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Law Educator, Esq.
Law Educator, Esq., Attorney
Category: Business Law
Satisfied Customers: 91941
Experience:  All corporate law, including non-profits and charitable fraternal organizations.
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A friend of mine has a floral business but cant afford to

Customer Question

A friend of mine has a floral business but can't afford to run it anymore so he wants to give the business (equipment, coolers, the whole shop) to me. His lease term is until July 2009 at $3800/month. I've met with the leasing agent and submitted a lease proposal that is at the current rate per square foot due to the market. The leasing agent will lose out on $23,200.00 if I take over his lease. She states that the coolers and equipment are now hers since he will be getting out of the lease early. Is this true or would she have to be awarded the equipment in court first?
Submitted: 5 years ago.
Category: Business Law
Expert:  Law Educator, Esq. replied 5 years ago.
She would have to be awarded the coolers and equipment in court first unless she has perfected a security interest in the items by filing a UCC-1 form with the secretary of state's office for those items as security for the lease. She does not automatically get anything from the business without a security interest. Her reocourse for her loss would be to sue the current owner for the losses and then she can seek a lien against the business or the equipment through a court order.

Your friend would convey everything to you including the business through a contract of sale.

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Customer: replied 5 years ago.
Thank you. When would she have had to file the UCC-1? Could she still?
Expert:  Law Educator, Esq. replied 5 years ago.
The UCC-1 can be filed at any time, but until it is filed (perfected) any other person can lay claim to the property. If you take possession of the shop and equipment before it has been filed then it would not be effective.

Customer: replied 5 years ago.
How would he convey the shop and equipment to me as quickly as possible? Quit claim deed? Bill of sale? What would be the best, XXXXX XXXXX?
Expert:  Law Educator, Esq. replied 5 years ago.
It would be done through a contract of sale for the business. You would have to provide adequate consideration to him (money/services) in exchange for the business because if you do not, the leasing agent could challenge the transfer as a fraudulent transfer and thus invalidate the contract for sale because every contract requires adequate consideration. Thus, you should include consideration such as a percentage of the net profits for a certain time to make sure it is an actual sale and the contract is upheld as valid.

Law Educator, Esq., Attorney
Category: Business Law
Satisfied Customers: 91941
Experience: All corporate law, including non-profits and charitable fraternal organizations.
Law Educator, Esq. and 3 other Business Law Specialists are ready to help you
Customer: replied 5 years ago.
Thank you very much and have a great day!
I'm accepting now.
Expert:  Law Educator, Esq. replied 5 years ago.
Thank you. One last piece of advice. It is best that you hire an attorney to draft the contract of purchase/sale to make sure it will hold up in court regarding consideration and the transfer of all of the equipment.

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Law Educator, Esq.
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All corporate law, including non-profits and charitable fraternal organizations.