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Selling to a limited company (not mine)
Comments
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As far as you, the vendor, are concerned - it's no different.
Yes, the Ltd Company could go south. And a private buyer could go bankrupt or lose their job or die.0 -
peterhjohnson wrote: »If something goes wrong after exchange, my onward chain will likely collapse :-( The deposit will have been paid on to my buyer and so on along the chain? It would be a great "consolation prize" to be the one that walks away with this deposit money but am I likely to be that lucky?
You are absolutely right about all that. The trouble is what are you going to do when the builder refuses to give a personal guarantee? Are you prepared to walk away from the sale?No reliance should be placed on the above! Absolutely none, do you hear?0 -
peterhjohnson wrote: »My buyer is:
* Cash buyer
* Cash seen by EA
* A builder
* A limited company
We haven't exchanged yet and I'm wondering if my solicitor should be doing anything different because this isn't a common sort of buyer? Should he be seeking a Personal Guarantee from the company directors? It's quite easy for a limited company to go bust compared to a private individual
I guess that, in theory, somebody could set up a limited company with no assets, as a 'vehicle' for buying a property.
And since the company has no assets, there'd be no point in suing them if they breached a contract (e.g. by not completing a purchase).
But it would be illogical for the company to pay a big chunk of money (i.e. the 10% deposit) and then walk away and lose that money. Why would any company want to do that?0 -
You are absolutely right about all that. The trouble is what are you going to do when the builder refuses to give a personal guarantee? Are you prepared to walk away from the sale?
And what if they give a personal guarantee and then kick the bucket?Everything that is supposed to be in heaven is already here on earth.
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Doozergirl wrote: »And what if they give a personal guarantee and then kick the bucket?
It will become a liability of their estate. The personal guarantee, not the bucket.No reliance should be placed on the above! Absolutely none, do you hear?0 -
It's called an SPV - Single Purpose Vehicle, and it's common for dev projects.I guess that, in theory, somebody could set up a limited company with no assets, as a 'vehicle' for buying a property.
And since the company has no assets, there'd be no point in suing them if they breached a contract (e.g. by not completing a purchase).
Well, it could be viewed as a stop-loss... Continuing might expose them to bigger losses, so cheaper to write that 10% off and walk away...But it would be illogical for the company to pay a big chunk of money (i.e. the 10% deposit) and then walk away and lose that money. Why would any company want to do that?0 -
The EA has (apparently) already verified that the company has sufficient cash to buy. That won't tell them the whole story about liabilities etc, but the same applies to any buyer.I guess that, in theory, somebody could set up a limited company with no assets, as a 'vehicle' for buying a property.
And since the company has no assets, there'd be no point in suing them if they breached a contract (e.g. by not completing a purchase).0
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