Mobile Home Park Due Diligence Checklist

Why sellers should understand due diligence

Due diligence is the buyer's verification period, but it is the seller who usually pays for surprises. When a buyer discovers something in week four that was not disclosed in week one, the result is almost always a price reduction, a delay, or a dead deal.

Owners who know what will be examined can prepare, disclose early and hold their price. That is the entire point of this checklist.

Financial documents

• Current rent roll listing every lot: occupied, vacant, rent charged, balance owed
• 12 months of collections history showing billed versus collected
• Two to three years of income and expense statements
• Bank statements or deposit records supporting reported income
• Property tax statements for the last two to three years
• Current insurance policy, premium and claims history
• Utility bills for water, sewer, trash and any common electric
• Details of any existing debt: balance, rate, maturity, prepayment terms
• Records of other income: home rent, late fees, storage, laundry, application fees

Property and physical condition

• Survey showing lot layout, boundaries and easements
• Total lot count versus usable lot count
• Road surface type and condition
• Drainage, detention and any flooding history
• Floodplain designation for the property
• Common area condition, lighting and signage
• Any structures: office, laundry, storage or maintenance buildings
• Records of recent capital work and repairs

Utilities — the most common deal killer

Utility infrastructure is where mobile home park transactions most often fall apart. Systems are buried, aging and expensive to replace, and regulatory compliance carries real liability.

• Water source: city, well or water supply corporation
• If a private well: permits, capacity, testing records and TCEQ standing
• Wastewater: city sewer, septic systems or a package treatment plant
• If septic: age, condition, permits and known failures
• If a treatment plant: permit status, discharge monitoring reports, operator contract
• Master-metered versus individually metered water and electric
• Whether residents reimburse utilities, and how billing is handled
• Electrical pedestals: age, amperage and condition
• Gas service arrangement, if applicable
• Known leaks, loss ratios and any history of violations

Homes and tenancy

• Count of park-owned versus tenant-owned homes
• Age, size and condition of each park-owned home
• Titles for park-owned homes and their current status
• Any rent-to-own or lease-purchase agreements in place
• Abandoned homes and any pending title or removal issues
• Lease agreements and community rules currently in use
• Security deposits held and how they are accounted for
• Eviction history and current delinquency by lot

Legal, zoning and title

• Current zoning classification and whether the use is legal nonconforming
• Any open code violations or municipal correspondence
• Title commitment, existing title policy and any liens
• Easements, access rights and encroachments
• Entity documents if the property is held in an LLC or partnership
• Pending litigation, claims or disputes
• Any state licensing or registration requirements that apply

Operations

• Who manages the property and under what arrangement
• On-site staff, compensation and whether they stay after a sale
• Vendor contracts: trash, landscaping, pest control, snow or storm response
• How rent is collected and what software or records are used
• Marketing approach and current waiting list, if any
• Turnover rate and average tenancy length

How to prepare and protect your price

1. 1Assemble the documents above into one organized folder before you go to market.
2. 2Reconcile the rent roll against actual deposits so the numbers survive verification.
3. 3Get utility permits and testing records current, or document exactly where they stand.
4. 4Write a short, honest list of known problems and share it early.
5. 5Resolve home title issues before diligence rather than during it.
6. 6Agree to a defined diligence period with a firm end date and meaningful earnest money.
7. 7Have your attorney and CPA review the contract and the tax consequences before signing.