Answer: An excellent question. And for that, we turned to Gene Pepper, business broker and consultant, who explained that most states, including California, have "bulk transfer" laws designed to ensure that a buyer receives a business with no fraudulent conveyance on the part of the seller.
Pepper advises that you'd be wise to open an escrow account for your business purchase. Escrow companies are neutral third parties that hold a purchaser's money until both the buyer and seller have completed satisfactory due diligence.
"The cost is minimal, considering what a good escrow company can do for you," Pepper stated.
Make sure that you choose an escrow firm with experience handling commercial transactions, rather than one with a primary focus on residential purchases.
For the cost of the advertisement, "your escrow company will run a notice in a local paper for about 30 days, notifying all vendors that have been servicing the company that there is a sale pending and that they must notify the escrow firm in writing if they have claims for payment," Pepper said.
When it comes to your business lease, don't take the seller's word for anything, Pepper said.
"I suggest that whichever lease is agreed upon, a copy of it should be submitted to the escrow company," he said. "Do not close your purchase without a completed new or extended lease signed by you and the landlord."
New Windshield Wiper Law
There is a new State law that states that when you are using your windshield
wipers your headlight must be on.
Who's entitled to buyer's deposit in failed real estate deal?
By Dian Hymer
Question: Who gets to keep the deposit when a real estate transaction goes bad?
- Warren R.
Answer: Renowned real estate author Dian Hymer notes that sellers often feel that they should be entitled to keep the buyer's deposit money if the buyer fails to complete the purchase; but, more often than not, when a property purchase transaction falls apart, the deposit ends up being returned to the buyer.
Once the purchase contract is signed by the seller it becomes legally
binding, and it includes all the terms and conditions that will apply
to the transaction.
For example, suppose the buyers include a contingency that specifies the terms of the financing they'll need to arrange in order to close the deal. Furthermore, the clause stipulates that if the buyers are unable to obtain that financing, their deposit will be returned to them.
They earnestly attempt to line up the financing, but are unable to do so. Maybe interest rates rose to a point where they could no longer qualify for the loan they needed. Or, perhaps their credit report turned up issues that made it impossible for them to qualify. In either case, the buyers would probably be released from the contract without penalty.
However, let's say these buyers didn't attempt to obtain financing. Instead, they went out and bought another house. They strung the sellers along for a couple of weeks and then claimed they couldn't get a loan and wanted out of the deal.
In this case, the sellers could have a legitimate claim to the buyers'
deposit. But, to find out a definite answer to this question you would
need to consult with an attorney – ideally one who specializes in
residential real estate.