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Dimitry K., Esq.
Dimitry K., Esq., Attorney
Category: Legal
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Experience:  Multiple jurisdictions, specialize in business/contract disputes, estate creation and administration.
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I sold business assets with a down payment and took back a

Resolved Question:

I sold business assets with a down payment and took back a promissory note. The note and agreement was secured by the business assets. They defaulted and I took back the business assets according to the Arizona UCC and the verbage in the agreement. They voluntarily returned the assets. Can I sue them for the unpaid payments at the time I took back the assets or are they considered "paid in full"?
Submitted: 1 year ago.
Category: Legal
Expert:  Dimitry K., Esq. replied 1 year ago.

Thank you for your question. Please permit me to assist you with your concerns.

The secured asset is used to cover all (or part) of the debt owed to the creditor, depending on the value of the debt. For example if there is a $20,000 deficiency based on the value of the assets you took back and what you are still owed, you could still sue them for the deficiency owed plus the cost of collections if any. They are not considered 'paid in full' unless your promissory note expressly states so, or if you gave them a receipt (or waiver) wen they returned the items to you, that you would considered them to fully conclude their obligation to you. Their voluntary return is not relevant, other than lowering your costs for collection, what is relevant is the language in your agreement.

Hope that helps.

Customer: replied 1 year ago.

I assume that the value of the business is the same as when they purchased it. So if I took it back do they owe me the unpaid payments?


 

Expert:  Dimitry K., Esq. replied 1 year ago.

Tom,

That is not quite a correct assumption. What governs is the value of the asset (or business) at the time fo default, not at time of purchase. If they bought the business for $100K, it is now worth $20K, but they borrowed $60K on it, they would still owe a $40K deficiency. They would only owe you unpaid payments if there is a deficiency, but if the asset you took back is worth more than the debt, no further payments are owed.

Good luck.

Dimitry K., Esq., Attorney
Category: Legal
Satisfied Customers: 36753
Experience: Multiple jurisdictions, specialize in business/contract disputes, estate creation and administration.
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