If you are planning to buy or sell an assisted living or group home business, you need a legal document that outlines the terms and conditions of the transaction. In earlier blogs have covered the first paragraph and the background sections of the asset purchase agreement. There is also a blog on the contingencies section of the real estate contract that is typically concurrent to the asset purchase agreement.
The first of several elements of the Agreement portion of the asset purchase agreement is covered here.
Firstly, understand that a typical asset purchase agreement starts with the description of the parties – who is entering into the agreement.
Secondly, the background section will discuss the general nature of the contract – what the parties intend to achieve.
The next section of the contract is typically called the “Agreement.” This section usually states that the parties have come to an agreement and that the exchange described in the contract is appropriate. Although it has been increasingly simplified over the years, the initial few sentences still carry a connection to legalese from days past.
Inside this big document called “Agreement” there's a little section also called "Agreement." It's like the contract is saying, "Hey, just in case you forgot, we're all here to make some serious promises!" It's like double-confirming that everyone's on the same page, or like saying, "Yes, I really, really want to agree to the thing we are agreeing to.
It is not clear why this is done. If there were a rational reason, it is lost in history.
Here is an example of the first sentence you will find in the “Agreement” section a typical asset purchase agreement:
AGREEMENT - IN CONSIDERATION of the foregoing and the mutual covenants and agreements set forth herein, and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties agree as follows: …
· Consideration is the legal term for something that each party gives or does for the other party as part of an agreement.
· The parties are making this agreement based on what they have already said and agreed on before, and also based on what they are promising to do for each other in this agreement.
· The parties are getting something good and valuable from this agreement, such as money, goods, or services, and they agree that it is enough for them to make this deal.
· The parties are saying that they have received whatever they are supposed to get from this agreement, or they will receive it soon, and they are happy with it.
· The parties are saying that they agree to follow the terms and conditions of this agreement, which are written below.
The Purchase of Assets section describes in very broad terms what is being purchased. Sometimes it is simple and can be described in a few sentences, or paragraphs. Sometimes it requires an inventory list identifying what is included and what is not included.
The next blog in this series will include a sample inventory.
The information herein is intended to be educational and an introduction to the subject matter presented. Despite any statutory or regulatory references cited in the article above, it is NOT specific legal advice to be relied upon for specific individual circumstances. Contact your own legal professional or reach out to our firm if you would like specific advice on this topic.
Look for additional blog posts on topics of interest to Assisted Living and Behavioral Health operators. We welcome topic suggestions! Write to info@pinkowskilaw.com if you are curious to learn more about a certain topic impacting assisted living or other group housing concerns.
