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Richard
Richard, Attorney
Category: Business Law
Satisfied Customers: 45633
Experience:  32 years of experience practicing law and a businessman.
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I sold a bar and carried a promissary note It is now in a

Customer Question

I sold a bar and carried a promissary note It is now in a corporation. A few years later sold the building.
The building is part of an llc and I am starting the paperwork with the title company who collects the note to forclose, a 91 day go to auction process.
The other note is for the liquor license, fixtures equipment etc. The wording in the note says I can excellerate if they are 30 days or more behind and I can get the license etc back.
There were 2 people involved one died and the other is a lady who we belive is drunk most of the time and has a manager trying to run the place. The rumor is that she says we can't do anything for 3 months and by then she will strip the place.
My actual question is this. If we repossess the business, and the foreclosure is not complete on the building , where do we stand with the fixtures and equipment in the building? Would we need to get them out of the building. We have no way to know if someone will out bid us on the building and we will just get our money or if she may decide to somehow pay the amount owed in full or if someone else will get the property.
Thank You,
Jeanne Gomer Florence Az the property is in cochise co AZ
Submitted: 1 year ago.
Category: Business Law
Expert:  Richard replied 1 year ago.
Welcome! My goal is to do my very best to understand your situation and to provide a full and complete answer for you.

Good afternoon. The fixtures and equipment attached to the building are considered part of the building and cannot be taken out because they are deemed part of the building. If you think you are at risk for her stripping the building, you would want to file a petition with the court asking the court to issue an injunction prohibiting the removal of any fixtures and equipment pending foreclosure and suit for any deficiency on the note. Once the court issues the injunction, if she were to remove anything, she would be in contempt of court and subject to both civil and/or criminal sanction by the court. That will hold things in place while you foreclose and sue on any deficiency on the note to the extent the value of the property from the foreclosure sale is not sufficient to pay your note in full.


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Customer: replied 1 year ago.

These are two separate notes and one is secured by the real estate


the other note is secured by the fixtures equipment, liquor license name and a ucc was filed listing the equipment secured by that note. however over the years some of the equipment has been changed or replaced but would be similar such as a beer cooler, draft box ice machine pool tables etc. This goes back to 1995.


I understand the process for the repo of the building and the auction.


The company that services the promissory note does not get involved in repo, but the note says I can call the entire balance of the note due at once if they do not meet the demand.


If I were to repo the liquor license this week and the fixtures and equipment listed in the ucc but the building remains in their control until the auction . she could not operate the bar without the license but I could not either as I would not have access to the building itself???This is what I am not sure about what to do.


Should I wait to foreclose on the liquor license now or wait.


I will go with your suggestion for the injunction to protect the contents of the building if that will hold everything in place until the building is auctioned. I don't see that she will pay off that note however someone else could buy it at the auction. I don' understand that you said the fixtures and equipment are part of the building when they were sold on another note and listed on the ucc.


Jeanne


 

Expert:  Richard replied 1 year ago.
Thanks for your reply. The only fixtures and equipment that would legitimately be covered by the UCC-1 would be those that are not attached to the building. Those attached to the building would be legally considered part of the building and would not be applicable to the UCC-1 because it only addresses personal property, not real property. Any improvements on the land and fixtures attached to the improvements are considered part of the real property. I would suggest you get your injunction now and then wait on the repossession of the liquor license...the reason being is that you probably don't want to shut down the place for the several months and risk losing the customers; only if you think they will alienate all the customers and you're better off closing than letting them run the place would you be better off getting the liquor license now.
Customer: replied 1 year ago.


Let me see if I understand. Will the injunction cover the equipment ie coolers, pool tables, tables bar stools etc. The back bar and bar that is affixed is not that big a deal. My concern would be she take out all the bar equipment. If we repo the license can the equipment remain in the building until we know the outcome of the auction and be protected from her doing damage or selling it. Should we get pictures of the existing equipment? Will the equipment they replaced from the original that was there be carried over or is that theirs. We may not end up with the building. What rights would they have if any while it is in repossesiont if they cannot operate the bar business without a license ?


Jeanne

Expert:  Richard replied 1 year ago.
You will want the judge to issue an injunction prohibiting them from taking out anything until your suit can be adjudicated to determine exactly what is covered by the UCC-1. If the UCC-1 covers everything in that bar, then it will include what was there originally and anything acquired later. They won't have any rights to operate as a bar without a license.
Richard, Attorney
Category: Business Law
Satisfied Customers: 45633
Experience: 32 years of experience practicing law and a businessman.
Richard and other Business Law Specialists are ready to help you
Customer: replied 1 year ago.



Thank you I guess the next step then would be to get a lawyer locally to do that paper work for us or is it something that we could do on our own. We are cash poor right now since we are not getting payments from this property which is a major part of our retirement


Thank you for all your answers. I know what we must do now. What are your thoughts of taking pictures of the inside

Expert:  Richard replied 1 year ago.
I totally agree that you should take pictures of everything to document what's there. And, I would recommend you get a lawyer to help you with this. Your notes should provide that you are entitled to legal fees from them due to their default. \

And, you're very welcome...it's been my pleasure to help!
Expert:  Richard replied 1 year ago.
Thank you so much for the positive rating! I appreciate having had the opportunity to serve you! If I can be of assistance to you in the future, just look me up and I will be happy to help! For easy access, my bookmark is: http://www.justanswer.com/law/expert-legalbeacon/

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