Seller’s Business Disclosure Statement selling a business explained by bizology business brokers

Depending on your state, county or country, a disclosure statement may or may not be required. I recommend it to every seller. Six months after the sale when you are living in the Florida Keys fishing and drinking frozen frosty drinks is not the time you want to learn that the seller did an Environmental II and the neighbors say you were aware of the spill or the state sales tax department feels you under-reported sales and is looking for you... get it out in the open up front so you can enjoy yourself later. You do not want the sale reversed and handed back to you. Yes, it CAN happen.

When I represent a seller to sell their business, I ask specific questions like

  • Has there ever been a violent crime committed at the business?
  • Has there ever been a robbery at the business?
  • Has there have been a fire at the business?
  • Now, with those three in particular, it depends on state law whether it needs to be disclosed or not. In some states a landlord is required to disclose it, leasing agent, real estate agent or business broker. If it is public record, the buyer will learn about it sooner or later. If he still owes you money, you don't want him to learn later...
  • What has the business had for health or zoning violations?
  • Have there been any accidents, slip & fall, or injuries that you are aware of in the last two years?
  • Have all payroll taxes been reported and paid?
  • Have there been any ADA complaints or failed inspections?
  • Are there any environmental issues?
    Now, at the closing, I would be sure everyone is given a signed copy. Buyer, buyer's attorney, buyer's broker, closing attorney or title company, your broker and your attorney. I would ask everyone to sign a receipt that they received it. It does not mean they acknowledge what you disclosed. Keep the receipt yourself.
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