The Bulk Transfer Law

The Bulk Transfer Law (also known as the Bulk Sales Law, to some) is a parameter set in place in order to prevent business creditors from becoming victims of a faulty transaction between a buyer and a seller. Essentially, this law ensures that any debts or responsibilities of the seller are taken care of and not forgotten or avoided when the business sale takes place.

If the buyer informs the creditors of his or her intent to purchase the business, then all debts or responsibilities of the seller remain as is; it is up to the seller of the business to take care of them. However, if the purchaser does not notify the creditors of the transaction that will take place, then the debts and obligations are passed onto the buyer, and he or she must resolve them.

Should I waive this law?

While it may seem like common sense for the buyer to always comply with this law, it is not always in his or her best interest to do so. There are certain issues for the buyer to take into consideration before he or she decides whether or not to waive the Bulk Transfer Law.

The process has many requirements, and may prove to be quite tedious. Creditor lists must be compiled, the buyer and seller must work together to draw up a property transfer schedule, the buyer must notify all creditors of this decision, and the creditor list and transfer schedule must be filed with the County Recorder.

If you as the buyer are willing to go through with all the requirements listed above, then complying with the Bulk Transfer Law may be your best option. However, if the Bulk Transfer Law does not even apply to the purchase, or if any of the above stipulations may not be met, then the law should be waived by the buyer.

Contact Us

If you would like to learn more about the Bulk Transfer Law and whether or not you as a buyer should choose to waive it, please contact the Austin business lawyer of Slater, Kennon & Jameson, LLP today at 512-472-2431.