Caveat Emptor or buyer beware are often used expressions. But do you really know what this means?
Before buying, you should thoroughly check. This includes:
You may want to check other things. Such as, just because you are buying a fish and chip shop, this does not mean that the Council has approved the use of that shop to sell fish and chips. Environmental and heritage concerns may also apply.
The cooling-off period will not always save you, particularly when you are buying 3 days before or after an auction, industrial or commercial use property or a farm larger than 20 hectares. If you try to cool-off, you will lose some of the deposit. Many people try to cool-off after the 3 – day period has expired. There is usually no cooling-off period when buying a business.
Clients will say to me that they know what they are buying because they have read the section 32 or section 52 disclosure statement. Everything is not in those disclosure statements. For a business, it is important to understand the business and ‘trial’ the business. Two weeks of takings are not usually representative of the turn-over of a business and can often be quite misleading. The existence of asbestos in building materials will not be evident in the disclosure statement.
An illegally constructed building extension will not be disclosed in the Disclosure Statement or in the Council’s building department’s report. If no one applied for a permit, then the building department will have no record of the building works. The Council inspector could well ask the Purchaser to demolish the illegal structure, pay a fine and then start again with a planning and building approval process.
The Purchaser will inherit all of the responsibilities of the property from the day the Purchaser signs the Contract. When you are paying so much money, it is worth thoroughly checking. Even check the lights and water supply. It is important to retain and even improve the good-will of the business.
Buying a business is hard work but very rewarding. If you have the co-operation of a caring finance broker who has your best interests in mind and take advice where required, your personal efforts can spurn great margins.
Most small businesses fail due to insufficient cash-flow. Debt is usually necessary in order to start your business or to expand your business. You should ask your finance broker to regularly assess your debt. If you actively manage your debt, rather than just close your eyes and hope that it will go away, you will be better able to control your business, rather than your business control you.
At Antippa Lawyers, we assist our clients with the purchase of properties and businesses, including retail leasing. We provide personalised care and attention and aim for the highest quality of legal service at a reasonable price.
The information provided above is of a general nature only. You should not rely on this information but seek specific advice relevant to your actual circumstances.
To inquire about what we do, ring for an appointment.