Laundry Purhcase NIGHTMARE

[chosun]

I'm a new laundrymat owner and recently went through a nightmare. During escrow, I saw that the previous owner had a large overdue gas bill (over $10K). I asked my broker if this is a problem and he said the previous owner's liabilities should not impact me, as I'm a new owner. This was completely wrong, b/c the gas company somehow said they have info I'm affiliated w/ the prev owner and few days after escrow closed, the gas company shut off my gas. I lost two days of business and angry customers. In order to turn my gas back on, the gas company forced to pay off the previous owner's bill and made me collect from the previous owner.

Any suggestions on who I should go after to claim loss of business income ? or just chalk it up to lesson learned ?

[azkid]

I have no expert advice, but to me it's another example of broker incompetence. Perhaps they will pay it out of their commission (yeah, right)!

[Jefflange]

Didn't you have a Attorney? If not that was very foolish. Next time you will know. How much did you save by not having a Attorney? I hope there are not other issues that may arise in the future.

[chosun]

I did consult an attorney. But in the end, the prev owner ended up paying me back for the overdue gas bill. So now what I'm left with is 2 days of loss of income and some credit card cash advance fees which I had to pay when I was forced by the gas company to pay in cash.

[Jefflange]

When did u hire a attorney? Before or after you bought? You should of had an attorney for the purchase of the business.

[chosun]

I never hired an attorney, I just consulted one after the escrow closed because unfortunately the gas company decided to turn off my gas after my escrow closed. If I had known the gas company was going to turn off my gas because the seller did not pay his bills, I would not have closed escrow. It just makes me sick to my stomach thinking about how messed up it was.

[Howard]

Well the answer is it all depends. Did you buy the company or just the assets? If you bought the company then the gas company is correct, whereas if you bought the assets you are correct.

Bottom line (sorry to be so blunt) but you deserve what happened to you by trying to do things on the cheap by not getting a lawyer involved up front. I hate lawyers as much as I hate business brokers, but unfortunately you need them to protect your interests. Fortunately things sort of worked out in the end and you learned an important lesson that you won't soon forget. Let it go and now run the business and make some money.

[neal]

I would have thought the money would have been paid thru escrow. We told the escrow to clear all bill on the store before it closed. Thats what its for. Dident you check the gas and water bills before you bought the store?

[petefritz]

I will say you are screwed, chalk it up.
Normally you have accounts changed over to your name at closing date, and that account is a new account. Also at closing most owners have to sign off on any past due debt,, saying things are clear. Whatever the case, consider yourself lucky you did not get stuck for the 10 g's!!

PS After I closed on my 4th mat I went there after closing. By bad luck a 35# Milnor had shorted out due to a coin hutting the relays. Then customers start telling me the dryers don;t work. Seems the gas company shut my gas off, even though I had set up a new account. I think I had to drive to their office and straighten it all out, loosing about 1/2 a day, and also the Milnor, it was burnt. I hope the future bodes better for you!

[fishmanz]

This a classic example of the confussion at some closings. There was a closing attorney but he was not representing you. His feduciary relationship was with the seller, not you and you didn't know what to ask. This is where some experience in buying and selling real estate (not laundromats per say) comes in handy.

[laundryman]

Get your closing info right the first time. You cant get comped for everything that goes wrong in business., its the price we pay. It was a simple misunderstanding.