I’m the listing agent for a restaurant business sale.
The Seller secured the lease and fully renovated the unit using his personal savings without any mortgage financing several decades ago.
The Seller has now sold the business, but the Seller refuses to hire a lawyer. He is insisting that the Buyer’s lawyer handle the lease assignment directly with the Landlord, and that the remaining balance of funds be paid to the Brokerage.
Answer:
Trying to save on legal fees will backfire quite easily. You will have to compromise their rights by amending the standard OREA Forms. That places you at some risk.
It also sounds like they want you to pay the money to them directly following the sale rather than paid to the actual restaurant. You cannot do that because of the risk of tax evasion.
There are some methods to reduce the taxes substantially. So, they should take those steps right now. Once they sign an APS for the business, it’s too late.
So, they need a lawyer and an accountant. If they don’t have anyone, then, there’s a substantial risk that all of those issues fall back upon you.
Your obligation is to:
- know the correct answers,
- provide the correct information to the Seller, or
- if you don’t know, then make a recommendation of other professionals who do.
You should use Form 128 (Seller’s informed consent), and a form which you will have to draft up disclosing material facts. Under TRESA you need to present that document to the Seller for signature and have them acknowledge it etc. That document signed or not signed then needs to be part of your file.
Brian Madigan LL.B., Broker