1) Third-Party Property Inspections (PCR / PCA): What They Are and Who Uses Them

Some lenders require a third-party Property Condition Report (PCR) or Property Condition Assessment (PCA) to understand what they’re lending against—or what they’re about to take back.

These reports are commonly used when:

• Purchasers want a defensible view of the asset’s condition before acquisition
• Lenders inherit properties through foreclosure and need a risk-and-resale snapshot
• Stakeholders need documentation to reduce future disclosure and liability exposure

Because they evaluate both real property and major building systems, they can involve multiple specialists (roofing, structural, electrical, plumbing, HVAC, environmental screening, etc.).  That scope drives cost.  Full-scope assessments can be expensive—often in the tens of thousands and sometimes more—depending on asset size, complexity, and required disciplines.

Why private money loans rarely use full PCAs:

In private money transactions, the loan purpose and timeline often don’t justify a full-scale institutional report.  Instead, parties may opt for limited condition assessments—narrower in scope, faster, and materially cheaper.

“A PCA isn’t paperwork—it’s a risk transfer document.  If it’s wrong, the liability doesn’t stay on the page.”

2) Vendor Quality: The “Cheap Report” Can Become the Most Expensive Item in the File

Commercial real estate lending contains plenty of risks (and we’ll cover them in subsequent articles).  But one risk rises above the rest: using substandard third-party vendors.

You can search for and hire highly qualified inspectors and specialists.  But if you choose vendors who miss material defects—or write weak, defensible language—you don’t just inherit the problem:

• You own it
• Your company owns it
• Your investors own it

“Our investors won’t remember who you hired—they’ll remember what you missed.”

Bottom line: If you’re relying on a third-party report, ensure it’s produced by someone with the expertise and credentials to deliver reliable results and build trust in your process.

Municipal / City Pre-Sale Inspection Reports: The Other “Inspection” That Can Stall Escrow

3) City-Required Pre-Sale Reports: Fees, Applications, and Time Delays

Many cities impose requirements that must be satisfied before a property transfer can close.

These often include:

• An application
• A fee (and sometimes related taxes)
• A city inspection and/or compliance verification
• A processing timeline that can take weeks

In some markets, buyers and sellers sign contracts without completing the city process upfront—then discover late in escrow that the clock (and cost) has already started.

What matters to lenders and investors:

City requirements can cause unexpected delays and obligations.  Treat them as a key part of your due diligence to reduce uncertainty and keep your deals on track.

4) Example (Illustrative): City Property Reports Often Require Owner Representations

Some coastal and highly regulated jurisdictions require a formal property report before a sale or exchange.  These reports commonly require owners to make affirmative representations regarding items such as:

• Zoning and lawful use
• Permits and Construction History
• Electrical, plumbing, and heating systems
• Conformity with municipal ordinances
• Potential nonconforming conditions

A city inspector may conduct an on-site inspection to verify compliance, and penalties for misrepresentations can be significant.

“City reports don’t just inspect the property—they inspect your paperwork, permits, and credibility.”

5) Expect More Cities to Adopt These Programs

Many municipalities view these programs as a predictable source of fees and enforcement leverage.  As budgets tighten, it’s reasonable to expect the list of cities with pre-sale report requirements to grow—especially in high-value coastal and urban markets.

Build “city pre-sale requirements” into your early escrow checklist—right alongside title, insurance, and rent roll verification.

Checklist

• Confirm whether a PCA/PCR is required (lender, asset type, loan purpose)
• Right-size the scope (complete PCA vs. limited condition assessment)
• Vet vendors like you’re underwriting risk (credentials, references, sample reports)
• Identify city pre-sale requirements early (application, fees, lead time, repairs)
• Bake time and cost into the closing calendar (don’t discover it at day 25)