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Do I have any recourse if I find the seller was not truthful?

What if something is discovered after due diligence and closing? Can I be covered if the seller was not honest?

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Answers (3)
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The BAF Group LLC
MD

It depends on what was untruthful. If you are dealing with a bar owner who tells you that he earned $150,000 per year in income, but only reported $15,000 on his Tax Returns, what would be the basis for the sale price? If you pay on the basis of the $150,000, how do you prove that he told you differently? If the information that was false was documented in writing, then it gives you a chance to sue the Seller. If the Seller tells you something verbally that you later find out to be false, how can you verify what he has said in a way that can allow you to take it to court? Get EVERYTHING in writing, and make certain that a competant business attorney is used to write or review the Contract of Sale.

Apr 3, 2009
Fayaz Karim, MBA, CA
Subway Valuations, Business Searches
Consultant
Orange County, CA

There are ways to bug the seller. That is one reason seller financing works and all cash is a bad method of buying
Once you sign off, it is too late usually. Each situation is unique. Sue everyone to get their attention, then negotiate !

Apr 3, 2009
Andrew Cagnetta
Transworld Business Brokers, LLC.
FL
Premium Broker

It depends on the law of the land where the business deal was performed. Usually fraud is illegal and you could sue for damages (if you sustained some). It gets sticky when fraud is not clear and the situation is a "he said, she said". The legal system is slow and expensive. So in the end you need to make a business decision, Also, remember in most states, in business the rule is "caveat emptor" and business people are seen as "professionals" and not protected like consumers.

Mar 24, 2009

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