I am selling a website of mine on seller financing right now, or at least am in the final stages of it. We obviously need a contract for this and the buyers are having a lawyer write up the paperwork before forwarding it to my lawyer to be reviewed. I just talked to a lawyer on the phone who quoted me $225/hour and said it would end up around $1000 total. Is this an expected price range? Also, what kind of protection do I have with a contract like this if something happens or the buyer trys something fishy?
If your website is worth quite a bit and you would like to finance it to a buyer until it's paid for, then you need to get a contract made. Once the contract is made you both need to fly and meet somewhere and go to a bank and sign the agreement together infront of a notary, then you will need the notary notarize the agreement as well. This will be the best protection you can get, a contract that you sent him over the internet wont protect you at all. Both of you need to be at a location and sign it together with a notary for 100% protection. That way if he does something fishy you can take him to court and hold that against him, which would be very successful if it a was a good agreement. You just need to make sure that the agreement will hold your buyer responsible if he does not pay. I would make the contract strict even though you would be willing to give him some leniency if he paid late a couple months. Be sure to include interest in the contract if he does not pay on time, etc. If he ends up not being able to pay for the site, then include in the contract your client will give you something in equal price such as an asset.
Thank you for the advice, I didn't know if the notary was necessary, though hopefully the lawyer will be competent enough to also mention that.
I just talked to a lawyer on the phone who quoted me $225/hour and said it would end up around $1000 total. Is this an expected price range? Depends on the contract, and an attorney can't be expected to give an accurate time estimate on something they haven't even seen. $225 an hour sounds about right ($500 an hour isn't unusual) - but one one attorneys hour is another's 15 minutes . Try to get an attorney recommendation from someone you know. Also, what kind of protection do I have with a contract like this if something happens or the buyer trys something fishy? Well, that really depends on the contract. Since the other side is doing the agreement, you can expect their attorney to have their clients interest, not yours, in mind when they draft it. That's why you need an attorney to review it. As far as protection, even the best contract can't collect money from someone who doesn't have it and doesn't want to pay.
Most of this is wrong, useless, and unnecessarily expensive. The whole idea of flying just to sign it in front of a notary is a joke. Contracts do not need to be signed by all the parties at the same time. mjewel has said everything else accurately. It is not necessary and your attorney will know that. Even if you wanted it notarized, you each just do it at your own location - it would be a total waste to fly to meet somewhere just to sign the document. If you don't mind, what is the value of the sale? There are other considerations that you might want to ask your attorney about. You and the other party can agree to allocate the purchase price to different things which have different tax ramifications. Part might go to the website content, part to the domain name, part to good will. Where you allocate the purchase price changes the taxes you might owe on the sale or to the purchaser. These things become much more important the higher the purchase price.
For it to be signed by all parties at the same time, wouldn't they need to fly out anyway? Or do I misunderstand what you said?
It does not need to be signed by everyone at the same time. You don't even need to sign on the same sheet of paper. This is basic stuff your attorney can handle. I often deal with contracts where each party is in a different state and they each sign their copy, usually more than one, and then exchange copies. So long as you each have a copy with the other party's signature you are fine. As mjewel said, attorneys work for one client. You need an attorney to review the contract on your behalf to make sure it addresses your needs and concerns. Sometimes I get a contract from another side and I have only minor changes, sometimes the whole thing needs to be re-written. I would assume a simple website sale is fairly straight forward, but without knowing the details, I can't know. You certainly don't want to provide guarantees of future success or accept any ongoing liability for the operation of the website. That would be one of my concerns since you are accepting only partial payment and will lose control of how he operates the site, you certainly don't want any liability. It sounds like a sale where you get a note back (A note is a loan, where you loan him the balance to pay and he will pay it over time, like a mortgage). Again, depending on the amount you will adjust the terms of the contract accordingly. If it is for $10,000 versus $100,000 is a big difference.
I have contracts signed all the time, pretty large money deals and partnerships where we will fax the contract back and forth to all parties involved. My lawyer for looking over and drafting contracts usually is in the range of 1,500-2,500 if they are to draft an entire contract and look over the whole situation. I do not think this is necessary unless your deal is worth at least 50k or if the other side has agreed to pay legal fee.
I have closed many multi-million dollar deals with the parties simply exchanging signature pages by fax. At least in the U.S., I find that the parties rarely sign the agreement together in the same room. I will say, however, that if you have selected a jurisdiction to govern the agreement and the party you are trying to seek enforcement against has never set foot in the jurisdiction, you may find that you have problems forcing him to participate in a law suit in the selected jurisdiction. That doesn't make the agreement unenforceable. It just means that you may have to go someplace that has jurisdiction over the other party rather than bring the legal action in the agreed jurisdiction.
Then go to an attorney and don't get your advice on a forum. If you need referrals ask someone you know or search google for your state bar's lawyer referral service: Search: New York Bar Lawyer Referral Service (use your own state or cities name instead of NY) The bar will usually refer you to an attorney who will meet with you once at a very low cost and you can meet with a couple attorneys until you find one you are comfortable with. I think personal recommendations are better. Ask you accountant or other professionals you work with for one if your friends do not have an attorney they can recommend. Good luck!
Although bar association referral services are very useful for finding an attorney to handle common problems, I think you would be better off looking for referrals from people that you know, or even doing online research to find a qualified attorney. Not too many lawyers have the experience and knowledge to deal with purchases of online businesses. Even many business attorneys who handle buying and selling businesses as a regular part of their practice are unfamiliar with some of the unique issues involved in the sale of an online business. Before you retain an attorney, ask plenty of questions and get specific answers. There are a number of good articles on the Internet on finding and selecting a business lawyer. Read a couple of them before you do anything.