We all read a lot about what should be considered before/during the purchase/sale of a business. However, we don’t find much about what should be done after the deal closes, particularly by a seller. This month, we’ll talk about just that (you may be surprised at what you find). See more below (and don’t forget to click on my Facebook or YouTube links below to also see my short video on this material).

Things To Consider After Selling A Business

First, ask yourself this question: “Did I sell my entire business and its receivables, assets, etc…, including the entity itself, or, in the alternative, did I just sell the receivables, assets, etc… of my business, exclusive of the entity itself?” It makes a big difference. If you sold the entire business, including the entity itself, you’re generally “off the hook” as the buyer has assumed the entire business and business entity, along with all of the debts/liabilities of the business. However, if you merely sold the receivables, assets, etc… of the business – but still retain ownership of the business entity itself, keep reading.

Second, ask yourself this question: “Did I owner-finance the purchase or did the buyer obtain its own purchase money financing?” If the buyer obtained its own purchase money financing and the contract does not provide for, among other things, any ongoing indemnities or covenants on the part of seller to be performed (not very common, but it happens), the seller should, upon closing, immediately dissolve its business entity’s articles of formation with the Secretary of State – otherwise, the entity could, by virtue of its continuing legal existence, still be subject to ongoing claims/liabilities from the general public. Alternatively, if you either owner-financed any percentage of the deal (where you could still potentially “foreclose” on buyer and get the business entity back) or have any ongoing indemnities or covenants to perform pursuant to the contract, keep reading.

If you’re still reading, your business entity’s legal existence remains necessary – whether to perform contractual obligations under the contract or to stand ready to “foreclose” on buyer. Accordingly, in the meantime, you need to continue your business entity’s general liability coverage (although you can, in order to save money after closing, drop your exposure amounts) until the last of the following occur: 1) the expiration of your contractual obligations (remember: contractual liability is an exclusion from any general liability policy thus requiring you to obtain an exception to such exclusion), 2) the date upon which buyer pays off the entire purchase price in full, or 3) the expiration date of such general liability policy (note: most GL policies are occurrence policies which cover the “occurrence” if it occurred during the policy term in contrast to professional liability and employer’s practices liability policies which are “claims made” policies). When the last of the foregoing occur, it’s time to dissolve your entity’s articles of formation (to prevent any further liabilities from arising).

Practically speaking, all this means you, as seller, don’t want, if at all possible, any of your ongoing contractual obligations or the term of the owner-finance period to extend beyond your coverage period – otherwise, you’ll be funding any claims/liabilities/demands which relate to your business entity out of your own pocket (unless your business entity still has money in the bank). If you want to learn more about the right insurance coverage, contact Chris Moxley at Professional Insurors, (405) 507-2750 – cmoxley@pi-ins.com.

What My Clients Are Saying

“Chris has worked on several projects for both me and my clients over the last several years including building acquisitions, preparation of new business documents and lease transactions. I have found that he is very dependable on the turnaround of document preparation and the pricing he has given me is more than fair for the excellent work he performs. Chris’ extensive knowledge in real estate and business transactions has been a valuable asset to me as a small business owner.”
Renee Reneau / Owner / Reneau Properties, LLC / Edmond, Oklahoma

Chris Griswold, P.C.
Contact Information:

7301 Broadway Ext., Suite 200
Oklahoma City, OK 73116
405.229.7595 (cell)
405.840.1019 (office)
405.843.9190 (fax)
chris@chrisgriswoldpc.com
www.chrisgriswoldpc.com

Whether you’re a banker, a broker, a business person, a ground lessee, or a landowner, it’s helpful to understand a few, key things about the legalities surrounding water in Oklahoma.  The purpose of this article is to make you a little more knowledgeable about the current laws concerning the use and ownership of water rights and how those might soon change.  Read more below (and don’t forget to click on my Facebook or YouTube links below to also see my short video on this material).

Water, Water Everywhere

First, it’s important to understand that laws break “water” down into two categories:
i) ground water and, ii) surface water.

Second, surface water, like wildlife hunting (e.g., deer hunting, bird hunting, etc…), is permit driven.  In other words, you can’t capture surface water on your own land (or land you’re leasing from someone else) without obtaining a water use permit from the State of Oklahoma – just like you can’t capture deer or other game without obtaining a hunting license.  Generally speaking, and subject to the findings of a detailed surface water study conducted by the State, the amount of surface water that someone with a valid, water use permit can capture is two (2) feet of water per acre of land (also known as “2 acre feet”).

Third, unlike surface water, ground water is not permit driven.  It’s deed driven.  Better put, if someone purchases real property (and obtains the deed to such real property), that person has also obtained all right, title and interest in the ground water located under such real property, subject to either: i) someone else’s previously issued and currently valid water use permit, or    ii) the reservation of the ground water rights in a previous deed of conveyance.

Fourth, a landowner’s ground water rights are currently “severable” from the rest of the real property.  In other words, just like mineral rights, ground water rights can currently still be sold separately (i.e., they are “alienable”) from the surface rights, the air rights, etc… of the real property.  Think T. Boone Pickens and West Texas here….

Fifth, a lot of out-of-state buyers and non-agricultural groups have recently taken to purchasing the ground water rights to many rural properties.  So what?  This has prompted our law makers to review the efficacy of ground water rights remaining alienable/severable from the rest of the real property.  Why?  This “commoditized” buying and selling of ground water rights potentially puts Oklahoma’s agricultural industry at risk.  However, this next legislative session may change the laws to make ground water rights unseverable from the rest of the real property to “cure” the problem.  Let’s see what happens.

What My Clients Are Saying

“Chris Griswold was instrumental in negotiating a very solid, long-term lease for our new bank branch in Oklahoma City.  His industry knowledge helped us avoid several potential pitfalls with a landlord that was somewhat difficult at times.  It was a pleasure to work with Chris because of his professional style and easy going demeanour.”
Charlie Crouse / President / Summit Bank / Oklahoma City, Oklahoma

Nuts & Bolts of Notice Letters

If done correctly, they save the day. If done wrong, someone is potentially in real trouble. It’s funny that something so important is usually located at the end of the contract (or the lease), written in such small print and is typically treated (in its entirety) over the course of a mere two to three sentences, or less. No wonder the old adage that “big things come in small packages” comes to mind when I think about the concept of notice letters. Accordingly, I want you to walk away knowing three, basic things about the proper drafting and management of notice letters:

First, check the actual notice addresses for the other party (or parties) who are required to receive such notice. These notice addresses are usually set forth in the first few pages of the contract; if not there, look at the end of the document. Keep in mind that these addresses may have already changed. Accordingly, look in your files for any letters, e-mails, contractual amendments and/or other correspondence received from this other party (or parties) which has changed their formal notice address. Remember, it doesn’t do any good to write a fancy letter if the address is wrong….

Second, check the language usually located in the back of the contract which is most often entitled “Notices.” The purpose of this language is to set forth exactly how notice shall be delivered and will commonly talk about how notice letters should be mailed “via certified mail return receipt requested” or by a “nationally recognized overnight courier.” If it says that, be sure and do it. You’d be surprised to know how many people deliver notice letters via first class or registered mail just to find out that they didn’t give the other party good and proper notice (tip: registered is not the same as certified; “registered” means “insured” and is used for insuring the value of parcels such as diamonds, precious metals, etc… while “certified” means “signed-for” which is the purpose of notice letters).

Third, remember that after you send out your notice letter and receive back the “green card” in the mail, you’re still not “out of the woods” as it were. Why? You have to actually keep up with the “green card” or other packaging receipt in order to prove, often months or even years later, that you delivered and the other party actually received the notice letter. Oftentimes, I get calls from people to the effect that they know the other party received their notice letter but the green card (proving such receipt) can’t be found in the files. This can be bad…. What should you do? I recommend that when you get back the green cards, be sure to staple them to the copy of the notice letter that you put into your file. This will keep those small, mint green and oddly shaped pieces of paper from walking away….

What My Clients Are Saying

“I take special care when selecting business partners to represent my company and look for those who exhibit the same levels of professionalism and integrity that I try to achieve. Chris Griswold definitely meets these requirements and is considered a very valuable member of the JOBO Properties team. I have no hesitation in recommending Mr. Griswold to handle your business and commercial real estate transactions.”
Darren Ford / Owner & Developer of JOBO Properties, L.L.C. / Oklahoma City, Oklahoma

What Is Adverse Possession?

Adverse possession (also known as “title by prescription”) is a tricky area of the law. To obtain title by adverse possession, you need to know (in advance) that it is disfavored by the courts. The person claiming title by adverse possession has the burden of proving each of the elements that follow by “clear and positive proof” and, in any cases of ambiguity, the law will favor the actual record title holder (this is the person that owns it according to courthouse records). The elements which prove title by adverse possession are:

1) Hostile (i.e., you possess it under a claim of right or color of title),
2) Actual (i.e., you actually possess it),
3) Visible (i.e., your possession is not hidden from view and can easily be seen),
4) Open and Notorious (i.e., it is so generally known by the public in the area surrounding the subject property so as to give the actual owner notice of your possession),
5) Exclusive (i.e., no one else but you possesses the property) and
6) Continuous for 15 years (i.e., there are no gaps in your possession of the property).

What My Clients Are Saying

“I have been extremely pleased with the legal services provided by Chris. He is an expert on real estate issues; devotes immediate attention to our needs and follows through with all required action. I look forward to a continuing relationship with Chris.”
Harrison Levy / President / Grubb & Ellis / Levy Beffort / Oklahoma City, Oklahoma

Rectangular Survey System

The following hand drawn diagram shows how our rectangular survey system breaks land down into Township “X,” Range “Y” (which consists of 36 square miles) and how Township “X,” Range “Y” is further subdivided into 36 Sections (each Section being 1 square mile and containing 640 acres) and how Sections #1-7, 18, 19, 30 and 31 have “correction lots” to correct for the curvature of the Earth.  In particular, Section #6 uniquely has 7 correction lots, lots #1-4 across the top and #5-7 down the left-hand side.  All other Sections with correction lots just have lots #1-4 (vertical or horizontal) and the other Sections in Township “X,” Range “Y,” other than the riparian acreage, have no lots.  Important Note: each correction lot will have more or less than 40 acres.  The diagram is as follows:

Some other terms related to surveying (which you’ve probably heard before but may not fully understand) can be quickly summarized as follows:

1 Link = 7.92 inches
1 Rod = 16.5 feet
5.5 yards = 25 Links
1 Chain = 66 feet = 4 Rods = 100 Links
1 Furlong = 660 feet = 40 Rods
1 Mile (5,280 feet)  = 8 Furlongs = 320 Rods = 80 Chains
1 square Rod =   272.25 sq.ft. = 30.25 sq.yards
1 Acre =   43,560 sq.ft. = 160 square Rods (which can be 8 Rods by 20 Rods or any other 2 numbers whose product = 160)

What My Clients Are Saying

“Chris Griswold has a unique skill set for a Real Estate attorney.  He is equally adept in the courthouse as well as in a transactional setting.   We have worked with him in lease negotiations where we found him to be pragmatic and fair minded while representing his client.  As result of working on the other side of the table with Chris, we engaged him to assist us with various lease enforcement issues.  We have used many attorneys to assist us with FED’s, collections etc. and Chris has by far been the most efficient and cost effective counsel we have ever used.”
Jeff Norman /  President / JAH Realty, L.P. / Oklahoma City, Oklahoma

Emails and Electronic Communications as Liabilities

When we email on the weekends, at night or at any other time when we’re past tired, we’re not “mentally” at our best.  These are the times when we can say something online or in an email (or fail to say something online or in an email) that creates trouble for ourselves and/or our clients.  What’s the big deal?

Emails are admissible as evidence in judicial proceedings.  While you probably already knew that, it’s easy to forget when you get really busy and stop thinking about the big picture.  A colleague of mine in Texas had a corporate client. This client was a large manufacturer and was being sued for products liability after an explosion occurred involving one of its products.  During the course of litigation, my colleague came across some emails that were internally exchanged between employees of the corporate client.  One of them contained the following language:  “…did that damn thing blow up again??”

Same thing with Facebook, Twitter, MySpace, LinkedIn and the other mediums.  Although there isn’t any current, controlling case law which addresses the admissibility of the content of these sites in Oklahoma, I am told that these types of mediums are beginning to be admissible in Texas (and there do appear to be some pending cases here in Oklahoma which touch on this subject).  Accordingly, it’s probably just a matter of time….  Let’s all just slow down, think about what we’re saying (when we’re saying it) and stay out of trouble.

What My Clients Are Saying

“I was referred to Chris from a friend of mine who has used him for years. I have 23 offices nationwide and tons of legal items that I don’t have time to deal with myself (nor would I trust just any attorney).  What a blessing to find Chris…. Here is someone I know will get it done right, day or night.  Chris’ good legal services free me up to run the day to day operations of my business with the peace of mind that the legal details are covered; all at an honest, fair price.”
James Gray / President & CEO / Full Circle Financial Group / Oklahoma City, Oklahoma

Chris Griswold, P.C. strives to provide outstanding legal representation to all clients whether individuals or corporate entities.  Moreover, Chris has extensive experience in communicating with large corporations and their boards and officers to achieve desired results while serving clients in the area of general corporate law.  At Chris Griswold, P.C., providing legal expertise with honesty, integrity, constant communication and respect is paramount while acting in the client’s best interest(s).

Click to view Material Breach Article from Chris Griswold.

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Click to view Feature Article on Tenant Leases.

Click to view Feature Article on Tenant Leases.

Click to view Feature Article on Tenant Leases.