Condition Report for a Property: When, Why, and How to Get One

When you’re looking to rent or buy a house, one of the most important steps is evaluating the property’s true condition using a condition report. 

For example, a loft apartment might look fine at first, but there could be hidden problems like leaks, cracks, or electrical issues that lead to costly repairs or even legal disputes later on.

In fact, a 2024 survey from Bankrate found that over 40% of homeowners had surprise maintenance or repair costs they weren’t expecting, and many said they regretted not knowing more before buying.

Whether you’re waiting for apartment approval, weighing the pros and cons of a studio vs. a one-bedroom, or exploring more spacious options like a duplex, having a clear understanding of the property’s condition will make living there easier.  

In this article, we’ll explain what a condition report covers, when to use one, who should prepare it, and why it’s something everyone in real estate should understand.

What Is a Property Condition Report?

A property condition report is a detailed document that captures the physical condition of a property at a specific point in time. Commonly used in real estate transactions, and due diligence assessments, this report helps property owners, tenants, and buyers establish a clear baseline for the property’s state, reducing risk, improving transparency, and preventing disagreements.

Whether you’re leasing a rental property, buying an investment property, or managing long-term property maintenance, a property condition report offers a clear record that protects all parties involved.

Additionally, a property condition report helps a mortgage broker assess lending risk and offer peace of mind before funds are released from escrow.

What Are the Purposes of a Property Condition Report?

These are the purposes of a property condition report:

Due Diligence for Buyers and Investors

In commercial or residential real estate transactions, a property condition assessment is vital for identifying structural issues, maintenance risks, and safety issues that could affect a property’s value.

Aside from a property inspection checklist, the report helps investors estimate necessary repairs and make informed decisions before closing a deal.

Rental Agreement Compliance

When a tenant moves into a property, the condition report serves as a baseline to compare the property’s state at move-in and move-out. This helps ensure fair handling of security deposits and avoids disputes over normal wear versus actual damage.

It’s especially useful in shared living situations like those with a roommate agreement or in cases of a sublease or sublet, where responsibilities and house chores may be divided among multiple occupants.

Having clear documentation protects all parties and supports a smooth rental experience.

Maintenance Planning

By documenting the current state of each room, including fixtures and structural components, the report helps property managers and owners plan future upkeep and repairs. This ensures the property meets health and safety standards, as well as lower the cost of bills in the future.

Legal Protection

In cases involving legal proceedings, condition reports serve as formal documentation that may be required by governing bodies. They provide evidence of property damage or compliance with tenancy regulations.

Lender & Insurance Use

Lenders and insurers may request a condition report for a property to assess risk before issuing a home loan or coverage. A complete report can be crucial during refinancing of an investment property or qualify for lower interest rates on your mortgage.

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What Does a Condition Report Include?

A condition report is more than a simple checklist, it combines a thorough physical inspection with detailed written documentation to give stakeholders an accurate understanding of the property’s general condition.

It is considered an essential tool for landlords, tenants, buyers, and lenders who want to ensure transparency, safety, and accountability.

Most condition reports follow a traffic light system to categorize and prioritize the findings:

• Green: Indicates a good condition, with no concerns noted.
• Amber: Highlights minor maintenance issues that need attention but are not urgent.
• Red: Flags significant defects or risks that require urgent repair to prevent further damage.

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Typical Components of a New Condition Report

These are some of the items inside a condition report:

General Overview of Each Room

Every room within the property is evaluated to document its cleanliness, structural integrity, and surface condition.

Walls, floors, ceilings, and fixtures are checked for cracks, stains, or signs of wear.

Photographic Documentation

Photos are included to visually capture the building’s structure and internal components. This visual record serves as objective evidence during future disputes or inspections.

Notes on Repairs Needed

Observations about cracks, leaks, mold, or damage are documented with specific notes. Each issue is categorized using the color-coded system and prioritized based on severity.

Example Conditions

The report may list example issues such as peeling paint, scuffed flooring, faulty switches, or broken tiles common indicators of general wear or neglect.

Assessment of Key Systems

A comprehensive review is performed on vital property systems such as plumbing, electrical wiring, roofing, ventilation, and insulation. These areas are often where underlying defects can compromise the functionality or safety of the property.

Specific Requirements

Any specific requirements relevant to the property’s location, such as functioning smoke alarms, carbon monoxide detectors, or ventilation systems, are reviewed for compliance with local safety laws.

Structure and Stability Review

A targeted evaluation of the building as a whole, including the foundation, walls, and roof, ensures that the building survey standards are met. This helps identify any hidden weaknesses or long-term stability concerns.

Tenant and Landlord Sign-Off

In rental scenarios, both the landlord and the tenant are given a reasonable opportunity to review the findings, ask for clarification, and address any disagreements before signing. The final, new condition report is then added to the official tenancy documentation.

A completed copy is signed and dated by both the landlord and tenant (in a rental scenario), becoming part of the official residential tenancy agreement or buyer’s records.

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Who Conducts the Condition Report of a Property?

These are the people who can conduct a property’s condition report:

• Chartered Surveyors: For property purchases and due diligence
• Real Estate Agents: Often handle routine property inspections
• Property Managers: Conduct reports at tenant move-in, during tenancy, and at exit

In any case, an independent assessment from a licensed professional is strongly recommended to ensure compliance with regional laws and proper documentation.

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When to Arrange a Property’s Condition Report?

A property condition report isn’t just a formality, it’s a critical safeguard at multiple stages of tenancy or ownership.

Here’s when to arrange one and how it helps:

Before a Tenant Moves In

Documenting the property’s condition before a tenant arrives helps prevent future disputes over existing damage. Both landlords and renters benefit from having clear records.

Walk through the property together and take timestamped photos. Store copies digitally so both parties can access them easily.

During Tenancy

Mid-lease inspections can catch issues before they worsen like leaks, pest problems, or HVAC inefficiencies.

Whether you are leasing or renting, schedule a brief check-in every 6–12 months. Consider adding a clause in your roommate agreement or lease that outlines responsibility for house chores and upkeep reporting.

After Tenancy Ends

Use the report to fairly calculate deposit deductions, ensuring transparency and minimizing conflict.

Compare the original condition report with the current state, and share the findings with the tenant before finalizing deductions.

Before Purchasing a Property

A pre-purchase condition report can reveal structural issues, hidden damage, or safety hazards that aren’t always visible during a walk-through.

If major repairs are needed and you’re not refinancing, you might consider an unsecured loan to cover short-term costs without risking property as collateral.

For Legal or Loan Purposes

Condition reports often serve as official documentation for home loans, insurance claims, or disputes involving damage or depreciation.

Hire a licensed inspector to conduct a full evaluation before making any commitments especially if you’re buying jointly under a civil union or planning any types of trusts.

Just in case a divorce or separation, documentation becomes even more crucial for the parties involved.

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Benefits of a Property Condition Report

These are the advantages of a conducting a property condition report:

Protects Financial Interests

A condition report helps prevent unexpected costs by documenting the property’s actual condition. This protects both tenants and property owners from financial losses due to unrecorded damage or overlooked issues.

Aids in Legal Clarity

In the event of disputes, the report serves as an official record that can support either party during legal proceedings. It clearly outlines the property’s state at key moments, offering peace of mind and legal protection.

Ensures Compliance with Rental Guides

Condition reports help ensure the property complies with local rental laws and tenancy agreements. This includes confirming that safety standards and habitability requirements are met.

Supports Negotiation in Property Deals

Buyers and sellers can use the findings from a condition report to adjust the sale price, request repairs, or walk away from deals if major issues are uncovered, leading to more transparent transactions.

Helps Schedule Proactive Property Maintenance

The report highlights existing or potential maintenance issues, allowing landlords and property managers to plan repairs before they escalate, ensuring the property stays in good condition over time.

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Conclusion

A property condition report is a vital part of modern property management and real estate. Whether used in a residential tenancy agreement, commercial transaction, or lender assessment, it ensures the condition of the real estate is documented and conflicts are avoided.

To ensure accuracy, seek assistance from licensed professionals. They’ll prepare a complete, legally recognized document that protects all parties and supports better decision-making—now and in the future.