Transferred dealership ownership but forgot to cancel bond

[Lina]

Jurisdiction

Washington

Hello,

I have transferred ownership of a dealership in April 2019, but forgot to cancel the bond ( I didn't know). Now, my bond company has received 2 claims so far and said there are 9 cases in total was opened with DOL and so there potentially maybe 7 more cases. And that I will have to reimburse for all those claims if the bond will be charged.

My question is: Is there anything I can do now? I don't want to pay for the actions that another owner did.

 

[army judge]

My question is: Is there anything I can do now?

Yes, meet with and interview several lawyers.

Why?

Your primary goal is hire a lawyer to represent you by fixing all issues that resulted from an oversight.

Your secondary goal is reduce any financial pain that arises because of any previous oversights.

Bottom line, this appears to be too big for you to undertake alone.

 

[adjusterjack]

I have transferred ownership of a dealership in April 2019

What do you mean by "transferred ownership"? Most people would say "I sold my dealership."

How did you "transfer it"? Was there a purchase/sale contract? What did it say about ongoing liabilities and obligations? Was the new "owner" working under your dealer license? Did you have a lawyer when you "transferred" the business?

No need to answer those questions. I posed them as food for thought.

Now hire yourself a lawyer to address the "transfer" and its consequences.

 

[zddoodah]

I have transferred ownership of a dealership in April 2019, but forgot to cancel the bond ( I didn't know).

When you say that you "transferred ownership of [the] dealership," what exactly did you transfer? Shares of a corporation? Something else?

With respect to the bond, who is the principal named on the bond? Are you personally an indemnitor on the indemnity agreement that was signed when the bond was first issued?

My question is: Is there anything I can do now?

I'm confident that you are able to many things, but I doubt this is really what you intended to ask. If you answer the questions I asked, I may be able to address the situation you described.

 

[Lina]

What do you mean by "transferred ownership"? Most people would say "I sold my dealership."

How did you "transfer it"? Was there a purchase/sale contract? What did it say about ongoing liabilities and obligations? Was the new "owner" working under your dealer license? Did you have a lawyer when you "transferred" the business?

No need to answer those questions. I posed them as food for thought.

Now hire yourself a lawyer to address the "transfer" and its consequences.

At that time, I was ready to close the dealership since I didn't like it, too much time needed and didn't match my income expectations. Then there was this guy, who said that he wants to do this business so bad but he doesn't know how to open a dealership. So, I signed LLC Membership Interest Assignment and basically gave him the dealership for free. Then I filled amendment with WA SOS, but I never thought it could end up this way. Now, he doesn't pick up my phone calls. There was no where that talk about further obligations since I thought if the business is now his, then he will be responsible for everything.

 

[Lina]

When you say that you "transferred ownership of [the] dealership," what exactly did you transfer? Shares of a corporation? Something else?

With respect to the bond, who is the principal named on the bond? Are you personally an indemnitor on the indemnity agreement that was signed when the bond was first issued?



I'm confident that you are able to many things, but I doubt this is really what you intended to ask. If you answer the questions I asked, I may be able to address the situation you described.

At that time, I was ready to close the dealership since I didn't like it, too much time needed and didn't match my income expectations. Then there was this guy, who said that he wants to do this business so bad but he doesn't know how to open a dealership. So, I signed LLC Membership Interest Assignment and basically gave him the dealership for free. Then I filled amendment with WA SOS, but I never thought it could end up this way. Now, he doesn't pick up my phone calls. There was no where that talk about further obligations since I thought if the business is now his, then he will be responsible for everything.
Regards the bond, I have signed as indemnitor.

 

[Lina]

Yes, meet with and interview several lawyers.

Why?

Your primary goal is hire a lawyer to represent you by fixing all issues that resulted from an oversight.

Your secondary goal is reduce any financial pain that arises because of any previous oversights.

Bottom line, this appears to be too big for you to undertake alone.

I afraid that hiring a lawyer will cost me more than paying off this balance, I don't know. Its 19k so far from those 2 claims. But thank you, I will try to consult business laywers.

 

[army judge]

But thank you, I will try to consult business laywers.

You're welcome.

Talking to lawyers about your concerns, interviewing lawyers costs you NOTHING but your time.

If you do nothing, except HOPE things get better, things will likely get worse.

You also need to find out whether your alleged transfer of ownership the way you did it achieved the result you sought.

If it didn't, you might end up wishing you only owed $19,000 over the ever accumulating debts perhaps approaching $190,000.

You have articulated a real problem.

You now must seek a real solution.

I wish you well, and I hope you get this troublesome deal corrected.

 

[zddoodah]

At that time, I was ready to close the dealership since I didn't like it, too much time needed and didn't match my income expectations. Then there was this guy, who said that he wants to do this business so bad but he doesn't know how to open a dealership. So, I signed LLC Membership Interest Assignment and basically gave him the dealership for free. Then I filled amendment with WA SOS, but I never thought it could end up this way. Now, he doesn't pick up my phone calls. There was no where that talk about further obligations since I thought if the business is now his, then he will be responsible for everything.

In the event you ever are interested in going into business for yourself again, I STRONGLY encourage you to retain legal counsel so you don't make these sorts of mistakes again.

Regards the bond, I have signed as indemnitor.

Your obligations to the bonding company are governed by the terms of the indemnity agreement you signed. It's possible that, when you sold/transferred the LLC, you could have terminated your obligations to the bonding company on a going forward basis, but you apparently didn't do that. That means you are on the hook because that's what you agreed to. I assume we're talking about the standard $30k Washington auto dealer bond, so that's the extent for which the bonding company could be liable, and you will be liable to reimburse ever dollar of that, plus any costs/attorneys' fees, etc. that the bonding company might incur in dealing with the claims. Given the number of claims you mentioned, it's likely that the bonding company will have to pay out the entire $30k. If that happens, there's not a lot that an attorney can do for you.