Imagine discovering hidden problems in a deal—issues the seller “forgot” to mention—just days before your due diligence period ends. It happens more often than you’d think, and it happened to me on a recent deal. That’s why I’m sharing this story, so you can see how critical it is to have the right contract and enough time to do proper due diligence (DD).
I want to take you behind a deal I’m currently working on to break down the situation, the red flags I encountered, and why having the right contract saved me. This one’s still in process, so stay tuned for part two, but here’s where I’m at so far.
The Value of a Strong Contract
You don’t know how important a contract is until you’re knee-deep in a deal and something goes wrong. I learned that lesson the hard way on a past transaction.
The seller was charming and promised everything would go smoothly—but the contract was a standard template, not tailored to mobile home parks. It didn’t include provisions for titles, inspections, extensions, balance transfers, or anything specific to the industry. When issues came up, I had nothing to protect me. I ate the costs, dealt with the headaches, and swore I’d never make that mistake again.
Now, I don’t enter a deal without a solid, tailored contract. I invested in a proven template from a top industry lawyer and adjust it as needed for each deal. Sellers will tell you, “Don’t worry, I’ll work with you if something comes up,” but the reality is different. When push comes to shove, they’ll hold your feet to the fire. That’s why a strong contract isn’t optional—it’s a must.
Learning from the Past
Have you ever had something pop up on inspections at the last minute, and suddenly you need more time to dig into the issue? That’s when the seller flips the script. They’ll tell you to decide now because they’ve got “people calling them every day” who’d love to buy the property. They’ll pressure you to make a choice: move forward without answers or risk your deposit.
Maybe the seller “forgot” to mention those septic issues you just uncovered. Maybe they don’t think it’s a big deal. Either way, they don’t care. Their priority is selling the park, not making your due diligence process easier.
I can’t be the only one who’s dealt with sellers dragging their feet. They promise to get you everything you need, but their pace is slower than a three-legged mule in a mud pit. You’re three weeks into your 30-day DD period, still waiting on critical documents like titles and leases. Now, you’ve got to go hat in hand, asking for an extension—because they couldn’t deliver on time. And if they say no? You’re left with two bad choices: cancel the deal and waste all the time and money you’ve spent, or move forward half-blind and hope for the best.
And let’s talk about titles. Sellers love to downplay title issues. “Don’t worry, I’ve got them all,” they’ll say. But as closing day approaches, they still haven’t produced them. Now they’re telling you, “It’s no big deal. I’ll get them to you after closing. Just trust me.” At that point, you’re left with another choice: take it as is or walk away.
Not every seller is like this, and not every deal is riddled with these problems. But here’s what I’ve learned: the sellers who insist “you don’t need it on paper” are the very ones you absolutely need a solid contract with. And the ones who say they’ll work with you when the time comes? They’re often the first to hold your feet to the fire and make you take it or leave it.
This is why having a strong, industry-specific contract is non-negotiable. It’s your safety net, outlining exactly what’s required and what happens if things go sideways. A good contract isn’t just a piece of paper—it’s your lifeline in situations like these.
The Current Deal: Red Flags During DD
Now, let’s get into the deal I’m working on right now—a park in Georgia. It’s a great opportunity with solid cash flow potential, but during DD, I uncovered a few red flags that could’ve derailed the deal if I wasn’t prepared.
Red Flag #1: Inspection Period Limitations
The seller, when I refer to “seller”, I mean their representative whom I am dealing with, wouldn’t agree to float the inspection period based on when they provided all requested documents. This was a big sticking point for me, but I didn’t win that fight. Thankfully, my contract included a clause giving me sole discretion to extend the inspection period by 30 days for a $5,000 fee.
While the seller was quick to provide most of the requested items, they were adamant I didn’t need extra time. Still, knowing I had the extension clause gave me peace of mind as I moved forward.
Red Flag #2: Refusal to Complete the Questionnaire
One of the tools I use in every deal is a comprehensive 30+ item due diligence (DD) request list. This includes standard documents like rent rolls, profit and loss statements, tax returns, leases, titles, a list of employees, and infrastructure details. But I don’t stop there—I also include a Seller Disclosure Questionnaire.
This questionnaire goes hand-in-hand with the request list and asks specific, pointed questions about the property. It’s a simple format with checkboxes for “Yes,” “No,” or “Don’t Know/Not Applicable” (IDK/NA), plus space to elaborate. Here are some of the questions I include:
- What are the water lines made of?
- Have you done any repairs to the sewer system? If so, what kind?
- Do you have issues with your water or sewer lines?
- What was the last major upgrade you made to the park?
- Do you have all original titles? Are you able to provide them?
It’s straightforward and designed to surface potential issues early.
On this deal, the seller outright refused to fill it out. Their reasoning? “You already have enough of what you need in the documents we provided.” When I pushed back, I was told by the seller representative, that they would have to do all the work for the seller and fill it out, because the seller was out of state and didn’t know much about the property.
I restated my request, explaining why the questionnaire was important and asking that it be completed. The response? “Take a look at what I already sent you.” That’s when I realized they were intentionally pushing this aside.
This was a huge red flag for me. If they truly didn’t know something, they could’ve just checked the “IDK” box. The fact that they wouldn’t fill it out at all made me question what they might be hiding. From that moment on, I stayed on high alert, looking for inconsistencies or missing information during the rest of the DD process.
Why wouldn’t they just fill it out? It’s a simple ask, and not doing so speaks volumes about their willingness to be transparent—or lack thereof.
Red Flag #3: Utility Billing Discrepancies
The seller claimed tenants paid all utilities, but when I reviewed the utility bills, there was an $830 sewer charge. They tried to give a generalized explanation, but it didn’t sit right with me. Without the questionnaire, I had to keep digging to make sense of it.
Red Flag #4: Hidden Sewer Issues
One of the key areas I focus on during due diligence is plumbing and infrastructure. I specifically asked about these in my Seller Disclosure Questionnaire—questions like whether there had been any recent plumbing repairs, details about the sewer system, and if there were ongoing issues. But since the seller refused to fill it out, I had to uncover these details myself during site visits.
Here’s what I found:
- Major Issues with Water and Sewer Lines
The city provides and bills for water and sewer services, but maintenance responsibility falls on the park because it’s private property. During my site inspection, I discovered the park had a history of significant piping issues. A few homes had already been repiped, which set off alarm bells about the condition of the overall system. They had holes in the middle of the road still from where they had to dig up the Main Line. They had orange traffic drums set up, alerting residents to dodge the hole! - A Previous Buyer Walked Away
While talking to the staff, I learned about a prior buyer who hired a plumbing company to scope the sewer lines. After the inspection, that buyer backed out of the deal. No one on-site could tell me the name of the company or what the inspection revealed—only that the buyer walked away. This critical information wasn’t disclosed during the offer process or when I submitted my DD requests. - Failing Pipes and Mixed Materials
The staff mentioned the system was a mix of different pipe materials, many of which were failing. This matched what I observed during the site visit, confirming my concerns about the park’s aging infrastructure. - Surprise Pond
One employee casually mentioned that some pipes “dump into a pond,” which was shocking for a property supposedly on city sewer. Naturally, I investigated. Hidden behind a fence and buried in overgrown brush, I found a pond on the back corner of the property. This raised my alert level even further—what was this pond, and is it really connected to the sewer system?
None of this was disclosed upfront. If I hadn’t been thorough during my site visits, I could’ve easily missed these issues. This experience reinforced the importance of digging deeper when red flags arise and not relying solely on what the seller provides—or, in this case, doesn’t provide.
The pond discovery was particularly troubling. If it’s tied to the sewer system, this could indicate a serious environmental issue. I knew I needed to take immediate action to investigate further. This meant tracking down plumbers, running inspections, and figuring out what I was really dealing with—because clearly, I wasn’t getting the whole story from the seller.
This situation highlights the importance of persistence and attention to detail during due diligence. Even when the seller doesn’t cooperate, you’ve got to uncover the truth. In this case, the surprises kept piling up, but being proactive allowed me to start identifying the real risks and costs involved.
Digging Deeper
During the due diligence period, I ran into some major red flags that couldn’t be ignored. I knew I needed to get a plumber who had experience with this park to inspect the sewer system thoroughly. Ideally, I wanted to track down the same plumber who scoped the lines for the previous buyer—the one who walked away from the deal—but that proved easier said than done.
I had a 45-day inspection period, and by the time I completed my initial paperwork and site visits, I was already two weeks in. The first couple of weeks were spent reviewing documents, calling the city, getting a zoning letter, and making public records requests to piece together the park’s history. That left me with just over a month to arrange inspections and finalize my findings.
I started calling plumbers, starting with the vendor list provided by the seller. One of the plumbers listed had supposedly done significant work on the park, but when I called, I got no help. My calls were either unanswered or met with promises of a callback that never came. I spent an entire week just trying to get someone—anyone—on the phone.
Frustrated but determined, I kept calling. While trying to arrange a standard line inspection, I accidentally stumbled across another plumbing company that had worked extensively at this park. They knew the park well and had replaced many of its sewer lines in the past. This was a break I desperately needed.
I scheduled a site inspection with them and requested the technician who had done the work to either call me or meet me on-site to discuss what he knew. Another week went by with no confirmation, but I decided to press forward and be present for the inspection myself.
Findings from the Inspection
The morning of the inspection, I finally caught a break. The plumber who had worked on the park was available to talk and provided critical information:
- Failing Lateral Sewer Lines: The lateral lines connecting homes to the main lines were made of Orangeburg pipe, a material notorious for failing. These pipes were already in bad shape and would require significant repairs or replacement.
- Aging Main Sewer Lines: The main sewer lines were mostly terra-cotta, which, while durable, is vulnerable to root intrusion. I learned many sections have had issues already, with one section collapsing in. Complicating matters, these lines ran down the middle of the road, meaning repairs would also involve costly roadwork.
- A Silver Lining: The back half of the park, built in the 1990s, had PVC pipes. This section was in much better condition, offering a small relief amidst the larger concerns.
- The Hidden Pond: During the inspection, I looked further into the hidden pond. It had drainage pipes running into it, which seemed odd for a park supposedly on city sewer. Nearby manhole covers revealed pipes that appeared to be leading directly to the pond.
The seller claimed the pond was maintained by the city and that all drainage “goes to the city.” However, the presence of sewer lines running toward the pond raised serious questions. It could be an innocuous stormwater retention pond—or it could signal a major environmental compliance issue. Either way, it required further investigation.
A Race Against Time
At this point, I knew what I had to do, but the clock was working against me. My due diligence period was set to expire in just a couple of days, and these new issues—failing pipes, past repairs, and the mysterious pond—had completely thrown me for a loop. None of this was disclosed by the seller, and I certainly wasn’t expecting to encounter problems of this scale.
I’ll admit, I wish I had gotten the plumbing inspections scheduled sooner. But between arranging the inspection, chasing down vendors, and coordinating my initial site visit, the time slipped away. It’s easy to underestimate just how fast the days fly by, especially with a park of this size.
Beyond inspections, there were other moving parts that demanded attention. We were simultaneously prepping the lending package and organizing the syndication for the capital raise. This added layer of complexity made it clear to me just how difficult it is to thoroughly inspect a park in less than 30 days. Honestly, I’m not sure how some companies claim to do it.
Here’s the reality: waiting for callbacks, scheduling appointments, and following up on findings eats into your inspection period faster than you’d expect. Even with a 45-day timeline, I was pressed for time. A 30-day DD period? Forget it—it’s practically impossible.
This is where having a strong contract saved me. The terms of the deal gave me sole discretion to extend the inspection period by an additional 30 days for a $5,000 fee. No back-and-forth negotiations, no seller approval required. All I had to do was send notice in writing and pay the fee within three business days.
I called the seller’s representative to inform them I was exercising the extension. Unsurprisingly, they weren’t happy about it. But the beauty of the contract was that it didn’t matter how they felt—the decision was mine to make.
Lessons from the Field
Here’s what this experience reinforced for me:
- Don’t trust verbal promises. Sellers will say anything to close the deal. Verify everything.
- A strong contract is your safety net. Without my extension clause, I’d be forced to make a rushed decision.
- Start plumbing inspections early. City sewer doesn’t mean problem-free.
- Persistence pays off. If I hadn’t kept calling, I wouldn’t have found the plumber who knew the park’s history. That one lucky connection saved me from walking into a potential disaster blind.
- Time is your biggest asset during DD. Even with 45 days, the time slips away quickly. Between scheduling inspections and chasing unresponsive vendors, I was lucky to uncover these issues in time.
- Never trust appearances. Just because a park is on city water and sewer doesn’t mean there aren’t underlying infrastructure issues. In this case, the private lines and that pond could turn out to be bigger problems than I anticipated.
Whats Next for this Deal?
I’ve now informed the seller of the issues I uncovered, and they want the chance to investigate further, claiming they had no knowledge of any of this. While they do their digging, I’m moving forward with my own efforts: contacting the Public Health Department, Public Works, and Engineering to figure out the full scope of the sewer system—where it goes, how it operates, and who’s ultimately responsible.
I’m also gathering quotes to determine the costs of fixing the aging pipes and addressing potential water line issues. Since the sewer lines run under the roads, I’ll need to factor in significant road repair costs as part of the overall infrastructure upgrades.
This isn’t ideal—it’s not at all what I planned for. My initial reaction was to walk away from the deal and avoid the hassle altogether. But I see this as not only my job but also an opportunity to learn. By going through the proper steps, I’ll uncover what’s really going on, figure out the potential remedies, and get a clear picture of the costs to address these issues. From there I can make a more informed decision.
The experience has reinforced a couple of key lessons:
- Time is critical. Proper due diligence requires a realistic timeline, especially for a park of this size. Moving forward, I’ll prioritize plumbing inspections earlier, no matter how “smooth” the seller claims the system is. Just because a property is on city water and sewer doesn’t mean the private lines won’t be a nightmare. In fact, I’d almost prefer septic systems to sewer lines buried under thousands of feet of road—it might be more manageable in the long run.
- A strong contract is everything. This deal could’ve been a disaster if I didn’t have a solid contract protecting my deposits and giving me the right to extend the inspection period. Having those protections in place allowed me to uncover the issues at my own pace and avoid being rushed into a bad decision.
For now, I’m not thrilled with the plumbing findings, but I’m diving deeper into the costs, requirements, and possible solutions. I’m also waiting to see what the seller uncovers and how they respond. Meanwhile, I’ll continue investigating the pond, testing the water for sewage, and contacting the city to piece together the full picture of this park’s infrastructure.
Stay tuned for the follow-up article to learn what I discover, how the seller reacts, and what my next steps will be.
Do you want to discuss this article or just talk about Parks in general? Use this link here to schedule a 1-on-1 Zoom video chat with me and Let’s Talk!
Join our Capital Partner Network and get priority on New Investment Opportunities. Receive Real Case Studies, invites to Educational Passive Investing Webinars, and Deal Webinars. JOIN NOW by using THIS LINK.
Lock N’ Load
The MHP Operator
Disclaimer: The information provided in this article is for educational and informational purposes only. It is not intended as financial or legal advice. I am not a licensed financial advisor, lawyer, or CPA, and you should consult with a licensed professional before making any legal or investment decisions.
