Found Buyer For My Business, Who Knows About Bank Liens?help

Business By tasteebakes Updated 15 May 2009 , 12:37am by tasteebakes

tasteebakes Posted 11 Feb 2009 , 11:19pm
post #1 of 11

I have found a buyer for my business. I have never sold a business before. I hope someone can help me answer these questions because i have googled it in every form I can think of and can't find an answer.

When I bought the business, I took out a business loan. I believe the loan officer then put a lien on the equipment and (I know) one on our Chevy Trailblazer.

When I sell the business, do I have to repay the entire remaining loan balance or can I keep the money and continue to make the payments on the loan? What about paying half of the loan balance and continuing to pay the balance down each month.

Is there anything to prevent me from selling to the buyer?

Any loan officers out there? I would like to have my ducks in a row so to speak before I talk to my loan officer...

Thanks in advance!

10 replies
cakesdivine Posted 11 Feb 2009 , 11:33pm
post #2 of 11

If I were you I would contact a commercial real estate lawyer about these questions. Each state is probably different. To my knowledge in Texas if there is any kind of lien, it must be satisfied at the closing for the property to be able to be owned by the buyer. If you sell and the lien isn't satisfied, then how can the lien holder have a secured loan with you? They can't. The loan you have with them is based on the colateral in which they have the lien against. If you sell that colateral, you have to satisfy the loan to have the liens removed. That is one of the reasons lien are placed on property.

I had to place a lien on my home after my divorce because my ex didn't sell it and I had to be guaranteed my half of the equity. Unfortunately, when he did sell the house I had to remove the lien so he could sell it. He had taken out a loan against the equity after the divorce behind my back, so when he went to sell it there was very little equity left. Because my lien was larger than the current sell would yield in equity in order for him to sell it I had to release it. I only did it because if he didn't sell it would go into forclosure and I would have receive NOTHING. so I settled for $5500 (all that was left in the equity). I can sue him for the balance but don't feel it is worth all the agony or my out of pocket costs.

Just check with your own state's commercial real estate laws. They will be able to let you know what can be done and what can't.

mlharvell Posted 11 Feb 2009 , 11:40pm
post #3 of 11

cakesdivine is right - liens must be satisfied before the completion of the sale.

teswade Posted 11 Feb 2009 , 11:53pm
post #4 of 11

you could always get a comercial realtor to help you. if you paid them a commission, they would do all that stuff for you. they might even charge you a lower comission rate because you already have the buyer. if you have someone representing you, there is a lot less that can go wrong. if the buyer already has an agent they might be able to represent both of you, but be carefulbecause that can get sticky sometimes. if it is not in your budget to get a realtor, you can talk to your loan officer. either way, all liens must be satisfied when you sell. make sure you don't have a pre payment penalty on anything either. sorry that was a lot of random info, but i hope it helps some.

janelwaters Posted 11 Feb 2009 , 11:55pm
post #5 of 11

Is the trailblazer a business asset or a personal asset - if it is business than the whole loan must be paid off and the lien satisfied - if it is a personal asset you can contact your loan officer and see what they would release the equipment for so that you can sell and allow you to continue to make payments on the loan now secured only by the trailblazer.

In the state of the current economy and dropping values in everything - I would venture a guess that you are going to have to satisfy the whole loan. Talk to your loan officer...

good luck! glad you got a sale!

cakesbycathy Posted 12 Feb 2009 , 12:24am
post #6 of 11

I would also contact a real estate attorney.

ziggytarheel Posted 12 Feb 2009 , 12:37am
post #7 of 11

I think it helps to remember that the purpose of the lien was to give the bank something of value in case you default. It makes the loan "secured". The loan would be "unsecured" without collateral if you could somehow continue making payments on something you don't own. That's why it is extremely unlikely that there would be any circumstance where you could continue to make payments without owning the items in question. In such a situation, the consumer would also lose some of their motivation to actually make the payments.

HTH

evasmama Posted 12 Feb 2009 , 4:38am
post #8 of 11

Paralegal and real estate title clerk here...

First off, PLEASE...GET A BUSINESS LAWYER! (Not a real estate lawyer or a Realtor...different ball game.) To paraphrase lawyer and radio host Bill Handel, you wouldn't do a Google search on how to perform surgery on yourself if you were sick, right? Then why would you risk the sale of your business by trying to do it yourself? Trust me...it's worth the expense.

A lien is not the same thing as a loan. A lien is placed upon property you own by a person who has obtained a judgment against you in a court of law, used as a means of collecting the judgment in the event you don't have cash. If you are not in default on your business loan, there is not likely a lien on anything yet.

When applying for the loan, did you use the equipment and SUV as collateral? That's not the same thing as having liens on them. If you used them as collateral, they are simply a guarantee of payment; if you don't pay with cash, the lender can collect those items as payment and auction them off to satisfy your debt.

The loan must be repaid as soon as the business is sold. It's just like selling a car or a house. You can't keep the money and continue to make payments. In order to see if anything stands in the way of the sale, you might run a credit check on yourself.

HTH!

~Jennifer

ziggytarheel Posted 12 Feb 2009 , 11:51am
post #9 of 11
Quote:
Originally Posted by evasmama

Paralegal and real estate title clerk here...

First off, PLEASE...GET A BUSINESS LAWYER! (Not a real estate lawyer or a Realtor...different ball game.) To paraphrase lawyer and radio host Bill Handel, you wouldn't do a Google search on how to perform surgery on yourself if you were sick, right? Then why would you risk the sale of your business by trying to do it yourself? Trust me...it's worth the expense.

A lien is not the same thing as a loan. A lien is placed upon property you own by a person who has obtained a judgment against you in a court of law, used as a means of collecting the judgment in the event you don't have cash. If you are not in default on your business loan, there is not likely a lien on anything yet.

When applying for the loan, did you use the equipment and SUV as collateral? That's not the same thing as having liens on them. If you used them as collateral, they are simply a guarantee of payment; if you don't pay with cash, the lender can collect those items as payment and auction them off to satisfy your debt.

The loan must be repaid as soon as the business is sold. It's just like selling a car or a house. You can't keep the money and continue to make payments. In order to see if anything stands in the way of the sale, you might run a credit check on yourself.

HTH!

~Jennifer




I am certainly not a paralegal, but in my line of work, I deal with "lienholders" every day. The word "lienholder" is stamped on documents that we send out to the institution issuing a loan for a vehicle. So again another reason for good advice, because this terminology is definitely used in my line of work for all car loans and all equipment loans.

cakeelf Posted 28 Mar 2009 , 12:15am
post #10 of 11

Hi!

I sold my business two and a half years ago.
Yup, all loans must be satisfied and once that happens, liens are removed. This takes documentation and a good team helping you out.

I had a great lawyer and cpa.

Did not go through a real estate broker, sold thru word of mouth in the inudustry.

icon_biggrin.gif

tasteebakes Posted 15 May 2009 , 12:37am
post #11 of 11

Thanks all! Sorry I didn't get back here. Sale fell through.

So now I have a couple who will be managing my business for me while I am out of the country. Scary, I know.

I am also looking for a decorator who can continue doing cakes at this location. Soooo, if you know any decorators in NW Arkansas....

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