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Can I Withhold Escrow Payment

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The Occultist

Senior Member
What is the name of your state? Arizona

Hello, all; long time no see!

I recently purchased a business. The important terms of the sale for this question are:
1) Seller would carry the balance of the sale with a down-payment.
2) Seller would be available for (3) weeks for training and support.
3) Seller required to turn over any monies received from credit card sales while waiting for the processor to transition to my accounts.

The seller owes me for 2 days worth of credit card sales. I have attempted to communicate with the seller, but he was around for only one day (instead of the three weeks) before disappearing. Calls go straight to voicemail, and his box is full. He is not responding to text messages. Can I simply withhold my payments through escrow until the balance he owes me is accounted for? Should I mail in the escrow "coupon" with an invoice reflecting that the "payment" was deducted from what he owes me until it has been "paid in full"? or do I need to pay my full balance each month to escrow and find a different way to collect what is owed to me? Please advise and let me know if there's any more information I need to provide.

Thank you!
 


quincy

Senior Member
It is good to see you back again, TheOccultist!

As to the escrow payments, this depends on the terms of the contract in its entirety but I recommend you continue to pay as agreed and, if the seller fails to perform as agreed, you can sue him for breach of contract.

How much money is involved (so far)?

Is it possible that the seller's "disappearance" could be attributed to an illness or injury?
 

The Occultist

Senior Member
It's not a large amount of money, but it would carry me through 6 months of escrow payments (low payments the first year as I regrow the business). I'm concerned my legal costs would exceed the money I'd get from him.

I know he did get a bit of the flu early on, but I also know others have seen him out and about since then.
 

quincy

Senior Member
This was a seller-financed sale? How long ago did you purchase the business? Is there a way for you to get alternative financing through a bank and eliminate the seller's involvement?

You could send a demand letter to the seller's last known address (certified mail, return receipt requested) to see if he responds.
 

LdiJ

Senior Member
While you certainly CAN do it, breaching your obligations under the contract is not the answer to his breaching his obligations under the contract.

At least don't do it without talking to an attorney first.
I agree with getting a consult with an attorney. I disagree a bit with breaching your end of the deal.

First, you should do whatever you possibly can to get the credit card switched over to you as fast as possible so that this is not an ongoing problem.

Second, I would have no problem with deducting those credit card payments from any payment you are supposed to give to him. Particularly if there is any reason to believe that he is not solvent. If he sues you for that, then you counter sue him for the credit card payments and the net result is that you will both get a judgment against each other and the judge will likely call it a wash.
 

quincy

Senior Member
These are separate issues and should not be combined. The payment on the business should continue as contract dictates.
 

LdiJ

Senior Member
These are separate issues and should not be combined. The payment on the business should continue as contract dictates.
I disagree with you. I have both bought and sold businesses and hiccups happen when one or another of the parties is not financially solvent. The other party risks never seeing their money again if they follow your advice. Its not as if a judge will negate or ignore their claims in a case like that.
 

quincy

Senior Member
I disagree with you. I have both bought and sold businesses and hiccups happen when one or another of the parties is not financially solvent. The other party risks never seeing their money again if they follow your advice. Its not as if a judge will negate or ignore their claims in a case like that.
And I disagree with you.

Two days (or more) worth of credit card receipts are not worth breaching the terms of the purchase contract. TheOccultist does not want to risk losing his new business by breaching its terms.
 
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LdiJ

Senior Member
And I disagree with you.

Two days (or more) worth of credit card receipts are not worth breaching the terms of the purchase contract.
Depending on the nature of the business that could be a lot of money. The other party not paying the credit card bills is an equal breach of the contract.

TheOccultist does not want to risk losing his new business by breaching its terms.
That kind of unnecessary scare tactic is beneath you. Someone is not going to lose their business due to something like that.
 

quincy

Senior Member
Depending on the nature of the business that could be a lot of money. The other party not paying the credit card bills is an equal breach of the contract.



That kind of unnecessary scare tactic is beneath you. Someone is not going to lose their business due to something like that.
He has (apparently) a seller-financed loan for his purchase. If he fails to pay AS AGREED IN HIS CONTRACT, he potentially can lose his entire investment.

I won't argue with you. TheOccultist can consult with an attorney in his area to determine his best course of action. Both AJ and I feel it is better not to address this with a breach of the contract's terms of payment.
 

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