Inspection Tips and Tools For Commercial Investment Property

When you inspect a commercial, retail or industrial property, it is the physical aspects of the property that should be well explored and documented. These matters below are some of the key issues for you to review before you complete the property listing or promotion.
1. Tenant compliance to physical building use: The tenants to a building may be obliged to undertake compliance to the way in which they use the building. Such matters will be detailed in the lease. You should read the leases in this regard to identify these things.
2. Antennas and aerials: Some buildings feature communication antennas and aerials. In the first instance these should have been approved by the landlord and in some circumstances the local planning authority. The antenna or aerial installation will have been made on the approved structures with supporting plans and documentation together also with access restrictions and risk signage to prevent people in the area being exposed to radio frequency radiation. You need to know that these things have been correctly handled.
3. Asbestos: It is common knowledge that asbestos is a hazardous building material that still exists in buildings constructed prior to 1990. From that time onwards, it was largely avoided and prohibited as a construction material in most buildings. Originally it was used as an insulation material in areas including electrical switchboards and also on the beams and columns of the building structure as a fire resistant material. It is therefore quite possible that you will sell or lease a building in which asbestos is still located. In your town or city there will be legislation rules and regulations that apply to the existence of asbestos. It is necessary that you get information from the building owner regards compliance to Legislation in this regard.
4. Asset replacement value: With commercial real estate properties, it is common for regular valuations to be undertaken by the building owner for insurance purposes regards asset replacement. This type of valuation would be applicable in the event of a fire or building disaster. You can also get building replacement values from information sheets provided by local quantity surveyors. You can usually obtain these from the internet. Importantly the construction costs and replacement value need to be applicable to your location given the costs of sourcing the construction materials and the labour.
5. Building Code Compliance: When buildings are first constructed they are done so to the current building code. As time progresses the building code changes and it is sometimes necessary for existing buildings to be upgraded to current code. A good example of this is the need for disabled access to buildings and internal disabled facilities. When you inspect and list a building you should identify if any such notices under the building code currently exist. A note of caution here; when a building is put through a major refurbishment, the planning authority may regard the refurbishment activity as a trigger for a code compliance upgrade. This can be a large cost. A quantity surveyor is the best person to consult on costs of this nature.
6. Floor and site surveys: When working with investment properties it is the internal lettable space that is of prime importance to the generation of rental and occupancy. All the leases for the tenants will be linked to the survey plans and the net lettable area therein. For this reason you should ask to see the survey plans for the building and the lettable space. You need to know that they are accurate and up to date at the time of sale or lease. Part of this process is to inspect the property with the plans so that you can identify any discrepancies. In all cases of error or concern with the plans you should get a building surveyor to give assistance and guidance.
7. As Built Drawings: Every building has a set of plans that were approved for the building to be constructed. They are a great source of information and cover, structural, hydraulic, electrical, mechanical, and lighting layouts. They are an excellent source of information on which you can base your leasing strategies.
8. Building approvals and permits: Does the building still comply with the original building permit issued by the building authority? Most particularly does the use of the property still comply with the approval as granted? It pays to get a copy of the current building approval when possible because a wise purchaser or tenant will want to see it.
9. BMU: This stands for the 'building maintenance unit' and is likely to exist in multi level buildings. The BMU is the device that hangs over the side of the building to clean the exterior and the windows at different times of the year. Importantly the BMU has to be safety compliant and also approved for use. When you know that the building has a BMU, it is wise to ask about its use and approvals.
10. Certificates of Occupancy: When a building is first constructed it is inspected and certified for occupancy. The certificate of occupancy is granted by the local building approval authority. From that point onward the occupancy of the building must comply with the approval guidelines. It is possible that the certificate of occupancy can be withdrawn at any time if the building is deemed unsafe or has been damaged. It is therefore something that you would question if doubts about the building exist. In such circumstances get a copy of the certificate of occupancy.
11. Development Approval: When property development is a consideration on the property, seek copy of any existing development approvals. They will stipulate the type of development that has been approved, the elements needed to comply with the approval, and the time line. Properties with existing development approvals may be attractive to purchasers that want to undertake new construction and property developments. You will also need to know if the development approval is transferable with the property to a new owner.
12. Disability and Discrimination Notices: Whilst the commercial property is simply a building constructed at a certain point in time, it is possible that it does not now comply with the current disability access codes and access provisions for buildings of that type. You need to know if any orders have been applied to the building by the building authority for compliance to new disability codes. If any orders exist, it is likely that they will have to be discharged prior to any building sale or lease.
13. Electrical Services: All electrical services in the commercial property must comply with current standards of electrical installation and maintenance. In such circumstances a contractor will normally be undertaking inspections and maintaining a log book for this purpose. If in doubt (and particularly with older buildings), call in an engineer to advise. Thermal scanning of switchboards in older buildings is a good practical processs to identify if matters of breakdown and heat could exist.
14. Electromagnetic Radiation (EMR): In some properties EMR can be generated from plant and machinery (such as the power feed for lifts or mobile antennas on the roof of the building). This then becomes a safety issue for people on site and also will be notable in the poor or erratic performance of sensitive electrical devices such as computers. When this problem is noted it is necessary to involve engineers to advise you. It is also common for barriers to be installed in the area that is involved in EMR.
15. Environmental Risks: In most locations there will be a register of contaminated sites and properties that do not comply with the environmental guidelines. Ask about this when looking at new properties. The most common issues in this regard are tanks in the basement that were used to store heating oil or diesel. They may be now redundant but they are regarded as an environmental risk and will need to be remediated.
16. Essential Services Certification and Compliance: All buildings need to be compliant with fire safety regulations. This can include, sprinklers, smoke detectors, smoke dampers, exit routes and signage, evacuation plans, fire hoses and hydrants, and the list goes on. Importantly all of these essential services systems in a building are regularly checked for compliance by qualified tradespeople. The results of the regular tests are maintained in log books on site. It is wise to question the compliance and checking process. It is something that can hold up sale and settlement.
17. Facade and Cladding: Given the large nature of commercial buildings, it is common for the exterior of the property to sometimes leak or fail. Deterioration is also an issue in the older properties. Whilst you can do your own visual inspections you are not an expert in building construction, and therefore it is sometimes necessary to call in an engineer to give qualified comment and guidance. The integrity of the building fabric will be of concern to the purchaser. In the case of older rendered buildings it is common for rainwater to penetrate cracks in the facade or walls, and cause the render or the concrete to fall away. This process is called 'spalling' and if noted will require engineer comment. It is regarded as a risk to the public and people on the grounds that are accessing the property.
18. Fire protection systems and compliance: Many buyers of a property will want to ensure that the property does comply with safety codes for building occupancy. Part of that will be formalised and operational systems such as building evacuation plans. It pays to ask the seller of a property as to their establishment of the evacuation plans and who is controlling the regular tenant drills and practices. This is highly important in a building with multiple occupants. In such circumstances the landlord is responsible for establishment of the plan and its integration to the tenant's occupation. The lease for each tenant will also refer to their involvement with the fire safety systems and evacuation processes.
19. Geo Technical Surveys: This will be more relevant with land and development sites given that the property and building is still to be established or redeveloped. Has the property had such surveys undertaken? If so what is the status of the survey and the report? If a property is located in an area that appears unstable or if it is on sloping or rocky land, the report will be important to the future of the property. The geo technical report can help with the understanding of construction costs and strategies.
20. Historic site listing: If the building or the property is listed on a register of historic sites then you need to know what this means to the future of the property. Restrictions and limitations can be imposed on future property changes because of the heritage listing. This will add to the development costs and approval processes. If in doubt consult with the local planning approvals authority. If you have a property that is so affected or listed, then you will need an expert such as an architect to assist with the future considerations and costs for the property.
21. Hydraulic services: This is the plumbing and drainage systems for the property. You can ask for the 'as built drawings' of the property as part of your inspection process to understand how these systems integrate into the building and service the tenants. Usually the hydraulic systems will be centred on the core of the building. If a tenant wants to connect tea rooms and kitchens to the system then it is an engineering issue and needs the landlords approval to the process.
22. Indoor air quality: For some older buildings this can be a concern for occupancy. Properties located adjacent to major traffic corridors will also be high on the list when it comes to air quality concerns. Today tenants are very aware of the 'sick building' syndrome and its impact on the workforce both physically and legally. Reports can be obtained from the air conditioning contractor to assist with this problem, and if greater concerns are identified then engineers can be sourced.
23. Lead paint risk: Older buildings may contain surfaces that are coated in lead based paint. This has been proven to be a health concern in occupancy and will deter tenants. When in doubt see expert opinion from an engineer.
24. Legionella health risk and safety compliance: Building owners must comply with the local health regulations regards the health and function of the air conditioning system. Most particularly the issue of legionella is of more concern when there is a 'cooling tower' that functions in the air conditioning system. It is the 'cooling tower' that can become infected with the bacteria and then spread the infection through the building. Larger buildings will commonly contain 'cooling towers' as that is the accepted way to achieve economical function of the air conditioning system. The air conditioning consultant that maintains the air conditioning system for the building owner should have this health risk in check. If in doubt ask the questions. When a property owner self manages a building it is possible that they will either not have the knowledge to do so correctly, or they will cut corners as they do not want to spend money. This is a trigger to ask questions in the property sale.
25. Plant Life cycle: In older buildings the economical and functional life cycle of the plant in the building will become an issue. It can be a costly concern for the building to operate into the future. Buyers will need to assess the stability and function of the plant in the building. It pays to get an engineer's report of the existing plant and machinery before you go to sale when transacting older buildings.
26. Maintenance contracts: Every property will have a selection of maintenance contracts and systems underway. Some of these will pass through settlement to the new property owner as the item under contract involves the amortisation of costly machinery and repairs. A good example here is the lift maintenance contract in the building. Cleaning contracts are also large expense contracts in major properties. As part of the property listing process it pays to understand the contracts that could fall into this category of ongoing cost to the buyer. If they do exist, then get a copy of the contract(s) and review it (them) for details and impact on the sale.
27. Mechanical services risks: The larger the property, the larger the risks when it comes to the mechanical services function and compliance to current operational codes. In the sale of larger properties it is likely that you will need an engineer's report on the mechanical services before you move towards sale. The engineers know what compliance issues exist and how they should be assessed. Have the report available to provide to serious and qualified buyers if they ask any pertinent questions.
28. Nickel Sulphide Inclusion: If you are selling buildings with a lot of exterior glass it is possible that you will have heard of this problem or seen something about it elsewhere. Most particularly nickel sulphide (NS) is an impurity of the glass manufacturing process. NS when it exists in glass it will likely cause the glass to break within 5 years or so of manufacture and this is particularly the case if the glass is on the exterior of the building where it is under the stresses of daily heat and cooling. Given that architects like to use extensive glass on the outside of buildings, the problem of NS breakage is common. If the building is multi storey then you can have a risk event to members of the public that pass the building at street level. If you sell a building with a history of NS then you will need an expert to get involved in a detailed property report on the glass involved and installed in the building.
29. Noise emissions and risks: When working with any commercial property, the problem of noise emissions should be considered. Noise can emanate from the subject property or even neighbouring properties can also create the problem. This will obviously affect the ability to let the property and may create legal action or controversy whilst the property is occupied. Should the tenants in the property be the source of the noise then have the lease document create controls on the tenant in that regard. If you are selling a property with noisy tenants then you should review the lease documentation for similar protection to the purchaser or property owner. Industrial properties are most particularly the properties of concern in this category.
30. Occupational health and safety: The local building code will require compliance to occupational health and safety rules and regulations. It is appropriate to ask the building owner to identify any matters of noncompliance or irregularity. If in doubt seek the assistance of a building engineer or property inspector that is familiar with the health and safety codes in the building type that you are handling.
31. Machinery risk and unsafe workspaces: This is normally the concern of the tenants that occupy the premises given the way they install and use the machinery on the property as part of their business operations. There are however situations where the landlord may also have responsibility and this regard. This can be in areas which create risk or injury to people. It may be enclosed spaces where people can enter and be accidentally locked away then unable to escape. It can also be areas of danger such as radio frequency exposure from antennas on the roof of the building.
32. Ozone depleting substances: This will be in the form of gases that damage the environment. Older air conditioning plant can be affected by the problem. Building owners should have the plant maintained within current plant and machinery codes to control the threat. A report from an engineer will assist here.
33. Polychlorinated biphenyls: PCB's are a group of manufactured organic chemicals that contain chlorinated chemicals (known as congeners). Concentrated PCBs are either oily liquids or solids and are colourless to light yellow in colour. They have no known smell or taste. There are no known natural sources of PCBs. PCB's are residual contaminants from industrial processes and remain in the soil and on the property for many years unless correctly remediated. Given that industrial property was usually the source or storage of PCB's, it still remains a problem today for real estate agents and brokers as they sell older properties. PCBs were originally used extensively in industry as they are a good insulating material. They have been used widely as coolants and lubricants in transformers, capacitors, and other electrical equipment. The manufacture of PCBs stopped generally around 1977 because of evidence that they build up in the environment and cause harmful health effects. Products containing PCBs are old fluorescent lighting fixtures, electrical appliances containing PCB capacitors, old microscope oil, and hydraulic fluids. During the time that PCBs were manufactured, there were often no effective controls on disposal.
34. Plant and equipment lists: When selling a commercial property, it is necessary to itemise the plant and the equipment across the property. This would normally be done in conjunction with the building engineer suitably skilled in the process. If your property is complex and large, it is a wise move to get this list creation process underway early.
35. Registration of plant and equipment: Some plant and equipment within the building is required to be registered with the local authorities. This is generally because that plant and equipment is regarded as a threat to the environment or to the public at large. The most common listings of plant and equipment are storage devices. The authorities like to know what is being stored on the property and where the storage devices are located. It can also be the case that the storage devices are suitably certified and registered the each year for compliance to matters of structural integrity. If any plant and machinery is certified in this regard, you should seek a copy of the latest certificates of registration.
36. Boundary survey: If the boundary of the property shows irregularity or is not clearly defined, then it is appropriate to get a surveyor to peg the boundary points and provide a plan of the site. Real estate agents and brokers should not give any guarantees as to the locations of the boundary of the property. If the buyer requires this information, then get a surveyor involved for the buyer's satisfaction.
37. Standby generator: In larger buildings it is common for standby generators to support essential power circuits in the building. This does not mean that full power is supported to the tenants in the event of a power outage. If the building has a standby generator, it is appropriate to ask for clarity on what circuits of energy are supported by the generator. This information should be supplied to tenants in the building and any purchasers of the property. It is likely that the leases for tenants will make reference to the standby generator and the way it operates. If the building operates the standby generator to support 100% building demand by then it is usually tested annually in this regard. Certificates of compliance can be sourced. In large shopping centres it is common for standby generators to supply 100% power for a period of time (usually 30 minutes) in the event of a power outage. This allows the tenants to safely shut down their business and the occupants of the building to be correctly evacuated at the time of the major power outage.
38. Flooding risks and storm water: The local environment can present flooding risks. This can be identified from the location of local creeks and rivers, the coastline, and the levels and slope of land across the property. When in doubt, seek the assistance of property surveyors to clarify the risk of flooding locally and to the property. If the risk of flooding does exist and is known to all parties, it is necessary to apply restraints on occupancy so that the environment and the property are not damaged. These restraints will be reflected in the leases for the property. In such a situation, you will need to review the leases prior to any sale.
39. Structural risks: Every constructed property has the potential for structural risks. The older the property, the more likely this is to occur. The exterior facades of buildings are a common culprit here. The purchaser of a building will not want to assume or acquire structural risks, for this reason you will need to get engineers' reports prior to moving to sale if issues are known or have been experienced on the property. It may also be necessary for the landlord to remediate the structural risk prior to marketing a property.
40. Synthetic mineral fibre: Most particularly this will be the installation or existence of Fibreglass and similar manmade fibres. Whilst this may not necessarily be a risk to the occupants of the building, it should be understood and documented by engineers to the building.
41. Trade waste: The tenants to the property may very well produce hazardous trade waste as part of their business. If this is the case, you will need to identify the controls and processes that the tenant uses to comply with property usage. Certification and regulation regards the hazardous trade waste will be an ongoing matter to which the tenant must comply. It is likely that the leases to the property will impose restrictions and obligations on the tenant in this regard. When in doubt, read the leases to check what is required of the tenant.
42. Traffic management: The property could be located on a major or minor road which has restrictions regards traffic access. This can apply to both the time of access and the points of access. If the tenant or the owner of the property requires extensive deliveries, this can be an issue. When in doubt, consult the local planning authority and highways commission for details of access rules and regulations. Also enquire as to the impact of any rights of way and easements which may apply to the subject property.
43. Underground storage tanks: Whilst we have mentioned this elsewhere, the existence of underground storage tanks is regarded as a hazard to the environment. These tanks are usually certified and regularly inspected. Awareness and disclosure of the tanks existence is imperative.
44. Vertical transport compliance: In multilevel buildings, vertical transport will be achieved through mechanical lifts or escalators. These mechanical services are regulated as to safety and operation. Annual certification and regular contractor maintenance will ensure compliance. Reference to the contractor involved will allow you to cover this issue and ensure compliance prior to sale.
45. Building warranties: When a building is newly constructed, or plant and machinery is newly installed, or tenant fitout is newly installed, the works involved will usually have an existing warranty for a period of time. If these warranties exist, they should transfer to the new owner of the building at the time of sale. Your job is to enquire as to the existence of any warranties as you move towards sale.
46. Zoning of the property and itcompliance: The property will be located in a zone detailed in the local development plans. Importantly, the property and its usage must comply with the zoning. If the property is a non-conforming or illegal usage to the existing zoning, then this should be detailed, advised, and acknowledged by all parties. As to how the contract is designed for such a sale, is up to the solicitors for both parties. In most circumstances of this type, special conditions are constructed which explain the intentions of the parties involved.
##Need More Help?##
John Highman is a prominent investment real estate speaker and coach that helps real estate agents and real estate brokers globally to improve their commercial real estate market share and close more sales and leasing deals. He himself is a successful real estate agent that has specialised in commercial, industrial, and retail real estate of all types for over 30+ years.
Whether you specialise in real estate sales, leasing, or investment, John has the tools that can help you and your office succeed in your market.
Today John Highman gives workshops and keynotes to real estate agents and brokers globally on how to be professionally better than your competition in any market and drive more of the right listings and commissions.
Join John Highman's global community of commercial real estate agents and brokers. The community can be accessed at http://www.commercial-realestate-training.com
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Inspection Tips and Tools For Commercial Investment Property

When you inspect a commercial, retail or industrial property, it is the physical aspects of the property that should be well explored and documented. These matters below are some of the key issues for you to review before you complete the property listing or promotion.

1. Tenant compliance to physical building use: The tenants to a building may be obliged to undertake compliance to the way in which they use the building. Such matters will be detailed in the lease. You should read the leases in this regard to identify these things.
2. Antennas and aerials: Some buildings feature communication antennas and aerials. In the first instance these should have been approved by the landlord and in some circumstances the local planning authority. The antenna or aerial installation will have been made on the approved structures with supporting plans and documentation together also with access restrictions and risk signage to prevent people in the area being exposed to radio frequency radiation. You need to know that these things have been correctly handled.
3. Asbestos: It is common knowledge that asbestos is a hazardous building material that still exists in buildings constructed prior to 1990. From that time onwards, it was largely avoided and prohibited as a construction material in most buildings. Originally it was used as an insulation material in areas including electrical switchboards and also on the beams and columns of the building structure as a fire resistant material. It is therefore quite possible that you will sell or lease a building in which asbestos is still located. In your town or city there will be legislation rules and regulations that apply to the existence of asbestos. It is necessary that you get information from the building owner regards compliance to Legislation in this regard.
4. Asset replacement value: With commercial real estate properties, it is common for regular valuations to be undertaken by the building owner for insurance purposes regards asset replacement. This type of valuation would be applicable in the event of a fire or building disaster. You can also get building replacement values from information sheets provided by local quantity surveyors. You can usually obtain these from the internet. Importantly the construction costs and replacement value need to be applicable to your location given the costs of sourcing the construction materials and the labour.
5. Building Code Compliance: When buildings are first constructed they are done so to the current building code. As time progresses the building code changes and it is sometimes necessary for existing buildings to be upgraded to current code. A good example of this is the need for disabled access to buildings and internal disabled facilities. When you inspect and list a building you should identify if any such notices under the building code currently exist. A note of caution here; when a building is put through a major refurbishment, the planning authority may regard the refurbishment activity as a trigger for a code compliance upgrade. This can be a large cost. A quantity surveyor is the best person to consult on costs of this nature.
6. Floor and site surveys: When working with investment properties it is the internal lettable space that is of prime importance to the generation of rental and occupancy. All the leases for the tenants will be linked to the survey plans and the net lettable area therein. For this reason you should ask to see the survey plans for the building and the lettable space. You need to know that they are accurate and up to date at the time of sale or lease. Part of this process is to inspect the property with the plans so that you can identify any discrepancies. In all cases of error or concern with the plans you should get a building surveyor to give assistance and guidance.
7. As Built Drawings: Every building has a set of plans that were approved for the building to be constructed. They are a great source of information and cover, structural, hydraulic, electrical, mechanical, and lighting layouts. They are an excellent source of information on which you can base your leasing strategies.
8. Building approvals and permits: Does the building still comply with the original building permit issued by the building authority? Most particularly does the use of the property still comply with the approval as granted? It pays to get a copy of the current building approval when possible because a wise purchaser or tenant will want to see it.
9. BMU: This stands for the 'building maintenance unit' and is likely to exist in multi level buildings. The BMU is the device that hangs over the side of the building to clean the exterior and the windows at different times of the year. Importantly the BMU has to be safety compliant and also approved for use. When you know that the building has a BMU, it is wise to ask about its use and approvals.
10. Certificates of Occupancy: When a building is first constructed it is inspected and certified for occupancy. The certificate of occupancy is granted by the local building approval authority. From that point onward the occupancy of the building must comply with the approval guidelines. It is possible that the certificate of occupancy can be withdrawn at any time if the building is deemed unsafe or has been damaged. It is therefore something that you would question if doubts about the building exist. In such circumstances get a copy of the certificate of occupancy.
11. Development Approval: When property development is a consideration on the property, seek copy of any existing development approvals. They will stipulate the type of development that has been approved, the elements needed to comply with the approval, and the time line. Properties with existing development approvals may be attractive to purchasers that want to undertake new construction and property developments. You will also need to know if the development approval is transferable with the property to a new owner.
12. Disability and Discrimination Notices: Whilst the commercial property is simply a building constructed at a certain point in time, it is possible that it does not now comply with the current disability access codes and access provisions for buildings of that type. You need to know if any orders have been applied to the building by the building authority for compliance to new disability codes. If any orders exist, it is likely that they will have to be discharged prior to any building sale or lease.
13. Electrical Services: All electrical services in the commercial property must comply with current standards of electrical installation and maintenance. In such circumstances a contractor will normally be undertaking inspections and maintaining a log book for this purpose. If in doubt (and particularly with older buildings), call in an engineer to advise. Thermal scanning of switchboards in older buildings is a good practical processs to identify if matters of breakdown and heat could exist.
14. Electromagnetic Radiation (EMR): In some properties EMR can be generated from plant and machinery (such as the power feed for lifts or mobile antennas on the roof of the building). This then becomes a safety issue for people on site and also will be notable in the poor or erratic performance of sensitive electrical devices such as computers. When this problem is noted it is necessary to involve engineers to advise you. It is also common for barriers to be installed in the area that is involved in EMR.
15. Environmental Risks: In most locations there will be a register of contaminated sites and properties that do not comply with the environmental guidelines. Ask about this when looking at new properties. The most common issues in this regard are tanks in the basement that were used to store heating oil or diesel. They may be now redundant but they are regarded as an environmental risk and will need to be remediated.
16. Essential Services Certification and Compliance: All buildings need to be compliant with fire safety regulations. This can include, sprinklers, smoke detectors, smoke dampers, exit routes and signage, evacuation plans, fire hoses and hydrants, and the list goes on. Importantly all of these essential services systems in a building are regularly checked for compliance by qualified tradespeople. The results of the regular tests are maintained in log books on site. It is wise to question the compliance and checking process. It is something that can hold up sale and settlement.
17. Facade and Cladding: Given the large nature of commercial buildings, it is common for the exterior of the property to sometimes leak or fail. Deterioration is also an issue in the older properties. Whilst you can do your own visual inspections you are not an expert in building construction, and therefore it is sometimes necessary to call in an engineer to give qualified comment and guidance. The integrity of the building fabric will be of concern to the purchaser. In the case of older rendered buildings it is common for rainwater to penetrate cracks in the facade or walls, and cause the render or the concrete to fall away. This process is called 'spalling' and if noted will require engineer comment. It is regarded as a risk to the public and people on the grounds that are accessing the property.
18. Fire protection systems and compliance: Many buyers of a property will want to ensure that the property does comply with safety codes for building occupancy. Part of that will be formalised and operational systems such as building evacuation plans. It pays to ask the seller of a property as to their establishment of the evacuation plans and who is controlling the regular tenant drills and practices. This is highly important in a building with multiple occupants. In such circumstances the landlord is responsible for establishment of the plan and its integration to the tenant's occupation. The lease for each tenant will also refer to their involvement with the fire safety systems and evacuation processes.
19. Geo Technical Surveys: This will be more relevant with land and development sites given that the property and building is still to be established or redeveloped. Has the property had such surveys undertaken? If so what is the status of the survey and the report? If a property is located in an area that appears unstable or if it is on sloping or rocky land, the report will be important to the future of the property. The geo technical report can help with the understanding of construction costs and strategies.
20. Historic site listing: If the building or the property is listed on a register of historic sites then you need to know what this means to the future of the property. Restrictions and limitations can be imposed on future property changes because of the heritage listing. This will add to the development costs and approval processes. If in doubt consult with the local planning approvals authority. If you have a property that is so affected or listed, then you will need an expert such as an architect to assist with the future considerations and costs for the property.
21. Hydraulic services: This is the plumbing and drainage systems for the property. You can ask for the 'as built drawings' of the property as part of your inspection process to understand how these systems integrate into the building and service the tenants. Usually the hydraulic systems will be centred on the core of the building. If a tenant wants to connect tea rooms and kitchens to the system then it is an engineering issue and needs the landlords approval to the process.
22. Indoor air quality: For some older buildings this can be a concern for occupancy. Properties located adjacent to major traffic corridors will also be high on the list when it comes to air quality concerns. Today tenants are very aware of the 'sick building' syndrome and its impact on the workforce both physically and legally. Reports can be obtained from the air conditioning contractor to assist with this problem, and if greater concerns are identified then engineers can be sourced.
23. Lead paint risk: Older buildings may contain surfaces that are coated in lead based paint. This has been proven to be a health concern in occupancy and will deter tenants. When in doubt see expert opinion from an engineer.
24. Legionella health risk and safety compliance: Building owners must comply with the local health regulations regards the health and function of the air conditioning system. Most particularly the issue of legionella is of more concern when there is a 'cooling tower' that functions in the air conditioning system. It is the 'cooling tower' that can become infected with the bacteria and then spread the infection through the building. Larger buildings will commonly contain 'cooling towers' as that is the accepted way to achieve economical function of the air conditioning system. The air conditioning consultant that maintains the air conditioning system for the building owner should have this health risk in check. If in doubt ask the questions. When a property owner self manages a building it is possible that they will either not have the knowledge to do so correctly, or they will cut corners as they do not want to spend money. This is a trigger to ask questions in the property sale.
25. Plant Life cycle: In older buildings the economical and functional life cycle of the plant in the building will become an issue. It can be a costly concern for the building to operate into the future. Buyers will need to assess the stability and function of the plant in the building. It pays to get an engineer's report of the existing plant and machinery before you go to sale when transacting older buildings.
26. Maintenance contracts: Every property will have a selection of maintenance contracts and systems underway. Some of these will pass through settlement to the new property owner as the item under contract involves the amortisation of costly machinery and repairs. A good example here is the lift maintenance contract in the building. Cleaning contracts are also large expense contracts in major properties. As part of the property listing process it pays to understand the contracts that could fall into this category of ongoing cost to the buyer. If they do exist, then get a copy of the contract(s) and review it (them) for details and impact on the sale.
27. Mechanical services risks: The larger the property, the larger the risks when it comes to the mechanical services function and compliance to current operational codes. In the sale of larger properties it is likely that you will need an engineer's report on the mechanical services before you move towards sale. The engineers know what compliance issues exist and how they should be assessed. Have the report available to provide to serious and qualified buyers if they ask any pertinent questions.
28. Nickel Sulphide Inclusion: If you are selling buildings with a lot of exterior glass it is possible that you will have heard of this problem or seen something about it elsewhere. Most particularly nickel sulphide (NS) is an impurity of the glass manufacturing process. NS when it exists in glass it will likely cause the glass to break within 5 years or so of manufacture and this is particularly the case if the glass is on the exterior of the building where it is under the stresses of daily heat and cooling. Given that architects like to use extensive glass on the outside of buildings, the problem of NS breakage is common. If the building is multi storey then you can have a risk event to members of the public that pass the building at street level. If you sell a building with a history of NS then you will need an expert to get involved in a detailed property report on the glass involved and installed in the building.
29. Noise emissions and risks: When working with any commercial property, the problem of noise emissions should be considered. Noise can emanate from the subject property or even neighbouring properties can also create the problem. This will obviously affect the ability to let the property and may create legal action or controversy whilst the property is occupied. Should the tenants in the property be the source of the noise then have the lease document create controls on the tenant in that regard. If you are selling a property with noisy tenants then you should review the lease documentation for similar protection to the purchaser or property owner. Industrial properties are most particularly the properties of concern in this category.
30. Occupational health and safety: The local building code will require compliance to occupational health and safety rules and regulations. It is appropriate to ask the building owner to identify any matters of noncompliance or irregularity. If in doubt seek the assistance of a building engineer or property inspector that is familiar with the health and safety codes in the building type that you are handling.
31. Machinery risk and unsafe workspaces: This is normally the concern of the tenants that occupy the premises given the way they install and use the machinery on the property as part of their business operations. There are however situations where the landlord may also have responsibility and this regard. This can be in areas which create risk or injury to people. It may be enclosed spaces where people can enter and be accidentally locked away then unable to escape. It can also be areas of danger such as radio frequency exposure from antennas on the roof of the building.
32. Ozone depleting substances: This will be in the form of gases that damage the environment. Older air conditioning plant can be affected by the problem. Building owners should have the plant maintained within current plant and machinery codes to control the threat. A report from an engineer will assist here.
33. Polychlorinated biphenyls: PCB's are a group of manufactured organic chemicals that contain chlorinated chemicals (known as congeners). Concentrated PCBs are either oily liquids or solids and are colourless to light yellow in colour. They have no known smell or taste. There are no known natural sources of PCBs. PCB's are residual contaminants from industrial processes and remain in the soil and on the property for many years unless correctly remediated. Given that industrial property was usually the source or storage of PCB's, it still remains a problem today for real estate agents and brokers as they sell older properties. PCBs were originally used extensively in industry as they are a good insulating material. They have been used widely as coolants and lubricants in transformers, capacitors, and other electrical equipment. The manufacture of PCBs stopped generally around 1977 because of evidence that they build up in the environment and cause harmful health effects. Products containing PCBs are old fluorescent lighting fixtures, electrical appliances containing PCB capacitors, old microscope oil, and hydraulic fluids. During the time that PCBs were manufactured, there were often no effective controls on disposal.
34. Plant and equipment lists: When selling a commercial property, it is necessary to itemise the plant and the equipment across the property. This would normally be done in conjunction with the building engineer suitably skilled in the process. If your property is complex and large, it is a wise move to get this list creation process underway early.
35. Registration of plant and equipment: Some plant and equipment within the building is required to be registered with the local authorities. This is generally because that plant and equipment is regarded as a threat to the environment or to the public at large. The most common listings of plant and equipment are storage devices. The authorities like to know what is being stored on the property and where the storage devices are located. It can also be the case that the storage devices are suitably certified and registered the each year for compliance to matters of structural integrity. If any plant and machinery is certified in this regard, you should seek a copy of the latest certificates of registration.
36. Boundary survey: If the boundary of the property shows irregularity or is not clearly defined, then it is appropriate to get a surveyor to peg the boundary points and provide a plan of the site. Real estate agents and brokers should not give any guarantees as to the locations of the boundary of the property. If the buyer requires this information, then get a surveyor involved for the buyer's satisfaction.
37. Standby generator: In larger buildings it is common for standby generators to support essential power circuits in the building. This does not mean that full power is supported to the tenants in the event of a power outage. If the building has a standby generator, it is appropriate to ask for clarity on what circuits of energy are supported by the generator. This information should be supplied to tenants in the building and any purchasers of the property. It is likely that the leases for tenants will make reference to the standby generator and the way it operates. If the building operates the standby generator to support 100% building demand by then it is usually tested annually in this regard. Certificates of compliance can be sourced. In large shopping centres it is common for standby generators to supply 100% power for a period of time (usually 30 minutes) in the event of a power outage. This allows the tenants to safely shut down their business and the occupants of the building to be correctly evacuated at the time of the major power outage.
38. Flooding risks and storm water: The local environment can present flooding risks. This can be identified from the location of local creeks and rivers, the coastline, and the levels and slope of land across the property. When in doubt, seek the assistance of property surveyors to clarify the risk of flooding locally and to the property. If the risk of flooding does exist and is known to all parties, it is necessary to apply restraints on occupancy so that the environment and the property are not damaged. These restraints will be reflected in the leases for the property. In such a situation, you will need to review the leases prior to any sale.
39. Structural risks: Every constructed property has the potential for structural risks. The older the property, the more likely this is to occur. The exterior facades of buildings are a common culprit here. The purchaser of a building will not want to assume or acquire structural risks, for this reason you will need to get engineers' reports prior to moving to sale if issues are known or have been experienced on the property. It may also be necessary for the landlord to remediate the structural risk prior to marketing a property.
40. Synthetic mineral fibre: Most particularly this will be the installation or existence of Fibreglass and similar manmade fibres. Whilst this may not necessarily be a risk to the occupants of the building, it should be understood and documented by engineers to the building.
41. Trade waste: The tenants to the property may very well produce hazardous trade waste as part of their business. If this is the case, you will need to identify the controls and processes that the tenant uses to comply with property usage. Certification and regulation regards the hazardous trade waste will be an ongoing matter to which the tenant must comply. It is likely that the leases to the property will impose restrictions and obligations on the tenant in this regard. When in doubt, read the leases to check what is required of the tenant.
42. Traffic management: The property could be located on a major or minor road which has restrictions regards traffic access. This can apply to both the time of access and the points of access. If the tenant or the owner of the property requires extensive deliveries, this can be an issue. When in doubt, consult the local planning authority and highways commission for details of access rules and regulations. Also enquire as to the impact of any rights of way and easements which may apply to the subject property.
43. Underground storage tanks: Whilst we have mentioned this elsewhere, the existence of underground storage tanks is regarded as a hazard to the environment. These tanks are usually certified and regularly inspected. Awareness and disclosure of the tanks existence is imperative.
44. Vertical transport compliance: In multilevel buildings, vertical transport will be achieved through mechanical lifts or escalators. These mechanical services are regulated as to safety and operation. Annual certification and regular contractor maintenance will ensure compliance. Reference to the contractor involved will allow you to cover this issue and ensure compliance prior to sale.
45. Building warranties: When a building is newly constructed, or plant and machinery is newly installed, or tenant fitout is newly installed, the works involved will usually have an existing warranty for a period of time. If these warranties exist, they should transfer to the new owner of the building at the time of sale. Your job is to enquire as to the existence of any warranties as you move towards sale.
46. Zoning of the property and itcompliance: The property will be located in a zone detailed in the local development plans. Importantly, the property and its usage must comply with the zoning. If the property is a non-conforming or illegal usage to the existing zoning, then this should be detailed, advised, and acknowledged by all parties. As to how the contract is designed for such a sale, is up to the solicitors for both parties. In most circumstances of this type, special conditions are constructed which explain the intentions of the parties involved.

##Need More Help?##

John Highman is a prominent investment real estate speaker and coach that helps real estate agents and real estate brokers globally to improve their commercial real estate market share and close more sales and leasing deals. He himself is a successful real estate agent that has specialised in commercial, industrial, and retail real estate of all types for over 30+ years.

Whether you specialise in real estate sales, leasing, or investment, John has the tools that can help you and your office succeed in your market.

Today John Highman gives workshops and keynotes to real estate agents and brokers globally on how to be professionally better than your competition in any market and drive more of the right listings and commissions.

Join John Highman's global community of commercial real estate agents and brokers. The community can be accessed at http://www.commercial-realestate-training.com

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Appealing Property Taxes for Apartment Owners


Property taxes are one of the largest line item costs incurred by apartment owners. However, many owners do not appeal effectively. Even though owners realize that property taxes can be managed and reduced through an appeal, some view taxes as an arbitrary estimate provided by the government which can't effectively be appealed. It tends to boil down to the old adage, "You can't fight city hall".

Fortunately, the property tax appeal process in Texas provides owners multiple opportunities to appeal. Handled either directly by the owner or by a property tax consultant, this process should involve an intense effort to annually appeal and minimize property taxes. Reducing the largest line item expense has a significant effect in reducing the owner's overall operating expenses. While it is not possible to entirely escape the burden of paying property taxes, it is possible to reduce taxes sharply, often by 25% to 50%.

Why some owners don't appeal

Some property owners don't appeal because they either don't understand the process, or don't understand that there is a good probability of achieving meaningful reductions in property taxes. Some owners believe that since the market value of their property exceeds the assessed value, then it is not possible to appeal and reduce the property taxes. Although appeals on unequal appraisal are relatively new, there is a clear-cut way to appeal property taxes at the administrative hearing level based on unequal appraisal. Unequal appraisal occurs when property is assessed inconsistently with neighboring properties or comparable properties. Also, some owners are reluctant to hire a property tax consultant, even though many consultants will work on a contingent fee basis, in which there is no cost to the owner unless property taxes for the current year are reduced.

Overview of appeal process

The following are the primary steps in the annual process for appealing property taxes:
· Request notice of accessed value
· File an appeal
· Prepare for hearing
. Review records
. Review market value appeal
. Review unequal appraisal appeal
· Set negotiating perimeters
· Administrative hearings
· Decide whether binding arbitration or judicial appeals are warranted
· Pay taxes timely

Requesting a notice of assessed value

Property owners have the option of requesting a notice of assessed value for their property annually. Section 25.19g of the Texas Property Tax Code provides the owner the option to request a written notice of the assessed value from the chief appraiser. Owners benefit from requesting and receiving a written notice of assessed value for each property because it ensures they have an opportunity to review the assessed value. This notice should be sent on an annual basis. The appraisal district does not have to send a notice of assessed value if the value increases by less than $1,000. However, if an owner was not satisfied with a prior year's value and the value remained the same, the appraisal district probably will not send a notice of the assessed value for the current year. In this situation, the owner might forget to protest since a notice of assessed value for the property was not received.

How to file and appeal

On or before May 31st of each year, the property owner should file an appeal for each property. However, while many owners are comfortable with an assessed value, in many cases there is a basis for appealing. Two options for appealing include:

1. unequal appraisal, and
2. market value based on data the appraisal district provides to the owner before the hearing.

You can appeal by completing the protest form provided by the appraisal district and indicating both excessive value (market value) and unequal appraisal as the basis for appeal. In addition, the property owner can simply send a notice that identifies the property, and indicates dissatisfaction with some determination of the appraisal office. The notice does not need to be on an official form, although the comptroller does provide a form for the convenience of property owners. (You can access the protest form at http://www.cutmytaxes.com .)

House Bill 201 - helpful information

House Bill 201 is the industry jargon for a property owner's option to request information the appraisal district will use at the hearing, and to receive a copy 14 days before the hearing. The name House Bill 201 is derived from the bill used to enact the law. The details for House Bill 201 are located in sections 41.461 and 41.67d of the Texas Property Tax Code. When filing a protest, the property owner should additionally request in writing that the appraisal district provide a copy of any information the appraisal district plans to introduce at the hearing. The appraisal district will typically require the property owner to come to the appraisal district office to pick up the information and charge a nominal fee, typically $0.10 per page. While the cost for House Bill 201 requests are quite low (typically $0.50 to $2.00 per property for residential and commercial) the information is invaluable in preparing for the hearing. In addition, filing a House Bill 201 request is important because it limits the information the appraisal district can present at the hearing to what was provided to the property owner two weeks before the hearing.

Preparing for the Hearing

Start by reviewing the appraisal district's information for your property for accuracy. If the appraisal district overstates either the quality or quantity of improvements, this will justify a deduction. The next step is to review the information on market value and unequal appraisal provided by the appraisal district in the House Bill 201 package. If the subject property is an income property, review the appraisal district's income analysis versus your actual income and expense statements. Consider the following areas as opportunities to rebut the appraisal district's analysis:

· Gross potential income
· Vacancy rate
· Total effective gross income, including other income
· Operating expenses
· Amount of replacement reserves
· Net operating income
· Capitalization rate
· Final market value

Many property owners and consultants start with the actual income and expense data, and use one or two of the assumptions provided by the appraisal district. However, they primarily utilize information from the actual income and expenses in preparing their own income analysis and estimate of market value for the subject property.

When comparable sales are the primary issue in determining market value, start by reviewing the comparable sales data provided by the appraisal district versus the assessed value for your property. Convert the sales prices from the appraisal district to either a per square foot or per unit basis. Then compare the sales to the per square foot or per unit assessment for your property. Sales can be helpful during the hearing.

The cost approach is not typically used in the property tax hearings except for brand new or relatively new properties. If your property is new, the appraisal district will probably want to review the cost information and you probably won't want to show it to them. In many cases, the actual cost of a property is higher than the estimate provided by the appraisal district. If this is the case, you will likely want to appeal on unequal appraisal instead of on market value. No matter how good your argument or how passionately it is expressed, the appraisal district staff and Appraisal Review Board (ARB) members tend to believe that cost equals value for new properties.

Deferred Maintenance and Functional Obsolescence

Another issue that is important for the market value appeal, and to some extent for a unequal appraisal appeal, is information on deferred maintenance and functional obsolescence. Deferred maintenance could include items such as:

· rotten wood
· peeling paint
· roof replacement
· substantial repair
· landscaping updating and other similar items

Most appraisal districts give minimal consideration to requests for adjustments based on deferred maintenance, unless the property owner provides repair costs from independent contractors. There are some exceptions where a cooperative informal appraiser or sympathetic ARB will take an owner's estimate of deferred maintenance and make adjustments based on those costs. Most appraisers and ARB members are much more inclined to make adjustments if third-party cost estimates are provided. In addition, the appraisers and many ARB members are inclined to only deduct a portion of the total cost using the argument, "we've been giving a replacement reserve allowance for this item for the past years and it'd be double-dipping to deduct the whole value off it in the current year." While this is an incorrect appraisal argument, it does tend to be the practice at many appraisal districts. The reality is, the cost of curing deferred maintenance is deducted from the offer by a prospective buyer.

Examples of functional obsolescence would be a three-bedroom apartment unit that only has one bathroom, or a two-bedroom apartment that does not have washer/dryer connections in an area where those connections are common. Another example would be an apartment that has a window air conditioner in an area where central HVAC is typical and expected.

Unequal appraisal analysis

The Texas Property Tax Code, section 41.43(b)(3), provides for appraising or appealing on unequal appraisal including ratio studies and "a reasonable number of comparable properties appropriately adjusted." Virtually all unequal appraisal appeals involve a reasonable number of comparables that are appropriately adjusted. Comparables are similar properties.

This is primarily because of the difficulty and cost of performing a ratio study. Historically, the position of many appraisal districts was that the property owner needed to get a fee appraisal for each comparable property and compare the market value estimated by the appraiser to the assessed value. The cost of getting multiple appraisals made this process financially impractical. Compiling a reasonable number of comparables appropriately adjusted is simple and straightforward. The first step is to choose a reasonable number of comparables. Usually four to five comparables is the typical number used at a property tax hearing, but in some cases, property owners choose ten to thirty. In some cases, there may only be one to four comparable properties that merit consideration. Most unequal appraisal presentations include three to ten comparables. The number of reasonable comparables depends on the location, type, size and age of the property. For example, there would be fewer five-year-old bowling alleys in the northern part of Harris County compared to recently built apartment complexes.

After choosing a reasonable number of comparables, array them in a table format, including fields of data such as account number, net rentable area, year built, street address, assessed value and assessed value per square foot.

The next step is to determine whether or not to make appropriate adjustments. For the administrative hearing, if you have truly comparable properties, most boards (appraisal review board or ARB) won't be concerned with you not making adjustments. If you make adjustments, those would typically be based on factors such as differences in size and age compared to the subject property.

You should also review the information in the appraisal district's House Bill 201 packet on an unequal appraisal. In many cases, the appraisal districts unequal appraisal analysis will document a reduction in your assessed value! If the appraisal districts unequal appraisal analysis documents a reduction, either the informal appraiser or the ARB should make the adjustment in assessed value for you. Having the opportunity to get an assessed value reduced automatically based on the appraisal districts unequal appraisal analysis is one of the reasons to appeal every property every year.

Completing Hearing Preparation

After reviewing the appraisal district's information on your property, the House Bill 201 package, and your market value and unequal appraisal analyses, determine the strengths and weaknesses of each approach and decide which basis of appeal provides the best opportunity for a meaningful reduction. Although appeals on unequal appraisal have clearly been the law of the land since 2003, some appraisal districts and review boards have chosen to disregard the option for unequal appraisal put forth by the Texas Legislature. Although there is litigation underway which should resolve this issue within the next year, it would be prudent to visit someone who is knowledgeable in local property tax appeals to determine whether the county appraisal district and ARB in your area are considering appeals on unequal appraisal.

Set Negotiating Perimeters

After reviewing the information, it is important to set the highest level of assessed value you will accept at the informal hearing because after you accept an assessed value, the appeal process will be complete for the year and you will not be able to appeal further.

Administrative Hearing Process

The two steps to the administrative hearing process are the informal hearing and the appraisal review board hearing.

The Informal Hearing

The following procedure and rules are typical at the informal hearing:

· Meet with an appraiser representing the appraisal district. You should be polite and prepared at this meeting. While many property owners are frustrated and angry at the high level of real estate taxes, the appraisal district appraiser does not control the tax rate set by various entities nor the policy regarding property taxes in the area or the state. The appraisal district appraiser is trying to execute his job in a professional manner and appreciates it when property owners work with him on that basis.

· Provide the appraiser information on your property and he will review that information and information he has available.

· The appraiser will likely make an offer to settle the assessed value of your property fairly quickly. You can either accept the value or negotiate further. Either way, you should know within ten to twenty minutes whether the appraiser will offer an acceptable value. If the value is acceptable, conclude the negotiation by agreeing to the value for the current year. If the value offered is not acceptable, ask to go forward with an ARB hearing.

Appraisal Review Board Hearing (ARB)

The ARB hearing panel consists of three impartial citizens selected and paid by the appraisal district. The age of most ARB members ranges from fifty to eighty. There is an unfortunate bias in the system since the ARB members are selected and paid by the appraisal district, but most ARB members are reasonable people who want to make appropriate decisions.

Like the appraisal district appraiser, the ARB does not set tax rates or tax policy. The members are also not responsible for the effectiveness of local government. It is unlikely to help your case if you complain to the ARB members about either the high level of property taxes or the poor quality of some aspect of local government.

The ARB will expect you to make your presentation in about three to ten minutes. They will typically wait patiently while you make your presentation and may have questions after you conclude. An appraiser from the appraisal district, who may or may not be the same person who attended the informal hearing, will represent the appraisal district at the ARB hearing. The appraiser will comment on the evidence you presented and will often present other information the appraisal district has available. If you requested a House Bill 201 package for your property, it substantially limits the evidence the appraisal district appraiser can offer at the hearing. The ARB members may have questions after the appraisers presentation. Then the property owner will be given a final opportunity to rebut evidence presented by the appraisal district appraiser and quickly summarize the evidence. The ARB members strongly prefer you not repeat your entire presentation at this point.

After hearing the evidence, the ARB members will confer and make a decision. This decision is not subject to negotiation and they will not revise the decision if further evidence is presented. When this decision is announced, the hearing is effectively over. The ARB will send a letter two to four weeks later summarizing their decision and notifying the owner of a 45 day limitation from the date receipt of the ARB decision to either request binding arbitration or file a judicial appeal.

Binding Arbitration or Judicial Appeal

Beginning September 2005, owners of properties with an assessed value of $1 million or less may file a request for binding arbitration. The owner must file with the appraisal district no more than 45 days after receipt of the notice of the ARB's decision. The binding arbitration option is interesting because it includes a loser pays provision. The appraisal district pays for the arbitrator's fee if the final value is closer to the owner's opinion of value, and the owner pays for the binding arbitration if the final decision is closer to the appraisal district's opinion of value. Binding arbitration was passed to provide an alternative to judicial appeals, which can be expensive to prosecute.

Many owners pursue judicial appeals to further reduce property taxes. In 2005, O'Connor & Associates filed over 1,200 judicial appeals on behalf of property owners in the state of Texas. The judicial appeals can be expensive if the property owner and attorney don't understand the process and have a plan in place to minimize the cost of legal and expert witness fees. Judicial appeals are typically successful. However, success requires cooperation from the property owner, such as providing responses to questions, documents and a deposition if requested. The judicial appeal is meaningful as an option to minimize property taxes since it reduces the base value. This is important because the appraisal district and ARB consider the base value in the subsequent year when setting the administrative hearing value.

Conclusion

Property owners can generate substantial reductions in property taxes by appealing annually. Consider appeals on both market value and unequal appraisal and obtain the House Bill 201 information when preparing for the appeal hearing. Property owners should consider all three levels of appeal: informal hearing, ARB hearing and judicial appeal/binding arbitration. While the ARB hearing and judicial appeal/binding arbitration can be an intimidating process, each is straightforward once you understand the mechanics.

Pat O'Connor, MAI is president of O'Connor & Associates, 130-person firm in business since 1974. O'Connor & Associates is the largest tax consultant in Texas, handled more than 43,000 administrative appeals in 100 counties in 2005 and is currently coordinating over 2,000 judicial appeals. O'Connor & Associates also provides real estate appraisal, cost segregation and market research services.

http://www.poconnor.com
http://www.cutmytaxes.com

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