Legal Question in Business Law in Michigan

management agreement and Liquor license

We are trying to purchase a local tavern. Money was placed down by us. Due to circumstances that we did not know about, seller closed bar and will be in default with HIS land contract in one month. Liquor license transfer is pending to our LLC with no time frame of approval. Payments must be made to the current land contract owner by the seller to keep business from foreclosure.

We stand to lose the monies we paid down if seller defaults.

Can we set up a management agreement with the seller to run the tavern while waiting for the transfer of the liquor license to be able to earn income to pay original land contract (and other vendor bills) in seller�s name?

Will this affect the transfer to us in a negative way with the Michigan liquor control?

The business would still be under the old seller business name and liquor license and we would run it with no monies to us until license transfer is complete. The transaction of full purchase of business would then take place and we would open under our new name.


Asked on 3/27/04, 6:39 pm

1 Answer from Attorneys
Don Darnell Darnell & Lulgjuraj, P.C.

Re: management agreement and Liquor license

While complicated, there is a way to do what you propose, your counsel handling the transfer should be able to set up such a transaction so that you can bridge this time frame between the purchase agreement and closing safely.

Don Darnell

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Answered on 3/30/04, 1:27 pm


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