buying a B&B - Gift card question

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Joined:
01/11/2020

We are about to close on our B&B. The seller issued Gift Certificates for around $25,000. At closing he wants to credit only 75% of the unused value - that would leave us about $6,250 short. Is this common ? He says it’s unlikely that 100% of these unredeemed certificates will be used.

 

To be honest - I am not happy with it. Your thoughts ? 

Thank you

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Joined:
01/11/2020

Thank you so much for your responses - very helpful

We will insist on 100% of the GC values. I don't think we are vying against other buyers - not during the current pandemic. Law in our state has very little regulation of gift cards.

Thanks again for your help and thoughts - very much appreciated. We hope we can find an agreement with the sellers and if not, who knows what it is good for .... Smiling

seashanty's picture
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Joined:
06/02/2008

Get your attorney in on this.

All monies for outstanding gift certificates are to be credited toward the sale. The prior owners of my place couldn't 'find' the record of gift certificates, said it was a 'handful'. Turned out to be quite a handful. And I had to honor them. 

Most inns cost hundreds of thousands of dollars depending on your area, and the seller is doing this? Why?

When you are running the place - if times get tight in that first year and they certainly can - the LAST thing you need are people redeeming gift certificates that you have not been compensated for. It's hard enough when you've been properly credited

Stand firm. 

 

 

 

PhineasSwann's picture
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Joined:
09/25/2012

Your seller is obligated to pay you for every cent of it, every dollar they've already collected for gift certificates. It's a liability against the business, and shows up on the balance sheet. As such, it needs to be put against what you're paying for the inn.

I don't know if you're vying against other buyers, but if I were selling my inn I wouldn't risk throwing the whole deal in the ditch over this. 

This is a hill worth dying on, in my opinion. And if your seller is trying to screw you on this, I'd be careful of how he might nickel and dime you on other things. 

__________________

Darren
Innkeeper & Owner

 

Morticia's picture
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Joined:
05/22/2008

Definitely check state laws about this but I would demand the full payment. If all of those GC’s get used you are out that money. 

the seller is correct that some won’t be redeemed, but that’s something you have to deal with down the line. You might have to return that money to the state as ‘lost property.’

We had sellers who said they gave us all the money but they shorted us by several hundred dollars and told us to leave them alone when we asked for reimbursement. 

handle it now before you close. you have no leverage later.

__________________

What a long, strange trip it’s been.

 

Generic's picture
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Joined:
02/24/2011

What is the law in your state? Each gift certificate is a liability on the business. The answer is NO. Unless the state allows you to cancel them. Some states actually require him to deposit the money with the state.

They are 100% owned by the B&B, no discount.

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