30 May Early Possession (Part 2 of 2)
Part 1 of this article shared what early possession is and why it should be avoided.
However, if you get stuck and the buyer and seller insist, you need to protect yourself, your company and your commissions. Have the buyer and seller sign a document such as the following:
The buyer and seller have been informed by Julie Broker and Associates, and its associate Bill Agent, that taking possession of the business prior to the legal closing may result in detrimental changes to the business, and may affect the closing of the sale.
Note: This is just a sample and should be reviewed by your attorney.
Before early possession is granted, you should make sure that all the legal work has been completed, such as the lease assignment, UCC searches, and that all moneys are in (this is critical), all the documents have been approved and signed, all contingencies have been satisfied, and that no problem exists with licensing, etc. In other words, no possession takes place, early or not, before all the work is done. In addition something similar to the following should be made part of their legal documentation.
The seller is granting physical possession of the premises to the buyer prior to the legal closing. The buyer is aware that he will be financially responsible for all indebtedness incurred by him or her from the date of physical possession. The seller is aware that allowing possession prior to the closing may result in detrimental changes to the business and that there is no guarantee that the pending sale of the business will be consummated. Both buyer and seller agree to indemnify Julie Broker and Associates, their agents, associates and (name of escrow company, closing attorney, etc.) from any damages or liabilities as a result of seller granting buyer possession prior to close, and to hold them harmless as a result of this action.