Legal Question in Credit and Debt Law in South Dakota
sale of a business
A few years ago I purchased a business in South Dakota. The main asset consisted of a piece of equipment. The owner gave me an appraisal done for a bank for that piece of equipment. The owner borrowed $150,000 from the bank using the equipment as collateral. 2 years later, it now it turns out the person who appraised the equipment never worked for the company he claimed to work for. The appraised piece of equipment was not the correct model but instead much older making the equipment less valuable.
Since I am the new owner of the business, the bank wants ME to pay off the equipment loan. Since the bank technically transferred the former owners loan to me, I feel the bank should collect money against the former owner of the business and or the person who appraised the equipment for the bank. My question is do I have any legal options. Isn't it fraud to claim to work for a company when you don't and isn't it fraud if you never appraised the equipment in the first place? Shouldn't the bank have checked the appraisers credentials before they gave the $150,000 loan to the former owner.
1 Answer from Attorneys
Re: sale of a business
Your inquiry raises several issues which might call into question the validity of the sale transaction. I would want to review all documentation re: your purchase of the business and any loan documents in your possession. I could then advise you on your position and best action steps to recommend.
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