Selling Business Premises

[corcol]

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We owned a small business (including the Freehold of the premises) but couldn’t sell it – so we closed the business down. We now have somebody interested in the premises, and purchaser is asking if we would be interested in providing Vendor Finance. I can’t seem to find and information which looks at this situation from the “Vendor” angle, but I was thinking of:
-deposit of 20%
-interest at 0.75% above Bank Standard Variable Rate
-term 15 years (maximum)
-monthly repayments
-loan secured by first mortgage to us (vendors)
Can anybody see anything wrong with this idea?

[Farid Zaki]

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Hi Corcol,

Would the deposit cover the GST and Capital Gains Tax that will be payable on the sale of the property ?

All banks require at least 30% deposit for commercial properties, so why are you asking for 20% only ?

Does the buyer have any bad credit history ? If not why they cannot borrow from the banks directly ?

Is this the only option you have available for the sale of the property ?

[MattR]

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Farid’s comment on first payment being enough to cover the GST and CGT is quite valid.

CGT is calculated on contract date, so assuming you have made a gain then this is calculated generally on exchange of contracts for property (and not settlement)

GST is on settlement, but look at you registration. If you as landlords are registered for GST, and if you don’t have a tennant, then its most likely you’ll have to charge GST as you aren’t selling a going concern.

[bizbuysellcoach]

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corcol, post: 36454 wrote:

We owned a small business (including the Freehold of the premises) but couldn’t sell it – so we closed the business down. We now have somebody interested in the premises, and purchaser is asking if we would be interested in providing Vendor Finance. I can’t seem to find and information which looks at this situation from the “Vendor” angle, but I was thinking of:
-deposit of 20%
-interest at 0.75% above Bank Standard Variable Rate
-term 15 years (maximum)
-monthly repayments
-loan secured by first mortgage to us (vendors)
Can anybody see anything wrong with this idea?

Hi Corcol,

This is a situation where you really should get full legal advice.

[Jake@EmroyPrint]

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I agree with bizbuysellcoach, it may be worth investing in professional legal advice.

– Jake

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