Commercial Property Inspections: Why They Matter and What To Expect

Commercial real estate can be the biggest financial obligation for a company. For some businesses, like restaurants, practically everything rides on their physical space. It’s therefore critical that borrowers have a clear, detailed picture of the property they’re looking to purchase. Commercial property inspections are the crucial first step in ensuring that the business acquires a property that is a good fit for the business, will hold its value, and above all else will be a safe place for employees and customers alike. Let’s take a look at the basics of commercial property inspections.

Third-Party Commercial Property Inspectors

To begin with, it’s important to enlist a third-party commercial property inspector, someone who has no vested interest in the property, the seller, or the buyer. The information collected by the inspector during his or her assessment needs to be accurate and complete, as the business owner will ultimately be liable for the health and safety of anyone in the building. For those in need of a commercial property inspector, the Certified Commercial Property Inspectors Association (CCPIA) is a good place to start.

Commercial Property Inspection: The Walk-Through

The foundation of a commercial property inspection is the walk-through survey. Here, the inspector will conduct a thorough visual inspection of the property. The critical internal components of the building will be examined; this will include HVAC systems, plumbing, and the electrical system. Restaurants and hotels will have additional considerations, from kitchens to laundry facilities to fitness centers. Basements or crawlspaces and the building’s foundation will also be examined. In addition to the interior inspection, the exterior will be examined. This will include the roofing, doors, and windows, and all outdoor drainage apparatus; the parking lot; any outdoor amenities such as patios, decks, or outdoor seating areas; and any other external components. The inspector may not work alone; they’ll typically bring in specialists (plumbers, electricians and so on) who can provide additional insight and expertise.

Commercial Property Documentation

In addition to the building inspection, a commercial property inspector will review all relevant documents for the property. This might include any records pertaining to repairs and renovations, any records of building code violations, and any prior lease agreements or records of previous ownership. It’s important for those looking to purchase a property – as well as those who may be lending them the money to do so – that all of the property’s written documentation is intact and complete. This documentation can support the inspector’s notes on the property’s condition, especially as those relate to potential structural and systematic faults and disrepair. 

The Final Inspection Report

Once those two steps are completed, the inspector will compile a final report. That report will include a detailed account of the walk-through survey, a listing of the documents that were obtained and reviewed, and any other pertinent information gathered during the inspection, whether from the aforementioned specialists or via interviews with anyone possessing useful information about the property. 

It’s important to note that there’s not a requirement for a final written commercial property inspection; a client can request that their hired inspector provide an oral report. For obvious reasons, it’s best to get the final report in writing, especially when dealing with an older property. 

Total Lender Solutions can help resolve lender challenges with their commercial property clients. For over 15 years, our team of highly experienced real estate professionals and legal experts has transformed complicated processes into clear resolutions for institutional and private lenders. We work as a vigorous extension of your team to provide comprehensive solutions and seamless communication, from pre-foreclosure and notice of default to the final sale phase. Our dedication and persistence when it comes to the foreclosure process ensures that our clients feel confident in reaching a successful outcome. Contact us today.