I'm Selling My Coin Laundry.
How Can I Be Assured That The Buyer
Will Make His Payments?
scientific fact that green is easy on the eyes. That may partly account for the fact that sellers prefer to
receive cash, bank, heavy bread, bones, buckage, a bundle, cabbage, lettuce,
cake, heavy coin, jack, lace, dough, copper, dinero, doowacky, do re mi, gold
or loot, rather than the buyer's IOU when selling a coin laundry.
however, as a seller, you are merely receiving chump change, birdseed,
chickenfeed or peanuts as a down payment, and must take back the buyer's
promissory note for the balance of the purchase price, read further.
obtain the buyer’s promissory note, in the eyes of some buyers, you are
receiving a promise to pay only in the event the coin laundry is successful. On
the other hand, if you hold a security interest in assets that the buyer wants
to retain, the buyer will be encouraged to make the payments to avoid loss of
security interest limited to equipment may not be sufficient to induce the
buyer to remember you on payment days.
If the equipment is outdated and needs replacement, there may be little
incentive for the buyer to be concerned with your security interest,
particularly if the buyer maintains a bank balance in the low two figures.
If you foreclose on your security interest
and remove your collateral from the coin laundry, you will likely recover very
little at public sale and can look forward to being enmeshed in litigation to
recover the balance due.
other hand, if you hold a security interest in the lease of the coin laundry
location as well as the equipment, in the event of non-payment, you will have a
right to foreclose upon the entire operation and be in a position to resell the
business as a turn-key operation.
the opinion of the 9th Circuit Court of Appeals in the matter of In re Kim,
130 F.3d 863 (9th Cir. 1997), a matter involving Ardmor Vending Co., a former
distributor of coin laundry equipment in California and client of this
writer. The Court, in ruling in favor
of Ardmor, stated:
both the lease and equipment gave [Ardmor Co.] a package that was worth more
than if the two . . . . were valued separately . . . . This is why [Dave]
Weiner, Chief Executive Officer of [Ardmor Co.], stated that in his many years
of building, equipping and selling laundromats and dry cleaners, his company
routinely took security interests in both the equipment it sold and the lease
where the equipment was installed -- so that in the event of default, his
company can sell them as a package."
of coin laundry equipment routinely obtain an assignment of the lease as
collateral security in addition to a security interest in the equipment sold,
if financing the purchase of a substantial quantity of equipment. As the seller of a coin laundry financing
the purchase of the entire business should you do less in securing the buyer's
forget that a Uniform Commercial Code security interest in the equipment is
only effective for a period of five years!
In order to continue the effectiveness of your security interest in the
equipment, it is necessary to file a UCC Continuation Statement within six
months before the five year period expires.
In the event you fail to file this Continuation Statement timely, your
position will be subordinate to any subsequent competing claims.
of the story? There are some
intricacies in crafting appropriate security instruments, but if undertaken
properly, your buyer will remember you on payment day!