Frank,
I think you have provided some valuable information for those that wanted to know what was going on with this situation and also to explain the challenges that beach properties present.
I have one question/comment. You mentioned that the buyer was unable to inspect the equipment because it would require to break the wall to remove it. After the sale was finalized you also mentioned that the restaurant was closed for renovations which included breaking through the walls to fix the floor and then to service the equipment and this is where the issues were discovered.
It seems that the new owner realized what work was needed during an inspection so he may have known that the wall needed to be broken to fix the floor.
Knowing this in advance why not come to an agreement with the seller on breaking the wall beforehand so he can check the equipment?
Break the wall before finalizing a deal and if the equipment is fine then he buy the business and he would have to do a renovation anyway so no harm.
Break the wall and he would have found the defect and worked something out. If seller does not agree with condition on equipment and thought it was ok then an agreement to help pay and put the equipment back and no deal.
No deal and you lose a bit of money but that should have been incorporated into the cost of doing this business.
Doing your due diligence is part of doing business even if you back out and lose what it cost to conduct that due diligence. Putting into a contract that the equipment is in good condition is riskier and made no sense when the buyer is giving 600,000 US dollars upfront.
Please excuse if I misunderstood anything.
thanks
Carlos,
It would be impractical--possibly impossible--to close a business down, destroy a wall, pull everything out of the kitchen, and then take the equipment apart, one by one, and inspect the internals.
That process is unrealistic, and quite frankly, i don't know anyone who would go for it.
To clear another thing up: there were two contracts: one was for the property for $675,000 dollars that Rocky paid in full, with several people present, including the lawyers.
Bam, one lump sum: $675,000. "Vær så god!"
The second contract was for the restaurant & equipment for $200,000 dollars, and that was to be paid monthly. However, as mentioned numerous times already, that was with the contingency that the restaurant equipment was in "good working condition." It was not.
Round 2
I don't blame Big Frank for this no more then i would blame anyone else. Until the equipment was physically taken out of the kitchen, completely taken apart, and the internals inspected (no easy process, which is why everything needed taken out of not only the kitchen, but also from behind the bar, and several more refrigerators and freezers deep inside two separate hallways that run parallel to the restaurant.)
At this point, everything was documented with photos. All the equipment was thoroughly photographed not just by me, but by other people as well.
Now, at this point, with everything well documented, it really should have been a simple sit down, re-negotiate the difference between the replacement of the equipment and the $200,000.
I documented it pretty thoroughly in my book: "Sun, Salt, & Hurricanes." No, it's not a plug for the book, it's just a fact that i devoted many chapters to it.