Putting together a purchase contract for an RV park is scarier. But what's even scarier is if the difficulty in creating that contract holds you back from buying something in the first place. This is Frank Rolfe with the RV Park Mastery Podcast. We're gonna talk about some simple strategies to create those initial purchase contracts. And let me start off by saying I'm not a lawyer, never have been. So I'm not trying to dispense legal advice here. I'm trying to tell you lessons and shortcuts I've learned over the decades on creating contracts. Just some truths that I have figured out on my own as an individual. Now, the first thing is sure, having a lawyer create your contract is perhaps the best because you're getting a second opinion, a set of eyes that is licensed, hopefully in that state regarding legal endeavors. But the problem is lawyers come with a very certain cost. It's never really inexpensive, and many people will pass on deals not because the deal was not good, but because they didn't want to spend the money to create the contract. And for most Americans, when we think of creating a contract, we're thinking of spending two or three thousand dollars, which is a significant sum, to create a sheet of paper that we don't know will ever even be accepted or a deal ever worked out. So here are some more practical ideas on how to get you over the hump of creating a decent contract using the least amount of money, but again with an eye towards the best case would be to use a lawyer, perhaps from day one. But this is a potential alternative for you.

The first thing is to really understand contracts. Because a typical RV park contract has to contain, for your own protection, several basic parts. It has to have a due diligence provision. This allows you to check out the property as much as you like. And if you decide that that RV park does not fit your guidelines, the ability to cancel and get your earnest money back. It also needs to have a financing contingency which allows you to cancel at any time you cannot get the financing to buy the RV park. And those two things are basically designed to protect the buyer in instances where the park doesn't meet their own expectations or the reality of the lending market. Then on top of that, you do not want any contract which has what's called buyer's specific performance. This is a provision that is normally not in any contract, but some sellers will try and slip it in. And what it does is if you do not cancel during due diligence or financing, then they can force you to buy the property. I can't even imagine the scenario where you would forget to do those two things. But it is possible. You could have a heart attack or a car wreck and suddenly the RV park is the least of your concerns and you forget to cancel, then you could be forced to buy it. So you can never have buyer specific performance, but it must also always contain seller specific performance, because that specific performance means that the seller has to come forward and convey title to you at the end of the movie if you come up with the money. You also should not enter into any purchase contract which has a large earnest money amount. Industry norm is about 1% of the deal, which means a million dollar RV park would be about 10,000 of earnest money. But you could go a little higher, obviously lower, but you wouldn't ever sign a contract where you would put up 10 or 20% of the purchase price. In fact, if you ask sellers why are you even requesting such a ridiculously high number, they'll say, "Well, I wanted to prove that you had the money to buy it." If that's all we're after, there's easier ways, safer ways to do that, such as showing a copy of your bank account, some kind of proof of funds.

Now, never sign any contract you have not read and understand yourself. So when you're looking at a contract, you need to understand the provisions. If you're bringing a lawyer in simply to explain it to you, we have a problem, because how do you know that that lawyer themselves are spending enough time or focus to make sure they're describing it correctly? So you have to be able to read and understand each paragraph of the contract. But here's a trick. Now, if you go to the seller with a contract that you have read and understand every provision and has those safeguards I discussed earlier, then what happens after that? Well, if you get the deal signed up by the seller and you put it in the title company with your earnest money—earnest money goes to a title company, and a title company is just full of attorneys. Most title companies contain many, many attorneys on staff. If you nicely ask the title company to read the contract to see if it's deficient in any way, they'll normally do that for free, which cut out a whole lot of legal cost. Now you're gonna get response from the title company's attorney. And if they did find a problem, if there was something in the agreement you forgot—and typically when that happens, it's because the state has some unusual little wrinkle of an additional provision, like having to exchange a hundred dollars in cash, something like that—well, you could always do an amendment to the agreement. Wouldn't be hard to do at all. So then you would go back to the seller and say, "Hey, the title company spotted a flaw in our agreement. Could you sign this addendum or this amendment to the original contract?" And of course, they're gonna probably say yes because you're still at that moment very much in the honeymoon period of the contract because they want to sell and you want to buy, and they will not have changed their mind after a few days. So now you can get the thing corrected, theoretically through amendment, but we didn't have to pay any legal cost on that. Then that's, again, assuming the title company will read your contract and affirm that it's fine for them for free, but most of the time they will certainly do that.

Now, I've never seen a seller refuse to sign that amendment because early stage, the seller is very much excited about the transaction. They're already looking online for that vacation home or somewhere to move. But later in the transaction, if it became closer to the end of diligence or financing provisions, then another thing can always set in, and that is kind of seller's remorse. They may think, "I don't really think I wanna sell the RV park because, gosh, our occupancy just went up a lot," or "I don't know if I can sell the RV park because it gives meaning to my life," or even, "I just don't think I got a good enough price for the RV park. I want more." Those things don't typically enter the seller's mind until later on. So if we're gonna go in and try and get that contract corrected on the early moments of the deal, then you probably will not have any problem. And of course, the alternative to what I just described as a shortcut is, in fact, just to use an attorney. Now, if you're gonna use an attorney, by all means make sure that you do find someone who is a real estate-specific contract attorney, because real estate's a little different than other things. There's really no similarities in the agreement to purchase an RV park as there would say a franchise or a business or a car. So you really need an attorney who really understands that little segment of business. And you can often find such an attorney by making a few calls to different law firms in the area. And of course, the attorney would have to be licensed in the state that the park is located in, not in the state where you are located in. And if you do a little short interview process, you'll probably be able to find somebody who has got some experience in writing real estate contracts. It doesn't have to be RV-specific; it could be really any form of real estate.

But again, you have to make sure that whatever they do always gives you those protections of a due diligence and a financing out. Because none of us, not a single buyer ever knows going into the deal if it fully will meet all of our parameters of success. And we don't want to buy something that we don't think will be a smash hit on the front end. Again, the best course always when talking legal matters is to use a licensed attorney in the state the property is located in. That's always the best case. But what I don't want you to do is ever get such a roadblock on contracts that you don't even try or make the attempt. Real estate is very much of a volume business, and RV parks are no different. And your best shot at getting a good RV park deal is to make lots and lots of offers, and that means fluidity in creating contracts. If having to use an attorney to get the contract, to get the entire process started, is in fact your roadblock, then try and find some way around that if at all possible. And in a worst-case scenario, if you had to, and if the title company wouldn't read your contract for free, maybe at that point you would then have an attorney read the agreement. At least that way you've narrowed your cost down to deals you actually have in hand. This is Frank Rolfe with the RV Park Mastery Podcast. Hope you enjoyed this. Talk to you again soon.