Avoiding the Pitfalls
I’ve been looking to buy a business for some time. I’ve found one which is being sold by an agent. They have given me what they say is a standard contract and said I have to pay a 10% deposit now. They say I don’t need a solicitor.
Be careful. There’s no such thing as a ‘standard contract’ in these circumstances. At the very least, read through it extremely carefully and make sure that you understand exactly what you are signing up to. It is strongly advisable that you speak to a solicitor and get some initial advice before you sign anything or hand over any money. Try to find a solicitor who is experienced in handling business sales and purchases. Remember that business selling agents in these circumstances act on behalf of the seller of the business. It is not their job to make sure that the buyer is properly advised. I’ve had reports of prospective buyers being put under a lot of pressure to sign these types of contracts on the basis that it is the only way to proceed. Usually it’s not. Getting proper advice at this stage can be the key to avoiding expensive mistakes.
The business I’m looking for trades from a shop that is leased from a private landlord. The seller of the business says we can just transfer the lease to my name but I will need to pay the seller’s and the landlord’s costs for dealing with this. He says this is normal?
Hang on. Entering into a lease of a commercial premises is usually a serious commitment. Are you sure that you understand all of the terms and, equally important, what is not included? Again, it is strongly advisable to get some proper advice at this stage to make sure that your interests are protected. If you are taking over a lease in the middle of its term it may well be that it is difficult to change any of those terms, but at the very least you should be comfortable that you know what they mean and their potential consequences.
As far as costs are concerned, this is another point to be negotiated. It is likely that the landlord will expect his costs to be paid but there is no reason why those should necessarily be paid by you. Perhaps the seller will agree to pay half of them?