Understand Your Buy And Sell Agreement Before Moving Forward
Buy-sell agreements are legally binding documents that must be carefully drafted and reviewed prior to a real estate transaction. Due to their legal nature, you should always consider speaking to an attorney before signing anything related to the transaction.
Our team at Sack Rosendin Inc., helps individual investors and owners of businesses large and small find success in their real estate purchases. Our services may include:
- Reviewing or drafting an agreement
- Helping you understand what you are signing
- Acting as advisors to guide the process and answer any questions
- Taking legal action if the agreement’s terms are breached
We Look At The Bigger Picture
Our lawyers are widely respected in California for their professionalism and tough approach to cases. Our tireless work ethic and our focus on our clients’ needs are the biggest factors in our success. When you meet with one of our attorneys, you can have full confidence that your business and your future is in good hands.
Our team looks at the bigger picture of every case. We understand a buy-sell agreement does not stand in isolation; rather, it fits into a set of personal or business goals and can impact your future. We are attorneys with vision, collaborating with clients to find the best path to these goals.
Frequently Asked Questions About California Buy-Sell Agreements
Buy-sell agreements are important inclusions in most partnership agreements. Those starting new businesses and those hoping to acquire a partner’s interest in a company may need to know more about these documents.
Is a buy-sell agreement the same as a purchase and sale agreement?
A buy-sell agreement is not the same thing as a purchase and sale agreement. A purchase and sale agreement is essentially a contract outlining the terms of a proposed business transaction.
A buy-sell agreement is typically part of a partnership agreement. The purpose of a buy-sell agreement is not to outline the details of a specific transaction but instead to provide the framework for a partnership buyout if one becomes necessary in the future.
When does a buy-sell agreement become legally binding in California?
The terms of a buy-sell agreement may include standards regarding business valuation, a timeline for the buyout process and other details, such as when one partner can pursue a buyout. Technically, the agreement becomes legally binding at the time of signing.
Partners generally sign a buy-sell agreement when they sign their partnership agreement and other key business formation documents. However, the agreement only goes into effect when qualifying circumstances arise. At that point, the partner hoping to invoke the buy-sell agreement must follow the instructions provided in the document.
What are the most common contingencies included in California buy-sell agreements?
Contingencies in a buy-sell agreement may allow either partner to cancel a transaction. Frequently, the acquiring party may need to make use of a financing contingency. The transaction may not take place if they cannot receive final approval for any necessary loans.
Lease assignment contingencies are also common. Landlords often look at the resources of both partners when setting terms for a commercial lease. The inability of one partner to modify or assume the lease could force the termination of a buyout transaction.
In many cases, the acquiring partner needs to secure business licenses or permits in their own name, making a license or permit contingency necessary. Due diligence contingencies that allow the buyer to conduct a deep dive into financial records and qualified buyer contingencies that protect the selling party are also relatively common.
Negotiating appropriate contingencies and recognizing when they might affect a transaction can be critical for those seeking to terminate a business partnership by completing a partnership buyout.
Speak With Us Today
Before proceeding without legal guidance, contact us at 510-270-5559 or email us to schedule a free consultation at our Oakland office. We work in the areas around Alameda County and East Bay.