I am making an offer using the purchase contract that I got from the reference library and I have two questions about it. First, is about real estate taxes. The last assessed value is about $400K. If I end up buying this park the taxes are going to go up by about $30K, if the new assessed value is anywhere near the purchase price, around $1.5mil. I did some research and looked at other contracts and changed it to read:
The amount of any general real estate taxes not then ascertainable, if any, shall be adjusted on the basis of 105% of the most recent ascertainable general real estate taxes and subsequent readjustment thereof.
Has anyone else ran into this and if so how do you handle it? I am going to have an attorney look at it but right now its saturday and I was hoping to figure this out first.
Second. In the contract it says that if the seller can’t provide a survey then the purchaser can get one at the purchaser’s expense. I was told there are two different surveys, a ILC and a “Pin survey” and this may be fairly expensive for a “full pin survey”. Its about 6 acres. So does anyone know a ballpark price for a full survey?
The 105% clause is fine/fair because that reflects the taxes the seller has incurred through the date of sale. You are correct that you are about to be walloped with a much higher tax bill, but that will only be incurred from the date you purchase the property, so it is only fair you pay it.
Some thoughts on how to reduce your tax bill:
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Assign as much value as possible to the mobile homes (if any) that come with the property. Then sell off those homes to deserving families, and be rid of the tax liability (and the many other headaches that come with land lording mobile homes).
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Assign as much value as you can to the ‘business’ of the mobile home park. You’ll definitely need an attorney’s advice and an accountant’s, but arguing that part of what you paid for was a ‘business’ and not the real estate will lower the taxes you owe on the real estate.
As regards a full pin survey, I don’t think I know. I believe I’ve only ever had an ILC, and those run about $1,500.
Good luck,
-jl-
Thanks for the good info! So that leads me to ask is there any reason or need to get a full pin survey?
I don’t think so - other than perhaps in California where the law states that each resident’s lot must be ‘defined’ even though the park is still just one large parcel of land.
None of my banks in the midwest has ever required such a thing as a PIN Survey. You mostly just want to understand the outside boundaries of your MHP, and where the homes sit, to insure none of your homes hang off the edge of your land onto someone else’s.
Best,
-jl-