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Dimitry K., Esq.
Dimitry K., Esq., Attorney
Category: Business Law
Satisfied Customers: 41221
Experience:  Run my own successful business/contract law practice.
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Im starting a auto dealership and a friend is suppling capital

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Im starting a auto dealership and a friend is suppling capital for me to purchase inventory. My friend wants to be protected in the case that something unfortunate happens to me, but Im not sure how to secure the loan since it is made against revolving inventory. Basically, I want to give them a first lien on the business and its assets that would hold up in court if I wasnt around to protect them. What kind of legal document do I need to give them this right?
Submitted: 6 years ago.
Category: Business Law
Expert:  Dimitry K., Esq. replied 6 years ago.
Thank you for your question.

Generally you cannot place a lien on something that is fluid and changing. The best solution would be that you maintain and provide him with a contract under which you acknowledge him as the priXXXXX XXXXXen holder and a primary party to interest on the property. Then, if something DOES happen you (hopefully not), your friend will then have to go to your local city hall and record a lien against your current inventory at that particular time.

Good luck.

Edited by Dimitry Alexander Kaplun on 11/2/2010 at 6:53 PM EST
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