Credit Report of BUYER

[CHUCON]

CALIFORNIA- We are selling our restaurant (both business and property). We've entered into escrow - the BUYER will be borrowing from a lender for the Property and will be borrowing a partial amount from us for the business. Escrow papers have been drawn outlining the payment schedule, interest rates and default conditions for the loan from us. I recently HEARD that the credit of one of the 3 buyers is not really admirable.

1) Do I have the right as a "lender" to check the credit of the BUYERS? Does the contract need to state that I reserve the right to run a credit report?

Please help.

 

[HomeGuru]

You have the right to request the same info as any bank or private lender to include but not be limited to loan application, financial statement, last 2 years tax returns, verification of deposits, employment etc. for both personal and business and obtain credit reports and judgement/lien clearances on all indivduals. This right shoud be written as a condition of the purchase and sale contract.
Along with the option of Seller to approve or disapprove the financial info and credit report such that the deal can be terminated if the Buyer's are not credit-worthy.

 

[CHUCON]

HomeGURU-The contract states this:

Debtor shall execute such Financing Statement and other documents and do such other acts and things as Secured Party may from time to time require to establish and maintain a valid, perfected security interest in the Security; and debtor shall permit Secured Party and Secured Party's representatives to inspect the Security and/or the records pertaining thereto from time to time at any reasonable time.

Does this mean that we have the right as the Secured Party request a credit report of the Debtors and any financial documents at any given time?

 

[HomeGuru]

Not really.
I can't believe you sold your business without help from legal counsel.