We’re under to purchase a park and through the title review process our lawyer uncovered a Land Use Contract that was executed between a previous owner of the park and the City about 15 years ago. Most of the stuff in the contract is pretty generic (setback rules, tie down requirements, etc.), but there is one provision that is an issue…
It states that if occupancy every dips below 40% for any 6 month period, the park loses its grandfathered status and would have to comply with current zoning…meaning it could no longer operate as a park since the current zoning is for standard residential, not MHP.
We’re buying the park at 50% occupancy, so it’s teetering close to the 40% number currently. We plan to increase occupancy once we close on the park, but there’s also the chance according to our lawyer that if occupancy dipped below 40% at some point in the past 15 years under a previous owner, the City could come back in the future and use that to shutdown the park.
Anyone seen this type of contract provision in the past or have any recommendations for addressing it?
Would you go to the City and see if they’re willing to amend the agreement to remove the provision or at least update it so that it only applies moving forward? Would you kill the deal? Would you accept the risk and close on the deal anyway?