Legal Question in Business Law in Texas

A relative of mine bought a business two years ago and the seller financed the loan. Now the business is failing and he cannot make payments any longer so he is in default on the loan. The business is the collateral for the loan and he is willing to turn the buisiness back over to the seller and walk away but the seller doesn't want the business back. My question is if my relative locks the doors and sends the keys to the seller, is there any other legal recourse she can take against my relative.


Asked on 8/12/10, 12:16 pm

2 Answers from Attorneys
Arthur Geffen Arthur H. Geffen, P.C.

Unless it's a non recourse loan or there are other provisions prohibiting the owner of the note to sue the payee, once the collateral is returned and valued, that value is applied to the outstanding balance of the note and your relative owes the difference.

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Answered on 8/18/10, 7:56 am
Kevin B. Murphy Franchise Foundations, APC

The other attorney is on point here. The terms of the promissory note and contract of sale need to be examined. The seller will sue for the balance owned on the note and your relative will need to raise any applicable defenses or offsets. Consult with an attorney in your area for specifics.

Kevin B. Murphy, B.S., M.B.A., J.D. - Mr. Franchise

Franchise Attorney

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Answered on 8/18/10, 8:15 am


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