A sterndrive splits the difference between an inboard and an outboard. The engine sits inside the boat. The drive leg hangs outside the transom, turns like an outboard to steer and tilts up for shallow water. Most are MerCruiser or Volvo Penta.
The drive's shaft and exhaust pass through holes in the transom below the waterline, and rubber bellows seal them. BoatUS says that after hurricanes, bellows failures are the second biggest cause of boats sinking at the dock.
What a surveyor checks
All three bellows with a torch, moving the drive to see as much rubber as possible, and their clamps. The inside of the transom for water tracks. The leg itself: David Pascoe explains drives are cast aluminium, which corrodes once the paint is breached, so blistering paint and chipped edges matter. The anodes, and the drive oil for water.
In the report
"Sterndrive, universal joint bellows cracked at two folds, no record of replacement. Replace all three bellows before the boat goes back in the water." See sterndrive bellows and sterndrive problems.