Owner financing a small business? -

I bought a business and paid 10000.00 down and took over the payment. I later found out the loan was not current at the time of closing. They also took my payment for 6 months and did not pay the lien holder. I quit paying them now they think they can take me to court. Can they do this? Also on the date of closing all parties agreed that all loans were current. This was part of the verbal agreement in order for us to take over the business.

Probably a good time to get a lawyer. If they knew that the loans weren t current and they stated that they were, it s fraud plain and simple. It s harder to prove if something wasn t signed, but generally you van prove that this was agreed upon by sworn testimony of a witness. The exception is that if the contract specifically states that nothing outside of the agreement was implied, etc...What sort of documentation was signed?Generally, you do not want this to go to lawsuits because civil litigation is extremely expensive. Based on your description, I would say they committed fraud and your refusal to pay them would be a default on whatever agreement you have. Just because they broke one part of the agreement doesn t dissolve the agreement or allow you to break it as well.

You should have had everything in writing. If there was only a verbal agreement about loans being current then you are in a heap of trouble. They can come after you for every thing you owe them and the lien holder can kick you out of the business. However you could go to the lien holder and explain the situation, maybe they will work something out with you. good luck.