Legal Question in Tax Law in Utah

i purchased a business last fall. i just found out the previous owner did not pay property taxes on equipment here in Utah. I paid the back taxes and current taxes. the business is not paid in full yet in fact there is a balance owed still to previous owner. we had a contract that we could not follow . we made a verbal contract afterwards . we followed this contract to the t. we found out at a later time about the taxes . I paid the taxes now the previous owner wants to foreclose on us. Didn't since we paid his back taxes and the current taxes put us in ownership of equipment? So in other words if he forecloses can't we take the equipment with us ? Ethical we know its not right that we have not paid him the full balance but, he new that he had back taxes owed and never paid them or would pay them. we had to pay the taxes. That was never disclosed to us til the tax commision got ahold of us 6 months after we bought the business. Can we keep the equipment if he forecloses on us. The lease is even in our name on the building so its not like he can just walk into our doors and lock us out. He gave up his lease . We have a new lease with the building owner.


Asked on 10/22/14, 12:31 am

1 Answer from Attorneys
Alvin Lundgren Alvin R. Lundgren, L.C.

You probably have a good case claiming that since the owner failed to disclose the unpaid taxes that you were within your rights to pay the taxes as an offset on what you owed him. The verbal modification may possibly be enforceable if there is a trail of communications showing an agreement on the changes, or if you have witnesses to the verbal changes.

Rather than caving on a foreclosure you should consider litigation to preserve your rights to the business, including a possible Chapter 11 bankruptcy that might allow the business to go on and adjust the terms of your contract.

These are only suggestions, an attorney will need more details to give a complete response.

You may call for a free consultation.

Alvin R Lundgren 801.725-0980

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Answered on 10/22/14, 6:41 am


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