Due Diligence Time Frames

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1

I have a question about typical due diligence and financing contingency time frames in contracts to buy MHP’s.

I am negotiating a contract to buy a park. I have asked for a 30 day due diligence time frame followed by a 60 day financing time frame, or a total of 90 days. I had thought this was pretty standard in the industry.

The seller is balking at this. I just got off the phone with a broker and he says the due diligence and financing contingencies run concurrently. This seems rather short to me. I dont want to plunk down hard cash for the appraisal and environmental until I am comfortable with my due diligence.

What do you folks think?

Thanks in advance for your help.

Rick Williamson

2

Rick,

I think that a 30 day due-dilligence period is sufficient. Of course, the 30 days shouldn’t start until the seller has provided all of the financial and operational information that you will need to start the process.

Depending on the type of financing, 30 days may not work. A local bank could probably make this time frame, but a national lender would most likely need at least 45-60 days. A conduit loan will most likely take up to 90 days.

I definitely wouldn’t order a Phase One environmental or appraisal until after you have conducted your on-site due diligence.

Steve