What documentation is needed to buy equipment from a business?

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What documentation is needed to buy equipment from a business?

We are buying equipment from a business that is closing there business; we are starting up our own using this equipment. It is a salon. What is needed to protect us from any liability or debts that they might have? Are we protected because we aren’t buying the business just the equipment?

Asked on May 6, 2015 under Business Law, Michigan

Answers:

SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 5 years ago | Contributor

Buying just the equiptment, not the business, goes a long way towards protecting you--it protects you from general business liability. But it won't help if there is a lien on the equipment (e.g. it was financed), because then you'd have to pay off the debt or have it repossessed (the same way that if you buy a house with mortgage, the mortgage has to be paid off before it's yours). You need to do UCC search to see if there are any liens. And you should also have the seller's execute (sign) a document that states that they represent that there are no liens or other encumbrances and will indemnify (reimburse) in the event there are any.


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