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Are there any legal issues arising from the typed agreement received?

Whitestone, NY |

I am the accountant and I ran into an issue that is new to me. My client(my brother) purchased an exisiting Hair salon . It is an LLC, NY. The only doc received is a typed agreement made up of a few paragraphs that DOES NOT specify what the sale of the business includes. My brother says he gets the clients and the salon chairs. However, I dont know if he now owns the name of the business . He says there are no accounting records, no other documents he received. The agreement was not even notarized. My brother has been operating the business for a few months now. What are my legal implications if any? Note my brother purchases an Unincorporated business and received a personal loan with no interest. Are there any legal issues here? If the seller owes taxes is the buyer liable for them?

Attorney Answers 5

  1. There are several issues. In order to protect his interests, your brother and the seller should not only execute a detailed asset purchase agreement that fully outlines the terms and what's included in the sale, but he should conduct full due diligence to determine whether this deal can/should be concluded. He really should speak with a qualified business attorney in his area before proceeding.

    If you find this answer useful, please mark it as "Helpful". Likewise, if you believe it is the most responsive, please mark it as the "Best Answer". The information provided herein is for informational purposes only, and should not be relied upon or construed as legal advice or legal opinion. You should not rely upon the information provided at this site without seeking individual advice from an attorney. No attorney-client relationship can be assumed or created by this post.

  2. As attorney Campanella indicated, your brother really needs to sit down with counsel to go over this transaction. Among the issues presented are whether he assumed any liabilities, did he purchase the LLC or shares thereof? If the business was unincorporated what is the LLC that you mention?

    There are tax considerations that need to be taken into account as well. We would be happy to speak to you and your brother to discuss this purchase.

    Answering this question does not create an attorney-client relationship between us. The answer given is for informational purposes only and is not a substitute for contacting an attorney licensed to practice in your jurisdiction and obtaining legal advice from such an attorney.

  3. There should have been a purchase agreement, a search for judgment, liens and bankruptcy, a clearance from NYS department of taxation and finance, a restrictive covenant and more items. Your brother should consult with an experienced attorney to discuss the matter. Also, the lawyer should review lease and the loan agreement and security agreement if any.

    If this answer is helpful, then please mark the helpful button. If this is the best answer, then please indicate it. Thanks. For further information you should see an attorney and discuss the matter completely. If you are in the New York City area, then you can reach me during normal business hours at 718 329 9500 or

  4. This sale should be done as an "asset sale" as opposed to the sale of the business entity (the LLC).

    This would keep your brother from being responsible for the taxes and other liabilities incurred by the seller, LLC.

    The purchaser would still have to get a release from the NYS sales taxes which could be done prior to or simultaneously with the closing (providing a suitable escrow would be deposited by the seller).

    Of course a competently drafted contract would address many other issues, including but not limited to the one which you brought up. What is included in the sale?

    You should retain counsel familiar with sales and purchases of business in order to review the documents signed in conjunction with this sale and to advise the purchaser going forward.

    Note: This response is for general informational purposes only. No attorney-client relationship is created. No responsiblity shall be taken by the submitting attorney for any individuals acting pursuant to any information contained herein.

  5. We would need to review the document you're talking about, and then we would be able to answer your questions. A consultation of that nature (by email, phone, or in person) would cost in the neighborhood of $150 to $200. My phone number is 718-544-3434. My email address is

    I'm located in Forest Hills, Queens.

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