Legal Question in Business Law in Oregon

My mother sold her restaurant. Drafted very simple contract. $200,000 sale price, $20,000 down, payments of $2,000 per month. Interest is 7%. Payment due on or before 15 of each month or $200 late fee charged. No time limit to pay off remaining loan balance. Under the "Default" section of the contract, it reads: "A default shall occur should any or all of the following occur:

A). Buyer fails to make any payment on or before the tenth (10th) day following the due date thereof.

To date, the buyers have incurred 16 late payments and have never paid them. They continue to pay the monthly $2,000 payment to my mother, but they have never cured the late fees. We are now tryigng to figure out how do we find the exact amount of the amount they are past due, and the exact loan balance since there is no time frame to pay off the loan. My mother wants to send a letter indicating that if the loan is not brought current, she will foreclose on the restaurant. Can do this? She wants the loan brought current, or her restaurant back. Please advise. Thanks


Asked on 1/20/10, 11:11 am

2 Answers from Attorneys
Susan Burns Law Office of Susan Ford Burns

To properly answer this question requires a complete review of the "very simple contract". If this contract was drafted by an attorney, she should go back to the attorney who drafted it. If not, she needs to see an attorney in the state where the restaurant is located.

It may be possible to foreclose, but there are likely to be some steps needed to reinstate the late fee requirement since she has continued to accept the monthly payments with the knowledge that the buyers were in violation of their agreement.

Ultimately it is likely that she could foreclose on the restaurant, but foreclosure of an operating business, especially one that deals with the public, is a very complicated issue and will require the assistance of an attorney.

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Answered on 1/25/10, 3:13 pm
Daniel Meek Daniel W. Meek

In order to send the buyers a letter stating the current amount due, you do not need an attorney. You need a spreadsheet. Start with the $180,000 due. Add interest each month at a rate of 7% divided by 12. If payment was not received by the 25th of the month, add $200. Deduct any payments made during the month. Carry forward the balance to the next month. Apply the interet rate to the new balance, add the late fee (if warranted) and subtract the payments.

If you cannot do a spreadsheet yourself, ask a student to do it.

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Answered on 1/26/10, 1:51 am


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