Buying A Business? Two Reasons To Conduct A Lien Search
If you are looking to become an entrepreneur and want to avoid some of the growing pains associated with startups, buying an existing business can be a very interesting option. You may find it to be easier to sell because the business comes with a built-in audience and there are possibly bona fide relationships with suppliers that make it a breeze for you to order new products to keep your inventory well-stocked. However, while there are some significant advantages associated with purchasing a company, there are potential drawbacks you need to be aware of. Before you take possession of any business here are a couple of reasons why you must do a lien search.
Don't Take On The Debt Of The Previous Owner
No matter how pristine a business may appear to be on paper, there is always the chance that there are one or more liens out there against the company. The owner may show you how profitable they were over the last few quarters or highlight the beauty of the location. What may not be as apparent is the fact that a creditor has filed a lien against the business and the moment you sign for the property you will then be responsible for paying off the debt.
Doing a lien search protects you from taking on what could become an extreme liability. The current owner may or may not be aware of the lien but under basic legal tenets, the debt could be transferred to you in the process of the sale. Think of how disappointing it would be to get what seems to be a booming business only to find out later on that you now owe a debt to the tune of thousands of dollars that must be paid or you lose everything. Stay far away from this kind of situation by getting the lien search.
Put Checks And Balances Into The Purchasing Contract
Doing a lien search is the appropriate first step but you might want to go a little further by including a clause in the contract that will boost your protection against liens that may not have shown up right away. Ask the seller to agree to pay for any liens they caused that could surface later and put it into the contract.
You are making an investment that you want to pay off handsomely in the future. Get a lien search and read through the report to make sure the business is in the clear.
For more information, contact a lien search service today.
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