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Business Seller Financing Agreement for New Zealand

Business Seller Financing Agreement Template for New Zealand

This agreement governs the terms and conditions of seller-provided financing in a business sale transaction under New Zealand law. It outlines the purchase price, payment terms, security arrangements, and ongoing obligations of both parties. The document incorporates key requirements under New Zealand's Contract and Commercial Law Act 2017, Personal Property Securities Act 1999, and related legislation. It includes provisions for default scenarios, enforcement mechanisms, and necessary security arrangements to protect the seller's interests while facilitating the business transfer to the buyer.

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What is a Business Seller Financing Agreement?

A Business Seller Financing Agreement is utilized when a business owner agrees to finance part of the purchase price for a buyer, effectively acting as a lender in the transaction. This arrangement is common in New Zealand business sales where traditional financing may be difficult to obtain or when the seller wishes to earn interest income while facilitating the sale. The document must comply with New Zealand commercial and securities law, including the Contract and Commercial Law Act 2017 and Personal Property Securities Act 1999. It typically includes detailed payment schedules, security arrangements, default provisions, and may require registration of security interests on the Personal Property Securities Register. This type of agreement is particularly useful for small to medium-sized business transactions where bank financing might be limited or unavailable.

What sections should be included in a Business Seller Financing Agreement?

1. Parties: Identification of the seller(s) and buyer(s), including full legal names, addresses, and company details

2. Background: Context of the transaction, including brief description of the business being sold and parties' intention to enter into seller financing arrangement

3. Definitions and Interpretation: Defines key terms used throughout the agreement and establishes rules of interpretation

4. Sale and Purchase: Core terms of the business sale including purchase price and what is being purchased

5. Financing Terms: Details of the seller financing arrangement including principal amount, interest rate, payment schedule, and term

6. Security Arrangements: Description of security provided for the financing, including charges over assets or personal guarantees

7. Conditions Precedent: Conditions that must be met before the agreement becomes effective

8. Representations and Warranties: Statements of fact and promises made by both parties

9. Covenants: Ongoing obligations of the buyer during the term of the financing

10. Default and Enforcement: Events of default and seller's rights and remedies upon default

11. General Provisions: Standard legal provisions including notices, amendments, governing law, and dispute resolution

What sections are optional to include in a Business Seller Financing Agreement?

1. Personal Guarantees: Required when individual guarantors are providing additional security for the financing

2. Non-Compete Provisions: Used when the seller agrees not to compete with the business for a specified period

3. Subordination Terms: Needed when there are other creditors and priority arrangements need to be established

4. Seller Involvement: Used when the seller will maintain some involvement in the business during transition

5. Early Repayment Terms: Optional provisions for early repayment scenarios and any associated penalties or benefits

6. Insurance Requirements: Specific insurance obligations beyond standard coverage requirements

7. Third Party Consents: Required when the transaction needs specific third party approvals

What schedules should be included in a Business Seller Financing Agreement?

1. Schedule 1: Business Assets: Detailed list of all assets included in the sale

2. Schedule 2: Payment Schedule: Detailed amortization schedule showing payment dates, amounts, and interest calculations

3. Schedule 3: Security Details: Specific details of all security arrangements and collateral

4. Schedule 4: Existing Liabilities: List of any liabilities being assumed or excluded from the purchase

5. Schedule 5: Key Contracts: List of important contracts being transferred as part of the business sale

6. Appendix A: Form of Security Agreement: Standard form security agreement to be executed

7. Appendix B: Personal Guarantee Form: Standard form personal guarantee document if applicable

8. Appendix C: Due Diligence Checklist: List of required due diligence items and their status

Authors

Alex Denne

Head of Growth (Open Source Law) @ Ƶ | 3 x UCL-Certified in Contract Law & Drafting | 4+ Years Managing 1M+ Legal Documents | Serial Founder & Legal AI Author

Jurisdiction

New Zealand

Publisher

Ƶ

Document Type

Finance Agreement

Cost

Free to use
Relevant legal definitions















































Clauses









































Relevant Industries

Retail

Manufacturing

Professional Services

Hospitality

Technology

Construction

Healthcare

Agriculture

Transport and Logistics

Real Estate

Education and Training

Relevant Teams

Legal

Finance

Compliance

Risk Management

Corporate Development

Mergers and Acquisitions

Treasury

Business Development

Commercial Operations

Executive Leadership

Relevant Roles

Business Owner

CEO

CFO

Commercial Lawyer

Business Broker

Financial Controller

Accountant

Business Development Manager

Corporate Counsel

Finance Manager

Managing Director

Operations Manager

Risk Manager

Compliance Officer

Investment Analyst

Industries








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