1. What Does the Buyer Actually Acquire?
The purchase agreement should identify what changes hands and which obligations remain with the seller. Buying specified assets differs from purchasing ownership of the entity that operates the business.
Assets and Ownership Interests
An asset purchase transfers listed property, such as equipment, inventory, and contractual rights. A stock or membership-interest purchase changes the entity’s owners; existing liabilities generally remain with that entity.
For business acquisition transactions, the agreement should distinguish purchased assets, excluded property, and assumed obligations. Ownership purchases also require review of provisions triggered by a change in control.
Earlier Liabilities and Successor Liability
Under New York law, an asset buyer generally does not assume the seller’s liabilities merely by purchasing assets. Exceptions can include express or implied assumption, a de facto merger, mere continuation, or a fraudulent transfer intended to escape obligations.
Separate statutes may also impose liability. An agreement excluding earlier debts may allocate responsibility between buyer and seller without defeating a creditor’s claim.
2. Can Operations Continue after Closing?
Continued operations may depend on landlord consent, licensing approval, and lawful use of the premises. The seller’s promise to transfer these rights does not replace a third party’s required approval.
Lease Consent and Continuing Guarantees
A commercial lease review should cover assignment restrictions, change-of-control clauses, permitted use, remaining term, and guarantees. An ownership purchase can trigger consent requirements even when the tenant’s name stays unchanged.
The agreement should assign responsibility for obtaining consent and state whether closing depends on it. A lease assignment does not necessarily release the seller or an existing guarantor.
Licenses and Permitted Use
NYC’s Department of Consumer and Worker Protection requires prior approval for certain ownership changes in licensed businesses. Approval requests generally must precede the change by at least 30 days; some license categories require a new application.
Other licensing agencies apply their own rules. Separately, DOB records, the Certificate of Occupancy, or an accepted alternative should support the intended use of the premises.
3. Conditions before Payment and Possession
Signing does not necessarily require immediate payment or transfer of possession. Closing conditions should identify the approvals, documents, and other requirements that must be satisfied before the parties complete the purchase.
Bulk Sale Notice and Tax Exposure
For covered transfers of business assets outside the seller’s ordinary course, New York requires the purchaser to submit Form AU-196.10 at least 10 days before payment or possession, whichever occurs first. The payment schedule should account for that deadline.
The Tax Department’s response determines whether funds must remain withheld for potential sales tax liabilities. A seller’s promise to pay taxes does not replace this process, and filing alone does not establish tax clearance.
Closing Conditions and Deposit Returns
Contract drafting and review should connect identified risks to specific terms, including:
- Required consents and regulatory approvals.
- Lien releases and transfer documents.
- Seller representations that must remain accurate at closing.
- Escrow arrangements and a final closing deadline.
Deposit terms should explain who holds the money and when it becomes refundable. An unmet condition does not automatically constitute a breach or allow either party to keep the deposit.
4. When a Problem Threatens the Transaction
The available response depends on when the issue emerges and what the agreement requires. A missing approval before closing raises different questions from an undisclosed liability discovered after completion.
Before Closing
Compare any discrepancy with the seller’s representations, closing conditions, and notice provisions. Preserve the supporting records and check whether the agreement requires an opportunity to cure.
A buyer’s right to delay or terminate may depend on materiality, deadlines, and responsibility for the failure. Written extensions or waivers should identify the affected condition and any rights retained.
After Closing
Post-closing acquisition disputes may involve indemnification, contractual notice deadlines, or liability caps. Meeting a statutory limitation period does not necessarily satisfy a separate contractual notice requirement.
NYC Civil Court generally hears money claims up to $50,000. Bronx County Supreme Court may hear larger claims and appropriate requests for equitable relief, subject to jurisdiction and venue requirements.
Federal court requires an independent basis for jurisdiction. A business address within the Southern District of New York does not alone establish federal jurisdiction.
21 Oct, 2026
