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 Dimitry K., Esq. Your Own Question
Dimitry K., Esq.
Dimitry K., Esq., Attorney
Category: Business Law
Satisfied Customers: 41221
Experience:  Run my own successful business/contract law practice.
18572087
Type Your Business Law Question Here...
Dimitry K., Esq. is online now
A new question is answered every 9 seconds

I sold business assets with a down payment and took back a

This answer was rated:

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"?

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 4 years 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?


 

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. and 2 other Business Law Specialists are ready to help you