Frequently Asked Questions

Why is it important to be wary of 'bulk' boilerplate in relation to the bulk transfer law?

Why is it important to be wary of 'bulk' boilerplate in relation to the bulk transfer law?" A: The importance of being wary of 'bulk' boilerplate in relation to the bulk transfer law lies in the potential financial implications and liabilities that a buyer may unknowingly assume. The bulk transfer law is designed to protect business creditors, stipulating that if a buyer notifies the seller's creditors in advance of a business asset purchase, the buyer will not be liable for the seller's debts and obligations. However, if the buyer does not comply with the law, they become responsible for these debts post-purchase. The process of compliance with the bulk transfer law can be tedious and complex, involving several steps such as determining if the transaction is subject to the law, preparing a list of creditors, scheduling the property to be transferred, notifying the seller's creditors, and filing the necessary documents with the County Recorder. To avoid this, buyers and sellers often agree to waive compliance, but this can expose the buyer to potential liabilities.