How JustAnswer Works:

  • Ask an Expert
    Experts are full of valuable knowledge and are ready to help with any question. Credentials confirmed by a Fortune 500 verification firm.
  • Get a Professional Answer
    Via email, text message, or notification as you wait on our site.
    Ask follow up questions if you need to.
  • 100% Satisfaction Guarantee
    Rate the answer you receive.

Ask Law Pro Your Own Question

Law Pro
Law Pro, Attorney
Category: Business Law
Satisfied Customers: 24644
Experience:  20 years experience in business law - sole proprietor, partnership, and corporations
11688690
Type Your Business Law Question Here...
Law Pro is online now
A new question is answered every 9 seconds

i sold a business on contract. the buyer is in default of the

Customer Question

i sold a business on contract. the buyer is in default of the contract. what are my options
Submitted: 1 year ago.
Category: Business Law
Expert:  Law Pro replied 1 year ago.

Law Pro :

Hi. Thank you for using JustAnswer. My name is XXXXX XXXXX I'm going to assist you today.

Law Pro :

What does your contract state the options are if the buyer defaults - anything?

Customer:

hello

Customer:

if he is in default he has to come up with the balance in full or forfit the business back to me

Law Pro :

The word "forfit" or "forfeiture" is not liked in law.

Law Pro :

How long has the buyer been purchasing your business?

Customer:

he paid ten thousand down and has been making 4oo dolaar payments for about 2 years. hes has been 1 to 2 months behind for several months

Customer:

he still has a couple of years to go

Law Pro :

How hard would it be for your to "take over the business"?

Law Pro :

Does the contract provide for how you are to proceed if there is a default?

Customer:

excludung having to take him to court,,,not hard at all

Customer:

here is the actual paragraph from the agreement.......should the buyer otherwise default in any manner , including monthly payments of this agreement, upon ten day written notice to the buyer to cure such default, and buyer failure to cure such default within ten days, seller may terminate this agreement and buyer shall be required to return all assets purchased under this agreement to buyer, and all sums paid by buyer to seller prior to the default shall be forfeited by buyer. buyerwill also be liable for all costs including attorneys fees incured by seller in enforcing this agrreement

Customer:

there is also the issue of him moving the business. the state bought the building to tear it down and have paid him almost a hundred thousand dallors to move. he has squandered all the money on non business related items. the business i would be taking over would need some money to finish remodeling before reopening

Law Pro :

Wow, you didn't get involved or demand that the money paid to him by the state be placed in escrow?

Law Pro :

This business was in a rented property OR did the sale include property?

Law Pro :

Has the state finished paying them all they are suppose to pay him to relocate?

Customer:

rented property. and i wasnt aware he was getting this money until recently.

Customer:

yes they have

Law Pro :

Then you should file suit immediately and hope that there is some monies left.

Customer:

the state is tearing the whole block down to put in turn lanes at the intersection

Law Pro :

Did this buyer incorporate - or what form is the business?

Law Pro :

Is your agreement with an individual or corporation?

Customer:

im pretty sure there are no momies left

Customer:

individual

Customer:

sorry monies

Law Pro :

Then you should immediately retain an attorney and file suit to take back the company AND recover monies paid to them by the state.

Customer:

unfortunately i cannot afford an attorney at this time. my health issues have kept me out of work for 2 years. even if i won . this person has no money or assets other than the business. which at this point is all i want

Law Pro :

That this individual wrongfully hasn't paid you pursuant to the contract PLUS they are being fraudulent - taking the monies paid to relocate and fraudulently not putting the monies into relocating.

Law Pro :

So what are you looking for here at JustAnswer?

Customer:

a couple of things. one....i was going to go to the courthouse and file. but i dont know what papers to ask for or how i should fill them out. and two.... should i risk taking this to court without an attorney. i am really in a bad situation, not being able to afford an attorney. do you have a rough idead what something like this would cost me in attorneys fees???

Law Pro :

Pursuant to your agreement - upon ten day written notice to the buyer to cure such default, and buyer failure to cure such default within ten days, seller may terminate this agreement and buyer shall be required to return all assets purchased under this agreement to buyer - you need to send the buyer a written notice to cure their default with the additional language that if they don't you will be taking back all the assets of the company.

Customer:

i have done so

Law Pro :

First, you must send the buyer a notice of default.

Law Pro :

Second, if you done that, then you take back the business.

Law Pro :

Who's name is XXXXX XXXXX in at this time?

Law Pro :

Yours or the buyer's name?

Customer:

i have sent three notices. 2 of them were 10 day default notices and one notice to let him know that i am ready to take him to court

Customer:

he has not responded

Law Pro :

Who's name is XXXXX XXXXX in?

Customer:

there is no lease on the old building and the new lacation the lease is in his. i wasnt aware he was moving until recently

Law Pro :

Then you are going to have to file a civil action against the buyer for default and a request for an immediate injunction for the business to be turned over to you and for an accounting.

Law Pro :

Unless you have experience drafting legal pleadings then I would suggest you retain an attorney because the procedures for obtaining an affirmative injunction are difficult even for attorneys.

Customer:

any idea what an attorney is gonna cost me?

Law Pro :

Yeah, it would appear that the buyer isn't being intimidated by your letters of default. So, it would appear that your only options are to pursue an injunction in the matter.

Law Pro :

What the possible legal fees you could incur would be largely dependent upon how vigorously the buyer fights you in court.

Law Pro :

This could be anywhere from just a $1m to $10m or more - it's all dependent upon what the attorney has to do and how much time they spend on the matter.

Customer:

the only assets i would get would total about 10,000 dollars. is it worth taking to court . or could it cost me that much in legal fees

Customer:

this a very small business

Customer:

excellent income but very low overhead and equipment costs

Law Pro :

But your agreement states that you can recover legal or attorney's fees from the buyer - you stated, "buyerwill also be liable for all costs including attorneys fees incured by seller in enforcing this agrreement."

Customer:

i spose i could call my attorney. only reason i came here first is my lawey charge me everytime i call. his secretary called me once to ask if i had called them and i said "no". they sent me a bill for 200 bucks for that call

Law Pro :

I think you could also pursue this buyer for additional monies that they received from the state too.

Law Pro :

The attorney shouldn't have "billed" you unless you actually called them. I wouldn't have paid that $200 bill if you didn't call OR they didn't respond to your question.

Customer:

i'll give him a call. thanks for the input. i really appreciate it.

Law Pro :

There are always problems when selling a business over time - there is always the possibility of the buyer defaulting.

Customer:

i have another attorney i can call

Customer:

hes a malpractice lawyer but im sure he could refer me to some one else.

Law Pro :

That's why the agreement of sale should have some sort of security - not just taking the business back.

Customer:

do you mind if i ask you another question not related to this? or should i open another question

Customer:

its a quick one

Law Pro :

Yes, I would absolutely pursue this buyer because they should also be liable to you for the monies paid to them from the state too.

Law Pro :

What's your other question?

Customer:

im gonna call right awat

Customer:

other question

Customer:

i was involved in a lawsuit with a dentist. i won but he filed bankrupcty. am i out of luck on that case.

Customer:

the damage he cauysed is why i havent been able to work in 2 years

Law Pro :

It all depends - if your claim against the dentist was for malpractice - then most likely you're out of luck.

Customer:

figures. ok i'll let ya get back to business. thanks for your time

Law Pro :

However, if for fraud or something else - that survives the bankruptcy if you would go in an file a "proof of claim" and argue against the dentist being able to discharge your judgment against him.

Customer:

it was malpractice

Customer:

he worked on teeth he wasnt suppose to without my permission

Law Pro :

Did you file a proof of claim in the matter of his bankruptcy?

Law Pro :

How long ago did you get notice of his filing bankruptcy?

Customer:

no i dont know. i had an attorney handleing it. he said he would keep in touch. i never heard from him

Law Pro :

Then I would contact the attorney to see what the status is and if they filed a proof of claim on your behalf.

Customer:

ok great. thanks

Law Pro :

If they didn't file a proof of claim - then your claim was, or is, most likely discharged or going to be discharged by the bankruptcy court - then you can collect upon your judgment.

Customer:

ok

Law Pro :

I'm sorry - then you CAN'T collect on your judgment.

Customer:

ok. i have to find the paper work and call him too then. tahnks again

Law Pro :

You're welcome. Good luck. I wouldn't let that buyer go - but go after him for breach of contract PLUS fraud.

Customer:

i will. thanks. you have a great day. i'll shoot ya a mesage when its all over and let ya know how it truned out

Law Pro, Attorney
Category: Business Law
Satisfied Customers: 24644
Experience: 20 years experience in business law - sole proprietor, partnership, and corporations
Law Pro and 8 other Business Law Specialists are ready to help you
Customer: replied 1 year ago.


just a follow up question if you dont mind. the buyer owes me a balance of 6900 dollars. i decided to just sue him in small claims court. i have the paper work filled out and i am ready to file. my concern is this: if the judges finds in my favor and he orders the buyer to pay me the balance, can the buyer file bankruptcy and im out the money AND the business. or if given the choic, should i just take the business back instead of the money? i would rather have the money only because i hate to take the business back after he has paid in over 30,000 dollars on the contract so far.

JustAnswer in the News:

 
 
 
Ask-a-doc Web sites: If you've got a quick question, you can try to get an answer from sites that say they have various specialists on hand to give quick answers... Justanswer.com.
JustAnswer.com...has seen a spike since October in legal questions from readers about layoffs, unemployment and severance.
Web sites like justanswer.com/legal
...leave nothing to chance.
Traffic on JustAnswer rose 14 percent...and had nearly 400,000 page views in 30 days...inquiries related to stress, high blood pressure, drinking and heart pain jumped 33 percent.
Tory Johnson, GMA Workplace Contributor, discusses work-from-home jobs, such as JustAnswer in which verified Experts answer people’s questions.
I will tell you that...the things you have to go through to be an Expert are quite rigorous.
 
 
 

What Customers are Saying:

 
 
 
  • Mr. Kaplun clearly had an exceptional understanding of the issue and was able to explain it concisely. I would recommend JustAnswer to anyone. Great service that lives up to its promises! Gary B. Edmond, OK
< Last | Next >
  • Mr. Kaplun clearly had an exceptional understanding of the issue and was able to explain it concisely. I would recommend JustAnswer to anyone. Great service that lives up to its promises! Gary B. Edmond, OK
  • My Expert was fast and seemed to have the answer to my taser question at the tips of her fingers. Communication was excellent. I left feeling confident in her answer. Eric Redwood City, CA
  • I am very pleased with JustAnswer as a place to go for divorce or criminal law knowledge and insight. Michael Wichita, KS
  • PaulMJD helped me with questions I had regarding an urgent legal matter. His answers were excellent. Three H. Houston, TX
  • Anne was extremely helpful. Her information put me in the right direction for action that kept me legal, possible saving me a ton of money in the future. Thank you again, Anne!! Elaine Atlanta, GA
  • It worked great. I had the facts and I presented them to my ex-landlord and she folded and returned my deposit. The 50 bucks I spent with you solved my problem. Tony Apopka, FL
  • Wonderful service, prompt, efficient, and accurate. Couldn't have asked for more. I cannot thank you enough for your help. Mary C. Freshfield, Liverpool, UK
 
 
 

Meet The Experts:

 
 
 
  • Law Pro

    Attorney

    Satisfied Customers:

    1426
    20 years experience in business law - sole proprietor, partnership, and corporations
< Last | Next >
  • http://ww2.justanswer.com/uploads/LA/lawpro/2012-6-25_171315_PT206740s.64x64.jpg Law Pro's Avatar

    Law Pro

    Attorney

    Satisfied Customers:

    1426
    20 years experience in business law - sole proprietor, partnership, and corporations
  • http://ww2.justanswer.com/uploads/DC/DCraneEsq/2012-8-14_14436_DCrane.64x64.jpg MShore Law's Avatar

    MShore Law

    Attorney

    Satisfied Customers:

    1233
    Drafted Negotiated and/or Reviewed Thousands of Commercial Agreements
  • http://ww2.justanswer.com/uploads/FL/FLAandNYLawyer/2012-1-27_14349_3Fotolia25855429M.64x64.jpg FiveStarLaw's Avatar

    FiveStarLaw

    Attorney

    Satisfied Customers:

    1162
    25 years of experience helping people like you.
  • http://ww2.justanswer.com/uploads/dkaplun/2009-05-17_173121_headshot_1_2.jpg Dimitry K., Esq.'s Avatar

    Dimitry K., Esq.

    Attorney

    Satisfied Customers:

    1142
    Run my own successful business/contract law practice.
  • http://ww2.justanswer.com/uploads/ohioatty/2009-1-22_185545_me.jpg J.Hazelbaker's Avatar

    J.Hazelbaker

    Attorney

    Satisfied Customers:

    393
    Experienced and trained in the area of business law.
  • http://ww2.justanswer.com/uploads/scottymacesq/2009-6-10_221523_small.jpg RGMacEsq's Avatar

    RGMacEsq

    Attorney

    Satisfied Customers:

    393
    Licensed Texas General Practice Attorney
  • http://ww2.justanswer.com/uploads/BA/barristerinky/2012-6-10_22423_office.64x64.jpg Barrister's Avatar

    Barrister

    Attorney

    Satisfied Customers:

    301
    13 years practicing attorney, MBA
 
 
 

Related Business Law Questions

Chat Now With A Business Lawyer
Law Pro
Law Pro
Business Lawyer
24644 Satisfied Customers
20 years experience in business law - sole proprietor, partnership, and corporations