When buying a small business and after escrow, is closed is there any chance of rescinding the contract or renegotiate it?

M husband bought this place.The seller misrepresented the income information to convince my husband to buy this business at $90,000 with $1000 installments per month putting our condo which is already paid in a Deed of Trust. Its been a month and the pizzeria doesn’t make enough money to even pay for all the expenses. It was a terrible deal. Is there a way out of this protecting our condo at the same time? The price is too high and we don’t want to loose the condo.

Asked on December 5, 2011 under Business Law, California

Answers:

SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 8 years ago | Contributor

If the seller did indeed knowingly or intentionally misrepresent the pizzeria's income, which is a material or critical factor in a business sale, that misrepresenation might constitute fraud; if it does, that could provide grounds to rescind the agreement (you give back the business and get your money back) and/or seek compensation. From what you write, it would be worthwhile to consult with an attorney, who can evaluate the facts (and the evidence you can bring to bear) and advise you as to your rights.

Note that it is not fraud if *you* cannot *now* make as much money as the prior owner  did--that could be due to you not running it as well, increased competition, changing market conditions, etc. It would be fraud if he lied about the income the business did in fact bring in for him, since that would be a lie about an actual fact, and not a projection about the future, which is subject to change.


IMPORTANT NOTICE: The Answer(s) provided above are for general information only. The attorney providing the answer was not serving as the attorney for the person submitting the question or in any attorney-client relationship with such person. Laws may vary from state to state, and sometimes change. Tiny variations in the facts, or a fact not set forth in a question, often can change a legal outcome or an attorney's conclusion. Although AttorneyPages.com has verified the attorney was admitted to practice law in at least one jurisdiction, he or she may not be authorized to practice law in the jurisdiction referred to in the question, nor is he or she necessarily experienced in the area of the law involved. Unlike the information in the Answer(s) above, upon which you should NOT rely, for personal advice you can rely upon we suggest you retain an attorney to represent you.