe ‘paint all painted surfaces’ means. Sometimes, tenants interpret it as… paint one white coat over a bright red wall, resulting in flamingo pink. Having a PCR means you can specify what paint colour the walls were at the commencement of the lease and, thus, what they should be at the end of the lease.
This one seems pretty simple: If you put a sign up during the tenancy, then please take it down.
But what happens when the tenant removes signage and it peels an old layer of paint off the building, which looks awful and reveals a previous business name or logo? You could argue that they need to paint all painted surfaces or you could resolve any possible disputes by referring to the Property Condition Report.
Good working order
You are 100% certain that the reticulation all worked when they moved in. You believe the tenant has neglected their obligations of maintaining the system and now the fittings have all dried up and split. If the PCR states it was working, then the tenant needs to roll their sleeves up and get it working.
Sometimes it’s as simple as wanting to save time. A Property Condition Report saves time because the condition at the beginning of the lease was agreed upon between all parties prior to commencement. Everyone knows that time equals money, so avoid costly and time-consuming disputes by adequately documenting your commercial premises condition prior to a tenant’s lease commencing.