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I purchased a business with seller financing and am at risk…

Customer Question
I purchased a business...

I purchased a business with seller financing and am at risk of defaulting. The buyer has UCC liens on the equipment

Lawyer's Assistant: What state are you in? It matters because laws vary by location.

Illinois

Lawyer's Assistant: Has anything been filed or reported?

I don't believe he has actually filed the UCC liens but it's in the contract we signed that it will be done

Lawyer's Assistant: Anything else you want the lawyer to know before I connect you?

That I would love to cut my losses from the down payment of the business and happy for the previous owner to take all of the assets back, I just want to know if it will affect my personal assets

Submitted: 8 months ago.Category: Legal
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Answered in 5 minutes by:
12/15/2017
Lawyer: Loren, Attorney replied 8 months ago
Loren
Loren, Attorney
Category: Legal
Satisfied Customers: 39,219
Experience: 30 years experience representing clients.
Verified
Thank you for using JA. I am Loren, an Illinois licensed attorney for over 30 yrs., and I am here to help.
I am a certified expert on JustAnswer since 2009, with nearly 100% in 5 star ratings. So, we should be able to work through your problem.
I appreciate your patience as I review your question. I will post my response shortly.
This is general information and no attorney client relationship is established.
The site may ask you if you wish to speak by phone for an extra charge. Many find the phone call to be the easiest and fastest way to get the information they need without posting on a public forum. I am also happy to continue online.
There may be a slight delay in my replies as I am assisting other JA customers also. I will reply to your follow up questions.
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Lawyer: Loren, Attorney replied 8 months ago
Did you sign the contract personally or as an entity, such as a corporation or LLC?
Did you personally guaranty the purchase obligations?
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Customer reply replied 8 months ago
I signed as one business buying another business, but he had both my partner and I sign the documents. On the contract, it only shows the UCCliens as collateral, but it worries me that I don't fully understand why both my partner and I had to sign
Lawyer: Loren, Attorney replied 8 months ago

Thank you for the additional information.

If you, as buyer, only signed in your capacity as a corporate officer or LLC manager then you have no personal exposure and your seller may only seek satisfaction from the assets held by entity, not you, in the event they sue for default and obtain a judgment.

However, if you signed a personal guaranty then, even if the buyer is a separate entity, you can be personally liable for breach and your assets would be vulnerable in the event a judgment was granted.

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Customer reply replied 8 months ago
Would there be a separate agreement or contract specifically for a personal guarantee? I just wasn't sure if simply my signature and my wife's signature was a personal guarantee. The seller was pretty adamant about my wife's signature being on the documents as well, and I don't understand that if no personal assets can be retrieved anyhow.
Customer reply replied 8 months ago
If I want to give back the assets, does it even have to go to court for a judgement?
Lawyer: Loren, Attorney replied 8 months ago

You should probably take a closer look now at the documents you and your partner signed personally to determine your exposure to liability..

Yes, a personal guaranty would likely be a separate document. If you and your wife were both required to sign then it sounds as if you signed a guaranty.

If you default then the seller would need to go to court and get a judgment against you before he could attach your personal assets or garnish your accounts.

Hopefully, you could negotiate a settlement before that happens to obtain a release and cut off further liability. That may be the turnover of the collateral, if it satisfies the liability. It will, in all likelihood, be negotiated. Very few claims actually go to trial and judgment.

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Lawyer: Loren, Attorney replied 8 months ago

If you reach a negotiated settlement, make sure it is in writing and that you obtain a signed release of liability, both personally and for whatever entity is the borrower, so that further liability is cut off and it is enforceable in court.

You may want to retain a local attorney to help you negotiate the exit. It is not required, but it will be helpful and is recommended.

If you need assistance finding local counsel try Martindale Hubble (site rules prohibit us from referring specific attorneys). Many attorneys, themselves, use this site to locate attorneys outside their jurisdiction or expertise:

http://www.martindale.com/Find-Lawyers-and-Law-Firms.aspx

It is a huge worldwide database searchable by location and specialty. The attorneys are peer rated. So, they represent the top of the profession.

If (and only if) you are completely satisfied that your question is answered, please remember to leave a favorable rating (click 5 stars in the rating section on this page). It is the only way that I am credited by JustAnswer for answering your question.

There is no additional charge to you for rating me favorably.

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Lawyer: Loren, Attorney replied 8 months ago

Are you still online with me?

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Customer reply replied 8 months ago
I'm looking at the contract and next to our names it says "individually". So it seems that we did sign as individuals
Lawyer: Loren, Attorney replied 8 months ago

Yes, it sounds as if you are personally liable for the purchase obligations.

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Lawyer: Loren, Attorney replied 8 months ago

Did you have further questions? Have I answered your question?

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Customer reply replied 8 months ago
i do have further questions but am not available for a call right now. Can I schedule a call for you later?
Lawyer: Loren, Attorney replied 8 months ago

of course.

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Lawyer: Loren, Attorney replied 8 months ago

If you have no further questions please remember to rate my service (5 Stars) so that I am credited by JA for answering your question and also so that I may close the question.

There is no additional charge to you for a 5 star rating of my service.

Thank you!

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Customer reply replied 7 months ago
Hi Loren, can I please get on a call with you now?
Customer reply replied 7 months ago
How do I provide you my phone number?
Lawyer: Loren, Attorney replied 7 months ago

The premium service is showing a payment failure.

It may have triggered a fraud alert on your card, which you need to respond to with the bank.

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Customer reply replied 7 months ago
Okay, can you resend the offer please?
Customer reply replied 7 months ago
Just resubmitted payment, does it show that it went through on your end?
Lawyer: Loren, Attorney replied 7 months ago

I can not from my end, after making the initial offer. You need to contact customer service or make an offer from your side.

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Customer reply replied 7 months ago
I was able to submit payment again on my end, can you see if it went through on your end?
Lawyer: Loren, Attorney replied 7 months ago

I tried to make another offer and the site will not let me. I am not an employee of JA and I can not see your account.

You will need to contact customer care to straighten this out and then we can speak.

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Lawyer: Loren, Attorney replied 7 months ago

Are you still online with me?

Ask Your Own Legal Question
Lawyer: Loren, Attorney replied 7 months ago

If you have no further questions please remember to rate my service (5 Stars) so that I am credited by JA for answering your question and also so that I may close the question.

There is no additional charge to you for a 5 star rating of my service.

Thank you!

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