What Are My Remedies After Purchasing A Business? Thomas Pedreira
Q.
In 2005, I purchased my business (restaurant) where the seller disclosed the business was eligible for all Lottery games (large revenue source).
Upon meeting with the lottery commission some 3 months later while reviewing my application, they inspected the facility and said it was not eligible for lottery and needed to meet ADA requirements. Substantial monetary upgrades.
The seller is also the property owner. He was notified and he said he would resolve the issue. Was never done! I lost substantial revenue and during the course have lost the business due the unrealized revenue (avg. $60,000-$100,000/yr) per state lottery report.
Sale of business is on contract with seller. Is there any protection from him for default on the contract since he failed to fulfill the original disclosure and agreement?
-- Rick
A.
A first thing to note is that you bought the business in 2005 and two years have gone by. You should have gone to see a lawyer a long time ago on this.
Look at your purchase agreement. What does it say about Lottery games? Was there a representation by the seller that the business was properly licensed and otherwise eligible to sell lottery tickets? This may be key to whether or not you have a remedy against the seller. However, it may be a problem that you have waited so long. Also, you have a duty to mitigate your damages. What have you done to try to get licensed in the meanwhile? You could have made the ADA improvements and then gone after to seller to reimburse you.
It sounds like the seller is still your landlord. What does the lease say?
Did you pay all cash at closing? Oftentimes, the buyer will insist on a portion of the purchase price being set aside as a reserve, just in case issues like this come up.
You are in a tough situation. Go see a lawyer right away if you have not already done so. Take all your documentation with you.
