How much are these frowned upon? Just had a deal break over term negotiations and now have another contract that is 1.5 pages and also as-is. Very solid deal that I can’t lose… With Phase I and proper diligence shouldn’t I be able to get enough comfort? No POHs, and water billed directly and entirely maintained by county.
I will only do an as-is deal. If something is way off then I ask the Seller for price concessions, but at the end of the day if the deal will fall through because of it you need to check if it’s worth absorbing or if you’re ready to walk away over it. I don’t want them to fix stuff with bubble gum and bailing wire, and then I have to fix it again 3 months after takeover.
I walked away on a Park that had oil drums in the creek that the Seller didn’t disclose, another that needed complete water and sewer replumbing, etc. These are big issues and unless the Seller will work with you on them then walk away.
If you’re talking about having to trim more trees, or patch more asphalt than expected, then you can probably spread those costs out and eat them.
The MHU Due Diligence Manual details the process if you don’t have it already.
MHU boiler plate contract is far from as-is… There are a ton of reps and warranties.
That’s more about the Seller being truthful about what you’re buying, not related to the Seller fixing the problems once you find out about them.
Got it, thanks. I’m assuming most of your deals aren’t repping accuracy of info either? At the end of the day it shouldn’t be that hard to confirm but unfortunately this one has everything written on paper and a company with 10 properties in it…
I do request accuracy of information as part of my contract (e.g. this park is non-conforming with X spaces and no issues with the City blah blah blah), and a lot of Sellers (especially smaller one Park owners) have heartburn with it, others do not.
I have lost some so-so deals because they wanted a 2 page contract on their State’s REC forms like you mentioned. For a steal I would go with whatever they want and then just add a couple extra weeks for additional feasibility to perform more diligence so I can get comfortable.
Others can chime in, but this is pretty common. Also extend your option period accordingly.
Makes sense. Added those in. Let me know if you think any others are critical. Still at 2 pages…