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Free Business Purchase Agreement Form

Use our free Business Purchase Agreement form to record the sale of a business.

Updated February 16, 2023

A Business Purchase Agreement, or Purchase of Business Agreement, is a legal contract used to sell any type of business to another person officially. A Business Purchase Agreement form can also be used to only sell some of a business’s assets or shares, not the entire business. In these cases, including all details regarding what assets or shares are being sold.

A Business Purchase Agreement acts as an official record of the sale and purchase and serves as proof of ownership for the buyer.

What is a Business Purchase Agreement?

When to use a business purchase agreement, how to write a business purchase agreement, business purchase agreement sample, the consequences of not having a purchase of business agreement, common business purchase agreement situations, frequently asked questions.

A Business Purchase Agreement is like a bill of sale that documents the purchase of a business. Either asset of a business or shares in the company can be transferred. As a legally enforceable contract, this Agreement ensures that both the seller and purchaser follow through with their promises and creates an opportunity to confirm the terms and conditions of the transaction.

Use a Purchase Agreement instead to buy or sell the property.

A Business Purchase Agreement will identify the following essential elements:

Negotiate the terms and conditions of the sale of a business and document the transaction with a Business Purchase Agreement at the closing. It’s important to equip yourself with the skills to develop a solid negotiation strategy in order to secure the best outcome from a business deal. [1]

As a reference, people often call this agreement by other names:

If you are either considering selling or purchasing a business, you should memorialize such an important transaction in a Business Purchase Agreement to confirm all details are carefully considered and documented.

This Agreement allows both parties to prevent the following misunderstandings:

Consult your accountant, attorney, and broker (if any) for the best tax, legal, and financial implications of buying or selling a business in your state.

Here’s a step-by-step on how you can create a business purchase agreement with a free business purchase agreement template.

Step 1 – Parties and Business Information

A business purchase agreement should detail the names of the buyer and seller at the start of the agreement.

It will also need to include the information of the business being sold, such as name, location, a description of the business, and the type of business entity it is.

Step 2 – Business Assets

The business purchase agreement will set out the specific assets that are being transferred in the sale. This could include physical assets such as vehicles, real estate, or furnishings as well as financial assets such as accounts receivable. It may also include intangible assets that could include the business name, trademarks, patents, goodwill, and customer lists.

You will also want to include excluded assets — any that you explicitly do not want to include in the sale.

Step 3 – Business Liabilities

A business purchase agreement should cover whether the buyer is assuming any liability by purchasing the business. Liabilities may include accounts payable, environmental liabilities, employee-related expenses, lawsuits, and contractual obligations.

If you need to, you can also include excluded liabilities — any liabilities explicitly not included in the sale.

Step 4 – Purchase Price

One of the key elements in a business purchase agreement is the purchase price. Here you should detail how much the buyer will pay to the seller for the purchase of the business and if the buyer will be paying a deposit when the agreement is signed.

Purchase price screenshot from a business purchase agreement template

You should also include whether you want to include how the purchase price will be allocated among the assets in the agreement and then detail how much will be allocated to each asset if so.

Another element of the purchase price is purchase price adjustments. This covers whether any adjustments will be made to the purchase price at closing to account for any differences in the business between the time of signing the agreement and the closing date. This is to cover any changes to the value of the business, such as specific net working capital or fair market value, that are assumed by the buyer when signing the business purchase agreement.

Step 5 – Terms

The terms of a business purchase agreement take up the bulk of the agreement and are made up of important information such as:

Step 6 – Signatures

To finish your business purchase agreement, signatures by the buyer and seller, or their representatives, are required to make the agreement binding — this may need to be witnessed and notarized by a notary public.

Here’s what a typical business purchase agreement looks like:

Business Purchase Agreement

After doing your research and negotiating the best deal, properly transfer the ownership of a business with proper documentation. Unless you memorialize your negotiation in writing, the thorny details of the deal could get lost or cause problems later.

Both parties should clearly understand the business’ outstanding debts and liabilities during the transfer to avoid surprise bills. There are many important considerations you must make before exiting a business, so you must have an exit plan in place. Check out these valuable tips from five entrepreneurs who successfully exited their businesses. [2]

Here are just a few of the situations when a Business Purchase Agreement is commonly used:

Purchasers will want a guarantee from the Seller that the business is in good standing with the state and has the licenses needed to operate legally.

What are Assumed Liabilities?

Assumed liabilities are liabilities that are taken on by a party purchasing a business under the terms of a contract. Examples of liabilities from purchasing a business can include accounts payable, environmental liabilities, employee-related expenses, and contractual obligations.

What are Buyer’s and Seller’s Representations and Warranties?

Representations and warranties in a business purchase agreement are facts and promises about what is sold. They are assertions or assurances given by the parties and are typically one of the most negotiated sections of the agreement.

The seller usually makes several representations about the business, which the buyer relies on being factual and correct and assisting in their due diligence.

Buyer’s representations and warranties focus on statements of facts and assurances regarding the buyer and its standing, specifically about their ability to purchase the business.

What is a Condition Precedent?

Conditions precedent is certain events that must happen on the part of either the buyer or the seller for the closing transaction to occur.

What is a Non-Compete Clause?

A non-compete clause in a business purchase agreement dictates whether the seller is prohibited from engaging in a similar business once the business is sold. The non-compete is for a specific time and prevents the seller from participating in similar businesses in or near the city of the business being sold.

What types of business purchases can a business purchase agreement be used for?

A business purchase agreement can be used to officially sell any type of business to another person or business. A business purchase agreement will describe the company, assets, and any stocks that are being purchased.

What is the difference between an asset purchase and a business purchase?

A business purchase agreement is used to record a sale of a business and can be used to purchase the entire business or just some of a business’s assets or shares. An asset purchase agreement is solely used to purchase a business’s assets.

Legal Templates uses only high-quality sources, including peer-reviewed studies, to support the facts within our articles. Read our editorial guidelines to learn more about how we keep our content accurate, reliable and trustworthy.

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Business Purchase Agreement (BPA) Template

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Updated December 02, 2022

A business purchase agreement (BPA) is a legal document between a buyer to acquire the full ownership of an entity from a seller for a sales price. All assets and liabilities held by the business will be transferred from the seller to the buyer on the closing date.

A business purchase agreement can be set up as an asset purchase or a stock purchase .

What does it include?

Do I Need a Business Purchase Agreement?

Often times a transaction will involve the purchase of an asset and not the business in its entirety. To know whether to use a business purchase agreement, the answer must be “yes” to each question in the 3-point test .

3-Point Test

1. Will all aspects of the business continue normally after the sale? 2. Will the business continue to be incorporated under the same governing law? 3. Will all liabilities (such as debts and leasehold interests) be transferred to the buyer?

An Asset Purchase Agreement is recommended if the answer is no to any of the 3 questions. For example, if a website business is being purchased, the buyer buys the website’s assets, not the entire business entity.

If the answer is “yes” to all 3 questions, but only a percentage of the business is being purchased, a Stock Purchase Agreement is recommended. For example, only 1 partner in a 50/50 partnership decides to sell their shares.

How to Buy a Business (5 steps)

1. conduct due diligence.

The buyer should gather all necessary documents of the business, including:

After obtaining such information from the seller, a financial value can be placed on the business.

2. Get an Appraisal

Hiring a business broker or appraisal company can be useful to get the value of a business. Depending on the industry, the business will commonly trade at a multiple of its profit or revenue.

Finding a Local Broker

A business is commonly sold on a local level. Therefore, it is recommended to contact a local business broker listed with the International Business Broker Association (IBBA) .

3. Make an Offer

The buyer should structure a business purchase agreement that encourages the owner to sell.

This should include:

4. Sign an Agreement

The agreement is not legally binding until all parties have signed. After an authorized agreement has been made, the buyer can begin their inspection and due diligence before closing.

The closing date is when the parties exchange the cash for the ownership of the business. For transferring stock , the seller will sign over the names on the certificates. For transferring assets , ownership and possession should be handed over on the closing date.

Common Terms (5)

Counter-offer . When the buyer or seller wants to make a change to the other party’s offer. The counter-offer will then be sent to the other party for acceptance.

Deposit . The initial payment is made towards the final sales price of the business.

Non-compete . The seller can be prohibited from engaging in the same business after the sale of the business.

Non-operating costs . Expenses not directly related to the costs of the business such as interest on debt, moving costs, payments to settle lawsuits, etc.

Operating costs . Expenses that are directly related to providing goods or services to customers. This includes costs related to materials, labor, transportation, etc.

Frequently Asked Questions (FAQs)

What are tangible assets.

Tangible assets are physical items that you can “touch and feel.” Examples include equipment, vehicles, hardware, etc.

What are Intangible Assets?

Intangible assets are non-physical items that hold value. Examples include trademarks, copyrights,

What is EBITDA?

EBITDA means e arnings b efore i nterest, t axes, d epreciation, and a mortization and is a metric used to determine the value of a business.

BUSINESS PURCHASE AGREEMENT I. THE PARTIES . This Business Purchase Agreement (“Agreement”) dated on [DATE] (“Effective Date”) is by and between: Buyer : [BUYER’S NAME] with a mailing address of [BUYER’S MAILING ADDRESS] (“Buyer”), and Seller : [SELLER’S NAME] with a mailing address of [SELLER’S MAILING ADDRESS] (“Seller”). Buyer and Seller are each referred to herein as a “Party” and, collectively, as the “Parties.” II. THE BUSINESS . The Business being purchased by the Buyer and sold by the Seller is as follows: Entity Name : [ENTITY NAME] Entity Mailing Address : [ENTITY MAILING ADDRESS] State of Incorporation / Organization : [STATE] Entity Type : ☐ Corporation ☐ Limited Liability Company (LLC) ☐ Partnership ☐ Other: [OTHER] Hereinafter known as the “Business.” III. ACQUIREMENT . The Buyer agrees to purchase the: (check one) ☐ – Assets of the Business . The assets shall include: (check one) ☐ – ALL tangible and intangible assets of the Business. Such assets shall include, but not be limited to, all inventory, receivables, trademarks, copyrights, leasehold interests, rights to purchase, business records, and the goodwill of the Business. ☐ – SPECIFIC tangible and intangible assets of the Business described as: Included Assets: [INCLUDED ASSETS] Excluded Assets: [EXCLUDED ASSETS] ☐ – Shares / Stock of the Business . Number (#) or Percent (%) o Shares: [# OR %] Class / Series: [CLASS OR SERIES] IV. LIABILITIES . The Buyer agrees to assume: (check one) ☐ – No Liability(ies) . The Buyer agrees to assume no more liability than is obligated and specifically mentioned under the terms of this Agreement. ☐ – Some Liability(ies) . The Buyer agrees to assume the following liability(ies) in accordance with the terms of this agreement: (check all that apply) ☐ – Accounts payable. ☐ – Past and current business expenses. ☐ – Contractual obligations. ☐ – Leasehold interests. ☐ – Legal liabilities. ☐ – Past and current taxes owed by the Business. ☐ – Payroll related to past and current employees, independent contractors, agents, and any other owed individuals. ☐ – Other. [OTHER] ☐ – Other. [OTHER] ☐ – Other. [OTHER] V. PURCHASE PRICE . The Buyer agrees to purchase the Business under the type of acquirement mentioned in Section III for $[AMOUNT] (“Purchase Price”). The Purchase Price represents the total sum of money that is agreed to by the Parties for the transaction mentioned in this Agreement. VI. PAYMENT . Payment of the Purchase Price shall be made: (check one) ☐ – In a Lump Sum . The Purchase Price shall be made on the Closing Date. ☐ – With Multiple Payments . The 1 st payment is due on [DATE], and shall continue on the [DAY] of each ☐ week ☐ month ☐ quarter with the last payment made on [DATE]. ☐ – Other . [OTHER]. VII. PAYMENT METHODS . The Buyer may deliver the full amount of the Purchase Price in any of the following methods: (check all that apply) ☐ – Bank Wire ☐ – Cash ☐ – Cashier’s Check ☐ – Other: [OTHER]. VIII. DEPOSIT . As part of this Agreement, the Seller: (check one) ☐ – Requires a Deposit . The Seller requires an initial payment in the amount of $[AMOUNT] (“Deposit”). The Deposit must be paid within [#] Calendar Days from the Effective Date of this Agreement. ☐ – Does not require a Deposit . The Buyer’s consideration shall be their full-faith commitment to purchase the Business under the terms of this Agreement. IX. CLOSING DATE . The closing shall occur on or before [DATE], (“Closing Date”) at a time and location agreeable by the Parties. X. DUE DILIGENCE PERIOD . The Buyer: (check one) ☐ – Requires a Due Diligence Period . The Buyer requires a due diligence period to inspect the finances and agreements of the Business. The decision as to whether the Business is suitable for its intended purpose shall be the sole decision of Buyer, determined in the absolute discretion of Buyer, with Buyer’s decision being final and binding upon the Parties. Buyer shall have until [DATE], at [TIME] ☐ AM ☐ PM to notify Seller of its termination of this Agreement (“Due Diligence Period”). If the Buyer decides to terminate this Agreement during the Due Diligence Period, any Deposit made shall be returned to the Buyer. ☐ – Does NOT Require a Due Diligence Period . The Buyer does not require a Due Diligence Period to review the finances, agreements, or any other information of the Business. XI. NON-COMPETE . As part of this Agreement, there shall be: (check) ☐ – Non-Compete Restrictions . The Purchase Price, for the Business mentioned in this Agreement, shall act as consideration towards a non-compete covenant that the Seller shall be legally bound. It is understood by all parties that the Seller is knowledgeable of proprietary information, including trade secrets, which could be harmful to the success and continuation of the business after the sale. Therefore, in order to protect the fiduciary interests of the Buyer, the Seller agrees not to compete under the following terms: Scope of work . For the specific business or practice of: [SCOPE OF WORK]. Term . For a period of [TERM] after the sale of the Business. Geographical areas . Strictly for the areas of: [GEOGRAPHICAL AREAS]. ☐ – No Non-Compete Restrictions . The Seller shall not be restricted, in any manner, from engaging in the same or similar business purpose as the Business in this Agreement. XII. DELIVERY . The delivery of the Business, along with any stock certificates, shall be transferred to the Buyer at the Closing Date upon the funds being received by the Seller. XIII. AUTHORITY OF SELLER . The Seller hereby represents and warrants to Buyer, and covenants with Buyer, as follows: a.) Capacity . The Seller has all requisite power, authority, and capacity to enter into this Agreement. The execution, delivery, and performance of this Agreement by the Seller does not, and the consummation of the transaction contemplated hereby will not result in a breach of or default under any agreement to which the Seller is a party by which the Seller is bound. b.) Binding Agreement . This Agreement has been duly and validly executed and delivered by the Seller and constitutes the Seller’s valid and binding agreement, enforceable against the Seller in accordance with and subject to its terms. c.) Title (Ownership) to Business . The Seller is the lawful record and beneficial owner of the Business, free and clear of any liens, claims, agreements, charges, security interests, and encumbrances unless otherwise mentioned in this Agreement. The sale, conveyance, assignment, and transfer of the Business in accordance with the terms of this Agreement transfers to the Buyer legal and valid title to the Business, free and clear of all liens, security interests, or pledges. XIV. AUTHORITY OF BUYER . The Buyer represents and warrants to the Seller as follows: a.) Capacity . The Buyer has all requisite power, authority, and capacity to enter into this Agreement. The execution, delivery, and performance of this Agreement by the Buyer does not, and the consummation of the transaction contemplated hereby will not result in a breach of or a default under any agreement to which the Buyer is a party or by which Buyer is bound. b.) Disclosure . The Buyer is aware of the risks involved in purchasing the Business and accepts that its value can change rapidly and unpredictably. XV. DATE AND TIME . Time is of the essence. a.) Calendar Days . Calendar days shall represent all days of the year except Saturdays, Sundays, and Federal Holidays (“Calendar Days”). b.) Effective Date . The effective date of this Agreement shall be the day the Parties authorize this Agreement and acceptance has been given. XVI. GOVERNING LAW . This Agreement shall be construed, interpreted, and enforced in accordance with, and shall be governed by, the laws in the State of [GOVERNING LAW] without reference to, and regardless of, any applicable choice or conflicts of laws principals. XVII. SEVERABILITY . In the event any provision or part of this Agreement is found to be invalid or unenforceable, only that particular provision or part so found, and not the entire Agreement, will be inoperative. XVIII. COUNTERPARTS . This Agreement may be executed in any number of counterparts and by the several parties hereto in separate counterparts, each of which shall be deemed to be an original, and all of which together shall constitute one and the same Agreement. XIX. ADDITIONAL TERMS & CONDITIONS . [ADDITIONAL TERMS & CONDITIONS] XX. ENTIRE AGREEMENT . This Agreement constitutes the entire understanding and agreement of the Parties relating to the subject matter hereof and supersedes any and all prior understandings, agreements, negotiations, and discussions, both written and oral, between the Parties hereto with respect to the subject matter hereof. Buyer Signature : _____________________________ Date: ______________ Print Name: _____________________________ Seller Signature : _____________________________ Date: ______________ Print Name: _____________________________

How to Write

Download: Adobe PDF , MS Word , OpenDocument

I. The Parties

(1) Formal Date Of Binding Effect. The exact calendar date when the obligations this agreement places upon both Business Buyer and Business Seller will need to be established in the First Article. Utilize the formatted space provided to record the first calendar date when the requirements and obligations for this transaction must be complied with by these Parties.

(2) Purchaser Of Business. The Purchaser or the Buyer of the Business must be attached to this document by name in Article I. Produce the legal name of this Party. If the Purchaser is a Business Entity unto itself, then make sure its legal name as cited by its articles or formation, operating agreements, and government paperwork is finished to the first line of the “Buyer” section.

(3) Address Of Buyer . The mailing address where the Business Buyer will reliably receive all communications regarding this transaction and the paperwork defining it should be dispensed to the second available space of the “Buyer” section.

(4) Seller Of Business. The entire name of the Business Seller requires production on the first line of the “Seller” section. This is the Party who shall release ownership over the Business Entity being sold in this transaction once his or her requirements for this purchase have been met. Should the Business Seller be an Entity such as a corporation, then it’s legal identity as known to Government Entities (i.e State Department, I.R.S.) should be furnished to this area.

(5) Address Of Business Seller. The mailing address where all notices, requests, paperwork, and correspondence regarding the sale of the concerned Business and this contract will be received by the Seller must be produced in the “Seller” section. The final blank space in this section has been reserved for the production of this information.

II. The Business

(6) Entity Being Sold. The formal name of the Business that shall be sold to the Buyer requires documentation in the Second Article. Furnish this name precisely as it appears when it is identified in its government paperwork. For instance, if the Business is a Limited Liability Company, then the name it formed under in its articles of organization should be dispensed to the “Entity Name” line.

(7) Entity Mailing Address. The Business being sold must be identified with some supporting information for the purpose of this paperwork. To this end, continue to the second available line in Article II, then record the entire (legal) mailing address of the Business Entity that shall be purchased by the Buyer through this agreement.

(8) State Of Incorporation/Organization. Naturally, the Business being sold here will have formally originated at one point in the past in a specific area. Produce the name of the State where the concerned Business Entity was legally formed. For example, if the concerned Business Entity is a corporation, then identify the State where its articles of incorporation were submitted (and approved) on the third line in Article II.

Select Item 9 Or Select Item 10 Or Select Item 11 Or Select And Complete Item 12

(9) Corporation. It will be important to appropriately classify the type of Business Entity that shall be sold and purchased through this agreement. Therefore, one of the items under “Entity Type” must be selected. If the Business Entity being sold has been identified as a corporation and has maintained this status from the approval of its articles of incorporation, then the first checkbox under “Entity Type” must be selected.

(10) Limited Liability Company (LLC). Select the second checkbox from “Entity Type” if the Business Entity being sold has filed its articles of organization and remains so at the time of this sale.

(11) Partnership . If the Business Entity is owned by two or more Parties through a Partnership agreement and/or has fulfilled any name registration requirements imposed by the State where it was formed, where it operates, and whose jurisdiction requires compliance then select the third check box.

(12) Other. If the Entity type cannot be defined by any of the above statements, then select “Other” and classify the Business Entity being sold on the space available. Keep in mind, this entry should represent the category assigned to the Business by Entities such as the I.R.S., Department of Revenue, and the State Government of its formation.

III. Acquirement

Select And Complete Item 13 Or Select And Complete Item 16

(13) Assets Of The Business. In addition to obtaining the power over the Business being sold that its articles of formation or active operating or partnership agreement grants to the Business Owner, it will be necessary to establish which assets, if any, will also be transferred to the Business Buyer. If the sale of the Business will be conducted through the sale of the tangible and intangible assets under its control, then select the “Assets Of The Business” checkbox.

To Complete Item 13: Select Item 14 Or Select And Complete Item 15

(14) All Tangible And Intangible Assets. If every asset of the Business will be purchased including all physical and non-physical assets or property belonging to or under the control of the Business Entity being sold, then the first checkbox available on this topic (“All Tangible And Intangible”) must be selected.

(15) Specific Assets. If some asset will not be sold to the Buyer in this agreement then select the “Specific…” checkbox. Once done, list every asset of the Business Entity that shall be sold to the Buyer in this agreement on the “Included Assets” line then document all the assets of the Business Entity that will not be included in this agreement and therefore not be sold to the Buyer on the “Excluded Assets” line.

(16) Shares/Stock Of The Business . If the Business Seller intends to transfer ownership over the Entity by selling its stock to the Buyer, then select the “Shares/Stock Of The Business” checkbox. In addition to making this selection, the number of shares or percentage of the total available stock being sold must be documented on the first line available while the class and series of the shares being sold must be furnished on the second blank line of this checkbox option.

IV. Liabilities

Select Item 17 Or Select And Complete Item 18

(17) No Liability. If the Purchaser of this Business will not be assuming any of the Business Enitity’s existing liabilities other than that mentioned by the provided language of this paperwork, then select the “No Liability(ies)” checkbox.

(18) Some Liability(ies). If the purchase of this Business will only require that the Buyer assume responsibility for some of the Business’s liabilities but not all, the second checkbox will need to be selected from Article IV. This selection will bear further discussion so that each liability that will be assumed by the Buyer is reported accurately.

(19) Accounts Payable. If the Buyer, upon the successful purchase of the concerned Business Entity, will be responsible to pay any and all debts owed for the supplies and services owed by the Business Entity (for its daily operation), then the “Accounts Payable” checkbox must be selected.

(20) Past And Current Business Expenses. Mark the second checkbox under the “Some Liabilities” section if the Buyer will be held responsible to pay for all of the past and current “Business Expenses” used by the Business’s employees that were required for its operation.

(21) Contract Obligations. If the Business Buyer agrees to fulfill all the current requirements and conditions placed upon the Business Entity by all its existing contracts for the full term of each such contract, then select the third checkbox (“Contract Obligations”). It is strongly recommended that every contract held by the Business being sold is disclosed and fully comprehended by the Buyer before this selection is made.

(22) Leasehold Interests. The lease held by the concerned Business Entity may carry serious penalties if it is violated, even in the event of this transaction. Thus, if the Business Buyer agrees to uphold the current “Leasehold Interests” of the Business, then the fourth checkbox on this list must be selected. Keep in mind, this will obligate the Business to complete its current lease regardless of the impact this would have on the Business Entity being sold.

(23) Legal Liabilities. If the Buyer intends to comply, satisfy, and/or fulfill all the Business Entity’s liabilities that were assigned by a court of law or gained by penalty, then the “Legal Liabilities” checkbox must be selected from this list.

(24) Past And Current Taxes Owed By Business. To assign responsibility over all the taxes owed by the Business Entity being sold to the Buyer in this purchase, the “Past And Current Taxes…” must be selected. This will place any past and current tax procedures and liabilities the Business Entity must satisfy under the responsibility of the Business Buyer once this purchase is complete.

(25) Payroll (Past And Current). All pay owed to the Business Entity’s Employees, Contractors, and similar Parties can be assumed by the Buyer if the seventh checkbox is selected.

(26) Other . All other current and unmentioned liabilities carried by the Business being purchased that will be assumed by the Buyer must be documented. If there are any remaining such liabilities that have not been discussed thus far, then select the box labeled “Other” and define the liability amount, the name of the Entity the Business owes the liability amount to, and the nature or reason this amount is owed on the blank space provided after the word “Other.” Three distinct checkbox options labeled “Other” have been supplied since each type of the Business’s liability that would be assumed by the Buyer through this purchase must be detailed separately. Only the checkboxes that are marked and supplied with the requested information will be considered part of this agreement.

V. Purchase Price

(27) Formally Determined Purchase Price. The amount of money that the Seller expects the Buyer to submit in exchange for ownership over the Business must be submitted to the Fifth Article in the space attached to the dollar symbol.

VI. Payment

Select Item 28 Or Select And Complete Item 29 Or Select And Complete Item 33

(28) In A Lump Sum. Since the payment for the Business Entity must be well-defined for the purpose of this document, the Sixth Article will need to be reviewed and completed. If the Purchaser will pay the Seller the full price of the Business with one payment, then mark the “In A Lump Sum” checkbox. If this is not the case, this checkbox statement should be left blank.

(29) With Multiple Payments. If the Purchaser shall submit payment for the Business as several payments across a span of time, then the checkbox labeled “With Multiple Payments” should be marked.

(30) First Installment. Produce the date when the first payment toward the purchase price of the Business Entity must be received by the Seller.

(31) Multiple Payment Schedule . If the Buyer will be submitting the full amount across multiple payments to be made separately, then the due date when these payments are to be received must be established. Notice the checkboxes presented in this statement (“Week,” “Month,” “Quarter”). Use the line before the words “Of Each” to document the two digit calendar date of the “Week,” “Month,” or “Quarter” when the payment will be due then select the appropriate checkbox. For example, if payment will be due once a week on the first calendar day of every week then supply the word “Monday” or the number “1” to the blank space and check off the box labeled “Week” whereas if the Buyer’s payment will be due on the fifteenth of every month, record the number “15” in the space provided and mark the box labeled “Month.”

(32) Final Installment Payment . The calendar date when the final payment required for the Business purchase must be submitted to the Seller should be furnished to the final area of this statement.

(33) Other. Generally, the above payment options are agreed upon by a Business Seller and Buyer, however should there be additional requirements or a specific schedule that must be followed and cannot be adequately detailed by previous options then the “Other” checkbox must be marked. If so, then the exact payment schedule and the information needed to fully define how, when, and the dollar amount(s) of every payment that must be submitted to the Business Seller must be furnished to the space following the word “Other.”

VII. Payment Methods

(34) Acceptable Methods Of Payment. The Business Seller and Business Buyer should agree on how the expected payment(s) must be submitted before this document is signed. To this end, locate Article VII, then select at least one of the options available to define what this agreement considers an acceptable method of payment. This article will allow for payments to be made with a “Bank Wire,” in “Cash,” by “Cashier’s Check,” or even with some “Other” method. Make note, that if the “Other” checkbox is selected then the exact method of payment must be defined.

VIII. Deposit

Select And Complete Item 35 Or Select Item 37

(35) Requires A Deposit . Generally, the above payment options are agreed upon by a Business Seller and Buyer, however, should there be additional requirements or a specific schedule that must be followed and cannot be adequately detailed by previous options then the “Other” checkbox must be marked. If so, then the exact payment schedule and the information needed to fully define how, when, and the amount(s) of payment(s) expected by the Business Seller must be furnished to the space following the word “Other.” For instance, if the Seller and Buyer agree to varying dollar amounts to one or more submitted as payment during the term of these installments then a calendar schedule listing the dollar amount that must be submitted as payment on each due date should be included when defining the multiple payments.

(36) Deposit Details . If a deposit will be required of the Business Buyer in order to proceed with this agreement’s transaction, then the exact dollar amount the deposit consists of must be recorded on the first line of the first checkbox statement found in Article VIII. Additionally, the number of days from the effective date, noted in the First Article, that will be allowed to the Buyer to submit this deposit amount must be documented on the second available space. This will act as a countdown in that, the Buyer only has the number of calendar days reported here after this agreement’s effective date to submit the deposit amount (to the Seller) lest this transaction be denied by the Business Seller.

(37) Does Not Require Deposit . If the Business Seller will not require (or accept) a deposit to continue with this agreement then, mark the second checkbox available in Article VII.

IX. Closing Date

(38) Completion Of Sale. The calendar date when the requirements for this sale must be satisfied should be furnished to the space provided in the Ninth Article.

X. Due Diligence Period

Select And Complete Item 39 Or Select Item 41

(39) Requires A Due Diligence Period . The Tenth Article will define whether the Business Buyer will be given a period of time (before the closing date) when he or she will be able to investigate and evaluate the Business being purchased. If this transaction will allow this period to the Buyer, then the first checkbox statement that is displayed in Article X should be selected.

(40) Deadline. If a period of due diligence shall be observed before this transaction may proceed to the closing, then a definitive deadline when the Buyer must formally approve or deny this purchase must be established. The first checkbox statement will require the exact date and time when the Buyer’s answer is due submitted. Begin by supplying the first two spaces with the date of this deadline. Additionally, the exact time of day when the Business Buyer must inform the Seller of his or her decision to approve or deny the purchase should be documented to the formatted space provided. This report will require that the “AM” box be selected if this time is between midnight and twelve noon or that the “PM” box is selected should this time be between 12 noon and midnight.

(41) Does Not Require Due Diligence. If the Business Buyer intends to waive the due diligence period and the Seller agrees that this would be appropriate, then the “Does Not Require” checkbox should be selected.

XI. Non-Compete

Select And Complete Item 42 Or Select Item 46

(42) Non-Compete Restrictions. Oftentimes, a Business will depend upon its proprietary or confidential information to remain competitive in its industry or on the market. If the Business being sold operates in such a way, then the Business Buyer may require that some protective restrictions be placed on the Seller. Such a non-compete condition will require that the Seller refrains from using his or her knowledge of the Business being sold to create an unfair level of competition on the market once it is the property of the Buyer. To institute such a precaution, select the “Non-Compete Restrictions” checkbox.

(43) Scope Of Work. Every industry can be defined through its products and/or services. For instance, a car manufacturer can potentially produce automobiles, the parts that make up the automobiles, and the accessories for those automobiles as well as generate the financing its Client requires to purchase its products. The type of work that the Seller must agree to refrain from working in and with for the duration of the non-compete restrictions placed on him or her through this transaction should be detailed on the “Scope of Work” line. Note, this may not be a general ban from an entire industry but should focus on topics such as specific services, products, proprietary information, and/or marketing strategies that must be forbidden to the Business Seller for the duration of this non-compete condition.

(44) Term. The non-compete requirements may only be imposed for a limited amount of time depending upon what is allowable by the State and Federal law(s) that govern the industry of the Business Entity being sold. Consult the currently applicable statutes to this paperwork and this transaction, then document the exact number of weeks, months, or years that the Business Seller will be bound by the non-compete conditions of this paperwork on the blank line provided by Statement B (“Term”).

(45) Geographical Areas. In most cases, the non-compete conditions of this transaction will only be applicable in specific geographical areas that the current laws deem appropriate to ensure a fair market. Report each geographical area where the non-compete conditions above will be imposed on the Business Seller on the blank space provided by Statement C. This report may be furnished by naming areas such as neighborhoods, cities, counties, or states where the Business Seller agrees to observe the non-compete conditions or by detailing a regional boundary in which the Business Seller agrees to comply with the non-compete conditions discussed.

(46) No Non-Compete Restrictions. If the Business Buyer does not require that the protection of a non-compete condition is imposed on the Business Seller or if this is simply inappropriate or illegal in the eyes of the law, then select the checkbox labeled “No Non-Compete Restrictions.”

XVI. Governing Law

(47) Jurisdiction . This agreement must remain enforceable by the laws of a specific State. Produce the name of this State as requested by the Sixteenth Article (“Governing Law”).

XIX. Additional Terms & Conditions

(48) Binding Agreements To Be Included . The signature provided to this contract will be considered binding and assumed to be submitted by each participating Party after each agreement made in this paperwork is reviewed and judged satisfactory. Therefore, any additional information, restrictions, or requirements that have not been documented in the previous articles but should be considered a part of this contract must be reported in Article XIX.

XX. Entire Agreement

(49) Buyer Signature And Name . The Business Buyer, or an Authorized Signature Party elected by the Business Buying Entity named in the FIrst Article, must sign and print his or her name to enter this agreement as the Purchaser or Buyer.

(50) Signature Date Of Business Buyer. The date when the Buyer signs and prints his or her name will be the date this contract formally obligates him or her to its term and conditions. Therefore, after signing, the Business Buyer must document the current date.

(51) Seller Signature The Seller of the Business must sign and print his or her name. In cases where the Seller is also a Business, a Signature Representative may be assigned by the Seller to enter the agreement for this transaction properly. This requires that the signature and printed name of the Business Seller or the Signature Representative of the Business Seller is submitted

(52) Signature Date Of Business Seller . The date of the Business Seller’s signature will establish when he or she has entered this agreement. This must be documented as part of the signature requirements of this contract.

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STARTER Package

Selling a Business by a Lease-Purchase Method

Armin Laidre

A lease-purchase is one of the most unique ways of selling a business to an interested buyer who might not have the means to buy at the moment but looking to own an existing investment. Most people today are plagued by lack of sufficient start-up capital but a well-done and shrewdly negotiated lease-purchase can help mitigate the situation.

In the lease-to-own arrangement, the lessee (would be buyer/user) is able to extend their resources while at the same time tapping into the established goodwill and name of the seller (lessor) and securing equipment, facilities and other business assets. Even so, like in many other legal agreements, the devil is in the details considering lease-purchases are never the same. How the seller puts the offer on the table does matter a lot.

Works both ways

In the arrangement, the lessee is allowed to run the business, which they intend to buy, for a specific period clearly indicated in the lease-purchase agreement. For a lessee seeking to own a business without having to risk a bad business purchase mistake, this form of contract is a wonderful choice. After the end of the lease, a lessee can easily purchase the business for a specific set cost or offer the lessor a financial deal, extend or seek a new lease, leave the business without buying it or return the control of the investment to the lessor.

No matter how you look at it, lease-purchase has something for both parties involved. To be thoroughly protected, considering the long term nature of the agreement and other legal matters, the seller (lessor) has no choice but seek the help of a good attorney to review the contracts and comb through the details. In the process, the lawyer will be able to inform and advice the seller whether the terms should be renegotiated, signed as they are or any other proper course.

What exactly is a lease-purchase?

Essentially, a lease-purchase (lease-to-own arrangement) has both the seller and buyer (lessee and lessor) entering into a contractual agreement with the lessee being allowed to lease the business of the lessor for an agreed, predetermined set period after which the lessee could fully own the business. Lease-purchase contractual relationships are diverse and unique. In some, the seller could have it that the buyer doesn’t have any obligation to close the purchase of the business if they decide not to after the end of the lease-purchase contract. Others have clear terms that the lessee must set apart a deposit that in case of any reason the purchase isn’t closed within the agreed set time the deposit will be forfeited to the lessor.

How it works

The first thing is for the seller to receive a letter of intent from the prospective buyer . In the letter, the desire to buy the business should be well spelled out, indicating clear intentions such as purchase option after the end of the lease or even purchase of specific assets of the business.

Letter of Intent Template

The lessee’s proposed terms should be detailed succinctly, assets that the buyer intends to lease, desire for an option to purchase the business or specific assets at a specified cost after a specific time frame or a certain date, including how the lessee intends to complete the final financing of the business purchase.

Letter of intent nonbinding

Even so, it’s important for the buyer to remember the intent is non-binding though it plainly offers information to the seller on specific dates that certain matters will be performed, such as due diligence or when the lessee intends to carry out proper research about the business.

Once the seller has signed the business purchase letter of intent the due diligence period kicks in. it’s through the research carried out that the potential lessee will have proper information to craft an option to buy if that’s what they want and the seller has no problem with it.

Once all the conclusions are done, which include the business valuation , the potential lessee can then use the information to come up with option to purchase or other options. The business value will be determined, including market position of the business, intangibles such as potential growth, among others.

The seller need to agree with the potential lessee prior to or on the deadline of the due diligence period on the intention to either bring the deal to an end or move into coming up with a binding contract. Note that, in the letter of intent the deadline on when the contract will come to end will be well articulated, including the closing date.

Within the deal the lessee could indicate willingness to purchase directly a part of the business like fixtures, including a purchase option and lease for certain business equipment or property. In a lease-purchase agreement other separate agreements might also be included, essentially option to buy contracts and lease agreements . In case the seller might be after an outright purchase of the seller’s business a purchase contract could also be a document required in the process.

Legal protection

For the protection of parties involved, especially the seller, the lease-purchase agreement need to be approached and written carefully, especially where option to purchase is involved. Fundamentally, the seller should ensure all the fraud statutes and principles are adhered to so that the agreement isn’t just legally binding, but also capable of holding up and protecting them if ever challenged.

Lease to own defined

The written contract should be identifiable without contradictions for what it’s with the basic agreement terms well indicated; both lessor and lessee have to sign it. The lessor’s lawyer should be able to ensure that the contract covers their own best interests.

The seller should expect the lessee to negotiate the lease-purchase heavily before it’s finalized. Once the agreement or contract, including any other related to the lease-purchase, have been presented to the seller then the request can be rejected, offer countered or accepted.

It’s important for a seller to ensure that the deal provided is largely similar to what the letter of intent had with documentation offered to justify any substantial changes that a due diligence by the buyer might have unearthed. After the terms have been agreed and the lessor signed the contract(s), the move towards closing can begin.

Lease-purchase agreements need to be reviewed with care before the seller puts a signature on them. The agreement is long-term (anything between 1 and 5 years) and expensive. As such, it makes perfect sense to diligently review it. In the process, both parties can benefit from the agreement where the seller is able to sell a business that may have been hard to sell while the buyer benefits from business ownership. In every part of the process talking to a diligent lawyer is highly advised.

Keywords: rent to own business, lease to own business, leasing a business, lease-purchase method

13 Ways to Exit Your Business...

Published by ExitAdviser ™ | 2019-10-01

Lease Purchase Agreement

Jump to section, need help with a lease purchase agreement, what is a lease purchase agreement.

A lease purchase agreement is a rent-to-own legal contract used between a tenant and a landlord. A rent-to-own contract allows buyers to rent for a few years before purchasing the real property from the seller. In a lease purchase agreement, the renter may or may not pay an option fee, which is an agreed-upon purchase price to gain exclusive rights to buy the property.

How Do Lease Purchase Agreements Work?

Lease purchase agreements work on a rent-to-own model. Renting-to-own means that the prospective buyer rents the property and progresses towards eventually owning it. A rent-to-own property generally has a higher rent than the fair market price. This extra portion of the rent goes towards the down-payment on the home. This down-payment can be used to buy the home at the end of the lease agreement .

For example, if you rent a home for $1500 out of which $300 goes towards the down payment, you will have $7200 saved at the end of 24 months of renting. If the house is worth $200,000, you will have 3.6% down payment ready.

A lease purchase agreement consists of two contracts:

A lease purchase agreement also contains cross-default provisions ensuring that the breach of one contract will automatically result in the breach of another.

Would you like to know more about lease purchase agreements? Here is an article for you .

Pros and Cons of Lease Purchase Agreements

Lease purchase contracts come with certain advantages and disadvantages for both the buyer and the seller. Here are some of them:

Pros of a Lease Purchase Agreement

Cons of a Lease Purchase Agreement

Here is more on benefits of a lease purchase agreement.

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Difference Between Lease Option and Lease Purchase

There are two types of rent-to-own agreements – lease option and lease purchase. Both types of agreements allow the tenant to buy the property after renting. However, there are some key differences to explore.

A lease option provides the tenant the option to purchase the property after renting. This is provided to the tenant in exchange for the option fee. Most option fees are around 2% - 7% of the total price of the home. In most cases, the option fees apply to the final purchase price of the property, thus reducing the price. While the tenant can choose not to buy the property at the end of the lease term, under a lease option agreement, the tenant’s option fee and rent credits will be forfeited.

In a lease purchase agreement, the tenant enters an obligation to buy the home at the end of the lease. The buyer and seller can set the purchase price before entering into the contract. This gives the tenant an idea of the loan amount needed before buying the property. In the case where the tenant cannot acquire funds to buy the home, they will lose the claim to the home and all accumulated rent credits. There is also a danger of being sued for breach of contract by the homeowner if the tenant doesn’t buy the property.

Here is an article on lease option agreements.

Are Lease Purchases a Good Idea?

Are you wondering if a lease purchase is a good idea for you? It depends on the real estate market. Since real estate market prices are rising, locking down a purchase price can help the tenant build equity and have security. If the price depreciates, the tenant can also pay for the option to have the home appraised before buying to secure a fair price.

Lease purchase agreements can really work for buyers who need more time to either decide on the property, try out a new place before buying or are looking to save more before buying a home.

If you would like to read more before making a decision, here is an article for you .

Get Help With a Lease Purchase Agreement

Do you have any questions about a lease purchase agreement and want to speak to an expert? Post a project today on ContractsCounsel and receive bids from real estate lawyers who specialize in lease purchase agreements.

Meet some of our Lease Purchase Agreement Lawyers

Ayelet G. Faerman knows what influencers mean to brands today. With experience as legal counsel for a beauty brand for over 5 years, and overseeing multiple collaborations, Ayelet has experienced the rise of influencer marketing. As the founder and managing partner of Faerman Law, PA her practice focuses on influencer relations including a specialization in contract negotiations.

Benjamin E.

Benjamin is an attorney specializing in Business, Intellectual Property, Employment and Real Estate.

Attorney Gaudet has worked in the healthcare and property management business sectors for many years. As an attorney, contract drafting, review, and negotiation has always been an area of great focus and interest. Attorney Gaudet currently works in Massachusetts real estate law, business and corporate law, and bankruptcy law.

Samantha B.

Samantha has focused her career on developing and implementing customized compliance programs for SEC, CFTC, and FINRA regulated organizations. She has worked with over 100 investment advisers, alternative asset managers (private equity funds, hedge funds, real estate funds, venture capital funds, etc.), and broker-dealers, with assets under management ranging from several hundred million to several billion dollars. Samantha has held roles such as Chief Compliance Officer and Interim Chief Compliance Officer for SEC-registered investment advisory firms, “Of Counsel” for law firms, and has worked for various securities compliance consulting firms. Samantha founded Coast to Coast Compliance to make a meaningful impact on clients’ businesses overall, by enhancing or otherwise creating an exceptional and customized compliance program and cultivating a strong culture of compliance. Coast to Coast Compliance provides proactive, comprehensive, and independent compliance solutions, focusing primarily on project-based deliverables and various ongoing compliance pain points for investment advisers, broker-dealers, and other financial services firms.

Experienced General Counsel/Chief Legal Officer

Jonathan R.

I am a graduate of Cornell University and Rutgers University School of Law—Newark, and have been admitted to the state and federal bars for New Jersey, and have been engaged in the full- or part-time practice of law since my admission to the bar in 1991. My practice centers on civil litigation; wills, trusts, and estates; and ediscovery review and management. I have extensive experience in regulatory compliance in the financial services industry, as well as privacy laws in the U.S. and E.U.

I am a general practice lawyer with 21 years of experience handling a wide variety of cases, both civil and criminal

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Lease to purchase camper

Location: georgia, turnaround: less than a week, service: drafting, doc type: lease purchase agreement, number of bids: 3, bid range: $700 - $1000, lease to purchase contract on one rental house in oklahoma, location: oklahoma, turnaround: a week, number of bids: 4, bid range: $250 - $895, related contracts.

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COMMENTS

Free Business Purchase Agreement
A Business Purchase Agreement, or Purchase of Business Agreement, is a legal contract used to sell any type of business to another person officially. A Business Purchase Agreement form can also be used to only sell some of a business’s assets or shares, not the entire business.
9+ Lease Purchase Agreement
A lease-purchase agreement is an agreement between a landlord and tenant, wherein, the landlord legally obligates the tenant to buy the property at the end of the lease. The contract usually includes a portion of rent held in an escrow account until the lease term is completed. 3. What are the Main Elements of a Lease Purchase Agreement?
Lease to Own Business: How Does it Work
Essentially, a lease-purchase (lease-to-own arrangement) has both the seller and buyer (lessee and lessor) entering into a contractual agreement with the lessee being allowed to lease the business of the lessor for an agreed, predetermined set period after which the lessee could fully own the business.
Lease Purchase Agreement: What To Know
A lease purchase agreement in real estate is a rent-to-own contract between a tenant and a landlord for the former to purchase the property at a later point in time. The renter pays the seller an option fee at an agreed-upon purchase price, giving them exclusive rights to buy the property.
Lease Purchase Agreement
A lease purchase agreement consists of two contracts: Residential Lease: The residential lease agreement provides the lease of the property between the landlord and the tenant for the specified term. Contract for sale: The contract for sale obligates each party to terms of the residential purchase agreement upon completion of the lease term.