Older MHP Seller wants to stay in Home, how to structure deal?

I located a park with original owner in his 80’s. He wants to keep his house and shop on premises and is concerned about his heirs. The conversation was brief and we agreed that I would call him in a few weeks.
I want to have solutions to his concerns when I call back and wanted to run my thoughts by the group here.
As far as him keeping his house and shop which are part of the park. I thought that we could structure the deal with a predetermined sale price of the house/shop separately at a later date from the park contingent upon his decision to move or passing? Is that the right way to approach that? Whats the proper terminology? Any other details?

As far as taking care of his heirs, I was planning to suggest seller financing that we structure in a way that it would transition on his passing to his heirs. If I am on the right track here, how do I go about setting these documents up ahead of time in order to expedite tying up the deal? He said that he has several people already contacting him and I could tell he knows he needs to sell.

Does anyone have better suggestions here? I know that talking about future death is a touchy subject but I took what he said on the phone to mean that it was his concern and need to address that to have a chance at closing this deal.
Thanks,
Tim

If I am understanding you correctly, the Seller wants to keep his house and shop (which is located on the park) for himself and his heirs. A few thoughts come to mind:

  1. Can you write a long term lease, with the sale, such that they can keep living in the home and using the shop as long as they continue paying rent. Maybe you write the lease at a below market rent and include yearly rent increases. Although it isn’t great to have below market rent, it will allow you to factor this into your valuation upon purchase and upon disposition of the asset. In reference to the long term lease, you should have the lease refer to who his heirs are. As a sceptic, this could easily turn into a situation where an heir wants to sell the business to a ‘friend’ and the lease just goes with a the business. So you need rules for transferring once the current owner passes. Using this method allows you to keep total control of the park. Depending on how utilities are structured, make sure you work out that rising costs of utilities are in the lease as well.
  2. Depending on where the home and shop is in relation to the park. Can you parcel it out? That way you buy the park and he keeps the home/shop? Be careful with this method. If the home/shop is in the back of the park, it could be an issue as you’ll need easements, etc. and will not have control of the home/shop and how it looks. This can effect the value of the park. If the home/shop is kind of out of the way from the park, it might be easier to parcel off. How are utilities set up? If public, great, make sure you get/give an easement depending on how the lines run and who owns them. If private, you would need to figure out some mechanism for sharing.
  3. The predetermined price option works well. It could benefit you in that prices go up - it could also negatively effect you if prices go down. Someone may not want to live in the home or the time could come when you get the shop back and it’s empty. Also, what if they trash the home / shop. You would need some clauses dictating the condition which the home / shop must be kept in or you won’t need to honor the original price.

Give him a life lease, no rents from him and ask for financing on the park with GREAT terms!!! We have done that in the past worked great!!

Carl, you mean a lease at no cost to him?

I have also been thining about just offering to let him keep the house and just cut it out of the deal since its right at the front of park and it shouldnt affect ingress/egress.

Our experience is we gave a life lease, no cost to seller but in turn we controlled a 235 space park with $5,000 down and since it was our first park they were very helpful with on site management. That park is his baby–let him change the dippers and you collect the rent. Let him know he is welcome to visit his friends in the park. Most people his age are great to work with and wanting his baby pampered. A life lease with the right party can be a PLUS. If you pass on the deal give us a call.

Devils advocate to Carl’s input, you can open yourself to family drama and issues with folks following the new owner with the old owner around. I ran across the same situation with my park as the owner wanted to stay after the sale. I told him he had to go and had plans for his space, shop for the park. I wanted to run the park my way and not have any other influences involved. Sometimes keeping it simple is the best way.