Financing Assessment

When writing a new mortgage, or renewing an existing mortgage, lenders will often require their clients to obtain certain reports as part of the financing.

Commonly this involves providing to the lender a report on the physical condition of the property, a Phase I Environmental Site Assessment, and potentially other reports.

There will be different requirements for these reports, depending upon the lender. Most lenders are aware of the ASTM Standard E2018 for Property Condition Assessments and thus require the reports meet this standard as a minimum. However, there may be variances to the ASTM standard that lenders require, which could include, for example, a longer timeframe for considering capital replacements. The ASTM standard requires cost estimates be provided for repairs likely to exceed $3,000 within the next two years.

Some lenders will require the timeframe for planning capital replacements be extended to ten years or sometimes the term of the mortgage or the term of the mortgage plus two years. Additionally, lenders may require a somewhat higher cost threshold for cost estimating in the report. The ASTM threshold of $3,000 may be too low, and a threshold of $5,000 or $10,000 will sometimes be requested.

Through CDW Engineering’s relationships with Environmental consultants, we are capable of providing Phase I, II and III Environmental Site Assessments as part of our Property Condition Assessment, so that both requirements can be met for the lender through one point of contact.

Often when the Property Condition Assessment (PCA) or Environmental Site Assessment (ESA) is required by the lender, the lender will also require a reliance letter be provided in their favour. The reliance letter allows that the lender can rely on the report as if it was addressed to them. This provides added protection for the lenders, knowing that the engineering company will stand behind their reports. CDW Engineering always provides PCA reliance letters for lenders of our clients, free of charge.

At CDW Engineering we also know the importance of our clients selecting an engineering firm that is known to their lender and on their list of “approved” service providers. To that extent, we actively seek to ensure we are on all approved lists for the major lenders.

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