Are you buying the Real Estate or the Business?
Some investors think that buying a business means buying real estate, and they are using the OREA real estate purchase agreement. For example, a company is selling assets in a bankruptcy auction, and the draft agreement states the sale is for real estate only. This company is a nursing home, and the senior residents are still living there. If it is only a transaction for real estate, the company would need to relocate all the senior residents and an empty property will need to be left to the buyer on closing. If the buyer would like to continue the nursing home business, they need to buy all the assets from the seller. All the assets, such as senior residents’ services agreements, employees’ agreements, suppliers’ agreements, license, trademark, real estate, equipment, etc., should be transferred to the buyer. This is a full asset acquisition. Real estate is only a part of a full asset acquisition. Therefore, an asset purchase agreement will be needed. The investor should make sure what they want when buying a business.