Title Insurance for Park Purchase

I am under contract to purchase a park in MI. Purchase price is $650K and a local lender is financing $390K. The title insurance company is asking for me to break out the personal property value vs real estate value as they will only insure the real estate.

The County assessor values the land at $150K. There are 17 park owned trailers that transfer with the sale and these are valued by me at $170K. It has been suggested I value the personal property at $50K; the land at $300K; and the balance of $300K between goodwill and intangibles.

Question 1: What are the consequences (regarding title insurance) of valuing the trailers at less than fair market?
Question 2: Does the suggested split of of real estate, intangibles/goodwill, and personal property values make sense?

I would look at this from the standpoint of how it affects your local taxes and financing first.

Is your bank involved in the homes? In other words, will you have to pay down principal when you sell a home? If so, I would value the homes very reasonably.

What is the affect on your real estate taxes if you load more value into the land and improvements? Taxes in MI are pretty high so this is a very worthwhile question to consider. If this is a big deal for your park, I would value the homes as high as possible.

What they are proposing makes sense to me if I was only concerned with providing insurance for the largest amount possible, but it probably isn’t the best advice for the continued operation of the park. You’ll just need to run the numbers and see what the best option is.