Legal Question in Business Law in New York
Let's say Joe buys a business from Bob. Then, while still owing a balance to Bob, Joe decides to sell the business to Mary. Does Mary become legally liable for the debt Joe owes to Bob from the first sale of the business?
2 Answers from Attorneys
That depends upon what it is - exactly - that Mary bought. And avoiding these problems is one of the many reasons that you should never just "buy a business" - but instead should have a carefully drafted contract.
For example, if Bob filed a UCC financing statement covering the property included in the sale, then Mary may lose the property when Bob enforces his security interest. Defective products sold by Joe or Bob might end up getting Mary and Joe sued.
Buying a business is a complicated transaction. Both sides should have good legal counsel.
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