The viability of commercial real estate can often determine the success of business operations that rely on physical space. Whether it’s a cozy restaurant or a bustling hotel, the chosen property holds the potential to shape success or failure. Therefore, commercial property inspections are crucial tools for lenders in determining lending contracts and predicting whether a lease may be headed toward default.
The team at Total Lender Solutions has interacted with hundreds of lender contracts across seven states for over fifteen years. We have seen that the results of commercial property inspections are often some of the best predictive tools for the state of a lease.
Below are some of the things that lenders can expect from commercial property inspections.
The Process of a Commercial Property Inspection
Property inspections involve a third-party expert who completes a walkthrough of the property. These experts may be industry experts, like architects, engineers, or trade experts. The Certified Commercial Property Inspectors Association (CCPIA) is a good resource for finding an inspector.
The expert looks out for the safety and well-being of the property and the people who may occupy the space. Some of the elements inspectors will look at include:
- HVAC Systems
- Electrical Systems
- Utilities
- Plumbing
- Exterior (roofing, doors, drainage systems, parking lots)
- Specialized Rooms (kitchens, gyms, spas)
Commercial property inspectors also scrutinize all relevant documentation associated with the property, including those related to repairs, renovations, and building code violations. The documented evidence supports the inspector’s observations regarding structural and systemic issues that may affect the property’s condition.
How Property Inspections Help Lenders
Before agreeing to enter a lending contract with a borrower, commercial property inspections can help lenders evaluate the property and decide whether to move forward with the investment.
After the lender and the borrower agree, lender inspection can help lenders anticipate whether a project is on schedule, whether the funds are being used appropriately, and if safety standards are being met.
“In our experience, lenders typically will not stop a borrower from drawing if they fail a property inspection as long as the borrower is current. Failing a commercial property inspection usually is a symptom of a larger problem, and the borrower may have already stopped making payments by that point.”
– Randy Newman, CEO, Total Lender Solutions
Property inspections can therefore be used as another tool in a lender’s toolbox to determine how to move forward with handling their loans.
Top Foreclosure Assistance for Lenders in Seven States
If you are a lender faced with foreclosing a commercial property due to unresolved default or a breach of contract, a reputable foreclosure company like Total Lender Solutions can make a significant difference for your business. Our expertise and experience in Washington, Oregon, Nevada, California, Arizona, Texas, and Missouri can create a personalized solution for you, guiding you to a favorable outcome.
If you’re currently dealing with foreclosure, don’t hesitate to contact our team by filling out our contact form.
