I am under contract for a mhp and have asked the seller for the items in the MHP univ list. The seller says she has no certificate of occupancy, there is no survey, the only contract is with the manager, and refuses to send bank statements or tax returns. She did send a business license for the park. There are 5 park owned homes but none sold on contract. What exactly is the certificate of occupancy and how do I check if she has one but doesn’t know it. Also what to do about the rest. Thanks in advance and sorry for the elementary questions
Contact the county to see if it is licensed.
The seller either wants to sell or they don’t. If they refuse to give you essential documents, you can either try to find them yourself, or drop the deal, or explain to them that, without those items, the most you can do is seller carry with little down. Nothing that they are withholding, at this point, would be a deal killer, but it might be a bank-loan deal killer (no operating statements will kill the bank loan concept). You can get the rest of those items yourself. You need a Certificate of Zoning from the city, and a list of all current violations. Not all areas use a Certificate of Occupancy – ask them and see if it applies. You will get a survey done during diligence. Witholding tax returns is pretty common, and is not essential, but can kill off the possibility of bank financing.
I’d argue that the lack of bank statements or tax returns is a deal killer. If you can’t verify they are actually receiving the rent they claim, why bother to move forward? I can understand the lack of C of O and excuse the lack of survey, but not verifying the income and expense is unacceptable. You need some record that has been submitted or reviewed by a third party. Consistent deposits and withdrawals on bank statements are one way, a tax return is a better way.My years of working on troubled assets for lenders biases me toward not believing what I can’t verify. We all want to believe that we’re good managers or we run a tight ship, but looking at the actual numbers tends to focus the mind more realistically.Will