By Fredrick P. Niemann, Esq. a New Jersey Purchase of a Business Attorney
A Buyer of a business in New Jersey can and should demand certain guarantees from their Seller, over and above those customarily included in simple contract forms. In my last blog, I listed several common warranties often requested of a Seller that should be included in your contract. Here are the remaining items:
Working order. Insist that a clause be inserted that states “the plumbing, heating, cooling and electrical systems are presently in working order and will be in working order at the time of closing”. It is standard to request that all personal property and fixtures included in the sale herein shall be in working order at the time of closing.
No Code violations. If real estate is included for purchase or for lease, request that at the time of closing, no violations will exist of any municipal, state or federal laws, codes or regulations concerning the use and operation of the business at and within the leasehold or real estate. If a violation exists, the Seller should be obligated to fix or cure it.
Nothing to impede sale. This is a catch all clause. It states that the seller knows of no facts which would impede the use of the property to be transferred by this Contract for the business purpose described herein.
Risk of loss. This clause is significant. It means the risk of loss or damage to the assets being sold herein or Sellers premises shall remain with the Seller until the Closing of Title.
Language should be inserted that reads either:
* Alternative 1. Seller shall furnish Buyer at closing a Cancellation of Business or Trade Name Certificate in proper form so that it can be recorded for cancellation of same with the county recording officer.
* Alternative 2. Assignment and transfer of Trade Name: Seller shall furnish Buyer with an assignment and transfer of all Sellers right, title and interest in the business and trade name of seller
Lease. If a lease needs to be assigned then the agreement should read that the Contract is contingent upon Buyer executing a lease to the building with Sellers landlord. As the Buyer you’ll often have to sign an Assignment and Assumption Agreement with respect to the lease if you are able to execute same with the Landlord.
Inventory. The value of all unsold inventory should be determined on the date of closing, at an agreed upon price. The cost of the inventory appraisal should be split equally between Buyer and Seller.
Remember, a business Contract is binding when the Buyer and the Seller both sign it. There is no three day attorney review period as with a residential house purchase. Before signing a New Jersey business contract, have an experienced New Jersey business attorney review the contract and make necessary revisions.
Contact me personally today to discuss your purchase of a New Jersey business. I am easy to talk to, very approachable and can offer you practical, legal ways to handle your concerns. You can reach me toll free at (855) 376-5291 or e-mail me at firstname.lastname@example.org.