How are you approaching Coronavirus fallout in your Purchase and Sale Agreements?

mobile home university
1

I am in the initial stages of negotiating a Purchase and Sale Agreement to purchase a park. For those of you that have deals in process, how are you approaching a possible drop in residents that may occur between now and when the deal closes? I’m thinking of adding an occupancy contingency to the contract and asking for rent rolls every month.

For those of you facing this issue, how are you folks handling it?

Thanks.

2

There would be contractual and non-contractual actions you can take. Contractually, it would be prudent to do as you suggest - your lawyer will probably have guidance too. Non-contractually, you could request rent roll updates during due-diligence. If you find an issue, you could adjust price. Problem with the process is that it may be 60 or 90 days from execution to settlement, but the fallout can be beyond 90 days. To accommodate that, perhaps you may want to offer less right up front expecting the fallout.