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Frequently Asked Questions

What is the purpose of the bulk transfer law in business transactions?

The bulk transfer law is a crucial component in business transactions, designed to safeguard the interests of business creditors. Its primary purpose is to ensure that if a buyer purchases a business's assets, they notify the seller's creditors in advance, thereby avoiding liability for the seller's debts and obligations. However, if a buyer fails to comply with the bulk transfer law, they become responsible for the seller's creditors post-purchase. Compliance with the bulk transfer law can be a complex process. It involves determining if the transaction falls under the law, preparing a list of creditors, scheduling the property to be transferred, notifying the seller's creditors at least ten days before the transfer, and filing the list of creditors and the schedule of property transferred with the County Recorder. Despite the tediousness, it's often more beneficial for buyers to comply with the law. However, in some cases, buyers and sellers may agree to waive compliance, with buyers seeking protection from the seller.

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