New Broker in CA, just finished an all cash business purchase.
Purchase price was 120K, and owner carried 30K. So the buyer gave me 90K which I deposited into our trust account.

Commission owed is 30K, so my question. Should we take the 30K out of the trust fund with authorization from the seller, or give the entire 90K to the seller and have him pay us 30K?

Also, since there is no escrow, what kind of transaction summary should we give the seller? Or what documentation must we give the seller and buyer before we distribute the funds?

Thanks for your time and help!

You're holding the money now.

How is your Listing Agreement written? Are you due a Commission at Closing ? If so, I wouldn't let it out of my control . . . . only if the Listing Agreement calls for something else to transpire.

I would expect to convey Net Proceeds; but I could be over-ruled.

Who is the Closing Agent ? Is there an Escrow Company or an Attorney involved? Who is responsible for filing the Sellers' 1099-B with the IRS ?

How do you negotiate 25% Commissions ? I need to learn how to do that !

Yes I am holding the money now. Essentially, I am acting as the escrow.

Here's what I believe should be done, please correct if I am mistaken.

I have written and signed instructions from seller allowing us to take our commission from the trust and give him net proceeds.

I would have to issue the 1099-B to the seller correct?

And have a transaction summary of all costs and commissions written out and given to buyer and seller?

Please provide any additional input

Was there any Real Estate involved . . . . or just a Business?

Who's collecting and filing the Transfer Tax with California ?

Are there any Business Taxes due ?

Who's pro-rating the Real Estate Taxes (if any) ?

Who wrote the Deed . . . . or who determined that the drafted Bill of Sale or the Deed was acceptable as a negotiable instrument to transfer this Business or Property ?

I'm too far away from California to do anything but ask these questions. Without being familiar with California Laws and the Rules and Regulations which may apply to the simple transfer of a Business, I must suggest that you seek out and retain competent legal counsel skilled in handling these matters.

No real estate involved.

Are there A/R; A/P; PayRoll; Utilities; Insurance Policies; Patents or TradeMarks/TradeNames; Vehicles; Leases; Finished Goods Inventory; Raw Materials; Proprietary Supplier and Customer Lists; . . . . things like that which need to be balanced, transferred, and/or otherwise accounted for ?

And sometimes the Seller has also agreed to provide a certain amount of training for a certain period of time . . . . or agreed to a Covenant Not-to-Compete in a specific territory or in a related business, and that needs to be well documented.

Those who deal in these matters routinely have special check lists for the specific concerns that need to be addressed for each different kind of enterprise, and then supplemented with issues which may not have been encountered elsewhere. Maybe that's why they're paying you that 25% Commission for a smooth "problem free" transfer ?

Now, 25% may not be enough by the time you finish addressing the potential headaches.

But Good Luck to you anyway !

Seller is always know the commision of the broker. So, if you took the 30k, there's no problem. But better to talk first into the seller so that he know that you want to get your 30k commisions.