Now that the transaction is agreeable, it is time to finalize everything. The contract is the actual written agreement between you and the seller. This is going to be the legal and binding part of purchasing a Web site that needs to be accurate. A contract is not supposed to be designed to give anyone distinct power over another. Rather, it should provide equal protection for everyone involved with the sale. The following checklist contains aspects of the contract that should not be overlooked.
The agreement itself
Some Web site sellers prefer to use an escrow service, in order to make sure payment is received before the Web site is turned over to the buyer. This service takes the payment and notifies the seller when the funds have cleared. If the deal ends up being a bust, then the escrow service will keep the money until the site has been returned to the seller. If an escrow service will be used or not, then this should be stated in the contract. When it comes down to the contract used, you and the seller should both agree on it.
What type of contract is going to be used?
Usually a contract is chosen by the seller. Sellers have an infinite number of choices, when it comes to choosing a contract. They can contact a lawyer and have an original one drawn up or they might already have a document that was made up for another website they sold. Quite a few online documents are also available and can be purchased for a nominal fee. However, when the contract is acquired, be sure to find out if it is actually a legal document. Signing a contract that isn’t legally binding can cause you to lose any money you hand over with no recourse.
What is included in the contract?
Contracts usually consist of more than one page. There is a lot of legal jargon in most business agreements, especially when it entails the exchange of some type of property. Purchasing a Web site is similar to investing in physical real estate, so many of the inclusions on the contracts for either of these transactions are interchangeable. The following sections are found on many, but not all contracts:
– Sale of the Assets
– Transfer of the Property
– Purchase Price
– Method of Payment
– Sales Law
– Taxes for the Sale
– Covenants, Warranties, and Representations for both Seller and Buyer
– If there is to be any compensation paid to either party for any loss suffered during the transaction
– Severability Method that is in Place
– Effective Date of the Contract
– A Business Disclosure
– An Appraisal of the Property Changing Hands
Is the document beneficial to both the buyer and seller?
The contract should provide benefits for you and the seller alike. Having a one-way document only creates distrust between the buyer and the seller. The contract should protect the transfer of cash between you and the seller, as well as the ongoing commercial operations. The method of transferring ownership of the site should be documented in this contract, so that both parties understand how it will take place. This contract should also protect any future and current copyrights. An additional benefit to be gained from the contract is that it should outline any terms of possible competition. Having a non-compete clause will save you both from future headache.
Who does the contract protect?
Since a contract is supposed to be an agreement, shouldn’t it protect all parties involved? No one wants to go into something that might potentially turn into a huge personal loss. The idea behind buying and selling Web sites is usually to benefit both parties, so the contract should protect everyone involved in this transaction. Make sure to read over the entire contract, no matter how long it is, and check the fine print. It’s easy to miss something the first time around, so double check each section. Sellers are often only out to make money during the sale of their Web site and want the contract to be as clear and correct as possible. However, there are a few who devise contracts that only protect themselves and not the buyer, so be careful.
Remember, the real, long term, money is made at the time of purchase and not while selling something. The contract used for a Web site purchase may be drawn up by the seller, but it needs to be agreed upon by both parties. It doesn’t hurt to ask questions about the contract. Asking questions will show the seller that you know what you are getting into and that you know what is involved with the Web site purchase. Be sure to go over this check list and add a few things of your own as you think of them. Then, if you still are not sure that you have completely minimized your risk, take Henry Ford’s advice and hire an expert of your own – a little investment now can save you many times over in the long term.
Did you this article and when it caught your lens? If you it, then read the preceding articles in this series at :
Virtual Real Estate Bootcamp – Bootcamp
Virtual Real Estate Bootcamp – Part 1: The Seller
Virtual Real Estate Bootcamp – Part 2: Domain
Virtual Real Estate Bootcamp – Part 3: Content
Virtual Real Estate Bootcamp – Part 4: Traffic
Virtual Real Estate Bootcamp – Part 5: Revenue
Virtual Real Estate Bootcamp – Part 6: SEO
Virtual Real Estate Bootcamp – Part 7: Price
Virtual Real Estate Bootcamp – Part 8: Your Plan
Virtual Real Estate Bootcamp – Part 9: The Transaction