This review list is designed to educate you about the document and to guide you in preparing it. A Certificate of Sale is a document that is frequently required by a Buyer at the time of company closure. It is a simple document that refers to the original purchase agreement. Ensure that the facts are true before signing. As part of your entire purchase agreement, have your attorney review this.
- Make several copies to accompany the sale’s documentation. The copies should be retained alongside the records that should eventually wind up in the corporate minute book and other pertinent locations once the sale or purchase has been completed, depending on which side of the transaction you are on.
Certificate Of Seller
Certificate of Seller
To: _________________ (Buyer)
Reference: ______________________ (Agreement)
In consideration of the closing of the above transaction, the Seller hereby certifies that:
1. It is not and will not be a non-resident alien of the United States of America within the meaning of Internal Revenue Code of 1986, as amended.
2. It is the absolute owner of the Business and all chattels, fixtures and other equipment and assets set out in the Purchase Agreement (“Purchase Agreement”) between the Seller and the Buyer.
3. All the chattels, fixtures, equipment and assets set out in the Purchase Agreement are free and clear of all liens, mortgages or other encumbrances and are in good working order, other than those expressly listed in the Purchase Agreement.
4. The Business is free and clear of all debts, liens and other encumbrances, other than those expressly listed in the Purchase Agreement.
5. The premises of the Business comply with all municipal, provincial and federal regulations as to fire, health, building, zoning and labor regulations relating to the use of the premises, other than those expressly listed in the Purchase Agreement.
6. To the best of the Seller’s knowledge, there are no outstanding work orders against the premises of the Business with any relevant Building, Fire, Health and Labor Departments and the Business has not been served with any such notices or work orders as of the date hereof, other than those expressly listed in the Purchase Agreement.
7. There are no liabilities outstanding against the Business for payment of salaries, employee’s deductions or workers’ compensation, other than those expressly listed in the Purchase Agreement.
8. All utilities have been paid by the Business to the date of closing, other than those expressly listed in the Purchase Agreement.
____________________________ __________________
Seller’s Authorized Representative Date____________________________
Witness
Certificate of Sale
Review List
This review list is provided to inform you about the document in question and assist you in its preparation. A Certificate of Sale is a document often requested by a Buyer at a closing of a business. It is a straightforward document that references back to the primary purchase agreement. Be sure that you have the facts correct when signing it. Have your attorney look this over as part of your overall purchase agreement.1. Make multiple copies to accompany the paperwork for the overall sale. The copies should be kept with those records that should wind up in the Corporate minute book and other relevant places after you have completed the sale or purchase, depending on which side of the transaction you are on.
Frequently Asked Questions
What is a Certificate of Seller?
A Certificate of Seller is a document in which the Seller certifies certain facts about the business and assets being sold to the Buyer. It is provided in connection with the closing of the transaction and references the Purchase Agreement between the parties. The certificate includes statements regarding the Seller's residency status, ownership, encumbrances, and compliance with regulations.
Why is a Certificate of Seller needed in a business sale?
The Certificate of Seller provides assurances to the Buyer regarding key representations made by the Seller. It confirms that the Seller is not a non-resident alien, owns the business and assets, and that they are free of undisclosed liens and encumbrances. This helps protect the Buyer and facilitates the closing of the transaction.
What does the Seller certify about their residency status?
The Seller certifies that it is not and will not be a non-resident alien of the United States within the meaning of the Internal Revenue Code of 1986, as amended. This certification is important for tax withholding purposes under U.S. law. It assures the Buyer that the Seller is a U.S. person for tax purposes.
What does the Seller certify regarding ownership of the business and assets?
The Seller certifies that it is the absolute owner of the Business and all chattels, fixtures, equipment, and other assets set out in the Purchase Agreement. This confirms that the Seller has the legal right to sell these assets. It provides the Buyer with confidence that the Seller has clear title to the assets being transferred.
What does the Seller certify about liens and encumbrances on the assets?
The Seller certifies that all chattels, fixtures, equipment, and assets are free and clear of all liens, mortgages, or other encumbrances, except those expressly listed in the Purchase Agreement. Additionally, the Business itself is certified to be free of all debts, liens, and other encumbrances, other than those expressly listed. This ensures the Buyer is aware of any existing claims against the assets or business.
What does the Seller certify about the condition of the assets?
The Seller certifies that the chattels, fixtures, equipment, and assets are in good working order, except as expressly listed in the Purchase Agreement. This representation gives the Buyer assurance about the operational condition of the assets. Any exceptions must be specifically noted in the Purchase Agreement.
What does the Seller certify about compliance with regulations?
The Seller certifies that the premises of the Business comply with all municipal, provincial, and federal regulations as to fire, health, building, zoning, and labor regulations relating to the use of the premises. This certification is subject to any exceptions expressly listed in the Purchase Agreement. It assures the Buyer that the business premises meet the necessary legal requirements.
What is the effect of the Seller's knowledge limitation in the certificate?
The certificate states that certain certifications are made to the best of the Seller's knowledge. This means the Seller is confirming these facts based on what they know, rather than providing an absolute guarantee. The exact scope of the knowledge limitation is defined in the full text of the certificate.
What happens if the Seller's certifications are inaccurate?
The Certificate of Seller does not specify the consequences of inaccurate certifications. However, such inaccuracies could potentially lead to legal claims under the Purchase Agreement or applicable law. The Buyer should review the Purchase Agreement for remedies related to breaches of representations.
Is the Certificate of Seller a legally binding document?
The Certificate of Seller is a formal certification made by the Seller in connection with the closing of the transaction. It is intended to be legally binding and may be relied upon by the Buyer. The specific legal effect depends on the terms of the Purchase Agreement and applicable law.
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