Owner financing business with breach

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Owner financing business with breach

I entered a written agreement to sell a hair salon to a stylist. I don’t run it or work there. She hired another unlicensed stylist and allowed her to perform hair color and cuts which is illegal. She paid

this unlicensed stylist cash daily from company funds. She also unplugged surveillance and had massage tables in back with no licensed therapists. I told her shop was closed until everything legal and I took down my salon license and cut off electric. Can I keep electric off until she complies or leaves?

Asked on January 19, 2018 under Business Law, Florida

Answers:

SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 3 years ago | Contributor

You may NOT simply shut off electric: that is never allowed when someone is leasing space from you or has a license  to use your space. What you can do depends on: 
1) Who has title at present? If you have already transferred it to her, then even if she still owes you money, you have no control over what she does, and you cannot do anything.
2) If you still have title, what does any written agreement (e.g. a lease, a lease-to-own, a purchase, etc. agreement) say? You can enforce the terms of any agreement against her, but cannot require her to do things not in the agreement. So if there an agreement requiring her to comply with the law while occupying the space, you can enforce that agreement--e.g. terminate the agreement for her breach while seeking compensation from her; evict her for noncompliance by bringing a legal action; etc. But if there is no requirement in the agreement for her to obey the law, then you may not be able to force her to do so: when you lease space or enter into any other kind of commercial transaction, your rights and the other party's obligations are defined by the agreement, and you have no more or different rights than the agreement gives you.
A good idea would be to bring a copy of the agreement to an attoreny to review with you, to understand your rights and options.


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