The Utility System Nobody Underwrote

A buyer closes on a park marketed with public water and sewer. Six months later, the county informs him the wastewater plant is private, its permit lapsed two owners ago, and compliance will cost more than the down payment. The offering memorandum was not lying about the pipes. It was just wrong about what they were.

An inspector walks a 1970s park and finds the electrical pedestals are original to the build. The system functions, in the sense that nothing is on fire. Then a holiday weekend fills every site, every air conditioner runs at once, and the park learns the difference between functioning and adequate.

A seller tells a buyer the septic has never been a problem. The county has no record of the system at all. No permit, no inspection history, no file. It has never been a problem in the same way an uninspected bridge has never been a problem.

These are not unusual stories. The scenarios below are illustrative composites; the pattern is the point. Ask around the industry and you will hear the same ones with different park names attached. Every dollar in the underwriting flows through pipes and wires, and the pipes and wires are the part of the file buyers verify least.

Functional is not permitted, and permitted is not adequate

Utility diligence asks three separate questions, and the package usually answers none of them.

Condition: what is the physical state of the system. Age, materials, maintenance history, visible deferred work.

Capacity: whether the system can serve the park as operated and as planned. A water system that serves 80 sites cannot be assumed to serve 120, and a lagoon at the edge of its rated load has no room for the expansion the model prices in.

Compliance: whether the system is permitted, inspected, and in good standing with every authority that governs it. A functioning system without a permit is a liability wearing a disguise.

A utility can pass any two of these and fail the third catastrophically. The park with new pipes and no permit. The permitted plant at 98 percent capacity. The adequate, compliant system with forty years of deferred maintenance inside the walls. The broker package says "city water and sewer" and moves on. The buyer cannot.

The verification path

Start with the bills. Twelve to twenty-four months of utility records, meter readings, and reimbursement histories show what the system actually moved and what it actually cost. Then the permits: the files with the city, the county, and the state that say the system exists legally and is in good standing. Then capacity: the letter or the engineering basis that says the system can carry the park, not just today but at the occupancy the model assumes.

Run the claim through the four labels. "Public water and sewer" in the memorandum is broker-reported until the permit file says otherwise. The capacity letter, reviewed by a human, is verified. The missing inspection history is missing evidence, and it stays missing evidence until someone produces it. The assumption that the system can support the expansion plan is an underwriting assumption, and it should be labeled as one before it enters the model.

Editor's note (2026-10-05): this note was written when the public language used four evidence states. The ParkProof Standard now uses six: Verified, Broker-reported, Missing evidence, Underwriting assumption, Calculated, and Unresolved.

What it costs to skip

Financial surprises negotiate. A rent roll gap becomes a retrade. Infrastructure surprises do not. A failed wastewater plant does not accept a lower offer; it sends a compliance order with a deadline. Deferred maintenance discovered after closing becomes emergency maintenance, performed at emergency prices, usually during peak season, usually with a full park watching.

This is also where the record outlives the deal. The utility file a buyer builds during diligence, permits, capacity, condition, maintenance history, becomes the operating baseline on day one of ownership. The truth established before the purchase is the same truth the manager needs after it. Build the record once, and it serves the whole life of the asset.

Next in Field Notes: the rest of the file, one verification at a time.