Sale of Business Destroyed in Fire

[hill2569]

This is a question pertaining to State of Michgan law.

I was waiting to sell my business after signing a purchase agreement. Before the closing, the biz was totally destroyed by fire. I am adequately insured, it appears.

If/when I rebuild, I will most likely have a building and contents that will appraise for more than the previous building and contents.

The prospective buyer is very anxious for me to rebuild. In the purchase agreement there was a clause that in case of fire or other loss, the property would be returned to the condition it was in prior to the fire. Well, it could very well be returned to a condition much better than before the fire, even after the costs of demolition. The building was eighty years old!

I am still willing to sell the biz to the buyer, but I believe based on what has happened, the price needs to be renegotiated.

What is my legal position?

Thank you.

 

[HomeGuru]

This is a question pertaining to State of Michgan law.

I was waiting to sell my business after signing a purchase agreement. Before the closing, the biz was totally destroyed by fire. I am adequately insured, it appears.

If/when I rebuild, I will most likely have a building and contents that will appraise for more than the previous building and contents.

The prospective buyer is very anxious for me to rebuild. In the purchase agreement there was a clause that in case of fire or other loss, the property would be returned to the condition it was in prior to the fire. Well, it could very well be returned to a condition much better than before the fire, even after the costs of demolition. The building was eighty years old!

I am still willing to sell the biz to the buyer, but I believe based on what has happened, the price needs to be renegotiated.

What is my legal position?

Thank you.

**A: I really do not know for sure. You need to hire an attorney to review your sales agreement, insurance policy etc. In my opinion, the Buyer is entitled to whatever exists after rebuilding without being required to pay more. The theory is that you are getting the benefit of insurance coverage and so is the Buyer.