What is a Property Condition Assessment?

A Property Condition Assessment (PCA) is a systematic inspection of a commercial property's physical condition, typically conducted prior to acquisition or financing. It follows the ASTM E2018 standard and documents building systems, deferred maintenance, and capital expenditure needs. It is widely required by lenders as part of commercial loan underwriting.

ASTM E2018 is the standard guide for Property Condition Assessments of commercial real estate published by ASTM International. It defines the scope, methodology, and reporting requirements for a PCA and is widely accepted by commercial lenders, CMBS originators, and agency lenders as the benchmark for physical due diligence reports.

Do lenders require property inspections?

Yes. Commercial lenders — including banks, CMBS originators, life insurance companies, and agency lenders — typically require a Property Condition Assessment before issuing a loan secured by commercial real estate. Construction lenders also require draw inspections throughout the build. Requirements vary by lender type and loan product.

Does Terra Scope Inspections provide residential pre-purchase inspections?

Yes. Terra Scope Inspections provides thorough pre-purchase inspections for residential buyers across North Carolina and the United States. Whether you are purchasing a primary residence, vacation home, or single-family rental property, our detailed inspection reports give you the clarity you need before you close.

Construction Draw Inspections: What They Are and Why They Protect Lenders and Developers

What Is a Construction Draw Inspection?

A construction draw inspection — also called a progress inspection or fund control inspection — is a third-party site visit conducted at key milestones during a construction or major renovation project. The inspector verifies that work completed matches the draw request submitted by the borrower before the lender releases the next tranche of funds.

Construction draw inspections are standard practice for:

Ground-up construction loans
Renovation and rehab projects
Bridge loans with construction components
Affordable housing and LIHTC developments

How the Draw Inspection Process Works

Borrower submits a draw request — The developer or general contractor submits documentation requesting a disbursement of loan proceeds for work completed to date.
Lender orders an inspection — The lender (or their servicer) engages a third-party inspector to verify the claim.
Inspector visits the site — The inspector reviews the project schedule, approved plans, and budget, then walks the property to assess percentage of completion by trade.
Inspector delivers a report — The report documents completion percentages, photos, any observed deficiencies, and a recommendation regarding the requested draw amount.
Lender makes a disbursement decision — Based on the report, the lender approves, reduces, or holds the draw.

What Inspectors Evaluate

A construction draw inspector assesses:

Percentage of completion by trade (sitework, foundation, framing, MEP, finishes)
Budget-to-completion alignment — is the remaining budget sufficient to complete the project?
Lien waivers and compliance documentation (often reviewed in coordination with the lender's counsel)
Material storage and site conditions
Schedule variance — is the project on time?
Observed quality concerns or deficiencies

Why Construction Draw Inspections Matter

Without draw inspections, lenders face serious exposure:

Overborrowing risk — funds disbursed for work not yet completed
Mechanics lien exposure — unpaid subcontractors can cloud title
Project abandonment — without oversight, troubled projects may stall after draws are exhausted
Collateral deterioration — partially completed buildings can lose value rapidly if construction halts

For developers and general contractors, draw inspections create accountability and reduce disputes with lenders over disbursement timing.

Terra Scope Inspections — Construction Draw Inspections Nationwide

Terra Scope Inspections provides precision property inspections for real estate investors, lenders, and residential buyers across the United States. Submit your inspection request today.