Buying a business or asset? Beware ownership claims!
If you are buying a business or any other type of property, it is important to make sure that the seller actually owns the entity that they are selling to you and that the property is not secured by a lender!
While this seems like the most obvious question to ask the seller when buying any type of property, relying on the seller’s verbal or written confirmation as to ownership may NOT be enough to protect you if, later down the track a third person comes along and claims an interest over the asset.
In New South Wales there are a number of important public search registers that should be checked before you hand over any money to a seller.
• If real estate is involved you will need to check the Land & Property Information register in respect of that parcel of land
• If you are buying goods including fittings, plant, equipment or even goodwill you will want to look at the Security Interest In Goods Register (part of the General Register of Deeds) run by the Registrar General
• If a motor vehicle is involved you should check with REVS – The Register of Encumbrances on Vehicles which will tell you whether the vehicle is the subject of any lease finance or other financial encumbrance
• To be sure of the seller’s right to sell their property you might also want to check with ITSA - The Insolvency and Trustee Service Australia to ensure the person is not a bankrupt.
The upshot is that if you fail to perform the appropriate searches, and an interest in a property is recorded on a public register, your ownership of that purchased property may be second in line and subject to the claim that the registered interest holder has over the asset. Making the appropriate searches is vital to your peace of mind.
As always in a business transaction, never assume! Rather, check all material details and get advice if you need it. For help on any business issue you may be facing, please pop in to meet with us or call 8296 6222