You may have heard the term “section 52” thrown around, especially if you are an owner of a business who is looking to sell. It’s one of those terms that lawyers often use in conversation with business owners, forgetting they have absolutely no idea what it means.
So if you've been nodding along with blank look on your face whenever it’s mentioned, here’s our plain English Section 52 guide – what the term stands for, when you'll need one, and how it will benefit your business.
What does “Section 52” mean?
“Section 52” is a colloquial term for a ‘Statement by a Vendor of a Small Business’ which is a bit of a mouthful. Section 52 is the relevant section in the Estate Agents Act 1980 that implements this document.
When do you need a Section 52?
A Section 52 is used whenever there is a sale of a small business. At present a small business is defined as a business in which the goodwill, plant, equipment, and fittings have been sold for total price of $350,000.00 or less.
A Section 52 is a document that sets out the details of the business, including assets, profits and losses so that the purchaser can make an informed decision about whether to buy the business.
Am I required by law to get a section 52?
If you are selling a small business, you must prepare a Section 52 Statement. If you don’t prepare a Section 52 and give it to your Purchaser before the Purchaser signs the Contract, then your Purchaser can walk away from the deal and get their deposit back from you.
For more information contact the team at Rose Law for a no obligation quote: