Buyers and Sellers Closing Responsibilities
The following checklist is designed to be an important reference for business buyers and sellers.
- From the time of signing contracts up until the closing, please be available by phone and return calls as soon as possible to your agent and others involved in the sale. Check your email daily and frequently.
- Be sure you, as a buyer, call the seller to set up and follow through appointment for the Due Diligence review as soon as possible after execution of the Asset Purchase Agreement. It is the seller’s job to walk the buyer through the books and records of the business to prove the income and expenses. Buyers and sellers do this together on their own time, without Broker involvement, as private business matters are usually discussed.
- If you are receiving email from First Choice, the sender’s email address could be firstname.lastname@example.org or email@example.com or firstname.lastname@example.org or some other foreign email that your browser doesn’t recognize. Please check your spam/junk email bin frequently, and set it to allow this email information to go directly to your email inbox.
- For the closing of escrow, be sure to have certified cleared funds in the form of a Cashier’s Check or Wire Transfer as per the wire instructions available from the escrow/title company. As a matter of law, personal checks or other business checks are not acceptable at a closing. Please wire several days before the closing and obtain cashier’s checks at least one day before the closing.
- It is suggested that an extra $500.00 “cushion” is added to the total amount of the check/transfer requested by the escrow/title company. This is to cover unseen items that often arise in business sales closings. Any excess funds will be returned to you at the closing via a check from the title company.
- Funds that are coming from relatives, lines of credit, equity loans, stock or mutual fund sales, insurance companies, etc. must all be wired into the title company trust account several days before the closing. Institutional checks from non-banks are not considered cleared funds. Depositing paper checks received from these sources will cause unnecessary bank processing delays for funds to clear, which can be up to ten business days. Wiring funds saves time and processing.
- Be sure to be covered by insurance by closing. The Landlord and any Note Holder(s) should be named as loss beneficiaries. It can be beneficial to use the Seller’s insurance company when possible.
- TIME IS OF THE ESSENCE” when it comes to all business closings. Businesses generally close very quickly. It is imperative that buyers and sellers close “on or before” the date specified in the Asset Purchase Agreement. The closing should happen shortly after all contingencies have been satisfied, even if well before the written outside timeline closing date in the Agreement. The escrow/title company will confirm the date and time of closing.
- The closing is not postponed for such items as the finalization of corporation paperwork, credit card machine agreements and transfers, or other items not required to close. These items can be finalized before, during, or after the closing.
- Additionally, in most cases, buyers or sellers leaving town, moving, or going on vacation, etc. are not valid or accepted reasons to postpone or change a closing date. The buyers and sellers cannot arbitrarily agree to postpone the closing on their own, without the Broker’s written consent.
- Buyers should not expect to do any training with sellers until after the close of escrow. There is too much risk and liability involved for both parties.
- Please be prompt in returning all forms and documents requiring signature, examples such as the Due Diligence Release form and the application to the landlord. Sign off on all documents in an immediate timely manner, as all signatures are expected immediately. Not signing the forms does not extend Due Diligence or other time periods, it only causes you and others problems.
- You must close on the business before you apply for a business license or transfer utilities into your own name! Licensing will want to see you Bill of Sale and space lease or the assignment of the space lease.
- This is designed to be a basic list, and other requirements may apply. If you have any questions, please consult your agent and/or the escrow/title company when applicable.