Question about a bond

donna_loomisMay 10, 2005

DH and I own a small sign shop. Thinking seriously of selling. We've been told that a bond can be purchased to ensure we are paid. We are so naive. Who pays for the bond? Seller, or Buyer? Do any of you know how the bond works? Thank you for your help.

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joyfulguy

Hi Donna Loomis,

Being a resident of another country, I can't give good advice, but here are a couple of ideas.

When you buy a home or other property, often you may be required by the agency holding the mortgage to buy mortgage insurance, which means that, should you not pay, the insurer is required to make good on the loan. Here in Canada, if you are paying under 25% down, you are (almost always?) required to purchase such insurance.

It may be possible that whoever agrees to pay you whatever number of dollars to purchase your business can purchase similar insurance, which would pay you if the purchaser defaults.

Should you be the agent holding the promise to pay, you might require that they take out such insurance.

It might be very difficult to find such, and if found it might be very expensive, for a house usually ramins pretty well intact after a period, but if someone through negligence, inattention, laziness, lack of skill or whatever does not/is not able to keep the business functioning in a fashion similar to its former level, it could deteriorate rather quickly - thus losing a great deal of its value. In which case, the guarantor of the loan would have had to pay out a good deal of money to you - and be left with a bag of sand, so to speak, to show for it.

Not a good situation, from their point of view.

Even if a dozen such situations turned out well, one dead dog could be very hurtful to them - two would be a disaster, as their margin on each situation would not be large.

God wishes for success in whatever you choose to do with the business - and its aftermath.

joyful guy

P.S. I presume that it's not a partnership/ownership of the Loomis Courier/money carrier trtucking agency that you're referring to. (:^)

j g

    Bookmark   May 12, 2005 at 12:16PM
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donna_loomis

Thanks for your input, JG. No, although money carrier agency was started by a distant relative (or so I've been told), this is not related. We are a small graphic and sign shop. You have given me some ideas to check out. Thank you again.

    Bookmark   May 12, 2005 at 4:59PM
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