Does Lender jurisdiction/venue matter?
August 13, 2024
by a searcher from Duke University - The Fuqua School of Business in Portland, ME, USA
I'm ~2 weeks out from closing on a business. Asset purchase, Buyer and Seller are in Maine, assets are in Maine, and contracts are being drafted and signed in Maine.
My lender is based in North Carolina and has informed me that the Closing documents will specify North Carolina as the venue/jurisdiction if there are any issues with the loan.
My Maine attorney doesn't find this appropriate and is telling me I should seek North Carolina counsel to advise me.
Is that really necessary? How different could the laws be? If I stop making loan payments they take back the business assets and everything else I have (PG), is there anything else to understand here?
from Eastern Illinois University in 900 E Diehl Rd, Naperville, IL 60563, USA
Please note that if they are pursuing collateral you have, they would need to do that in the State the collateral exists. A UCC on business assets get filed in your home state. A mortgage for real estate gets filed in your home state. So they would need to pursue liquidation in your home state. However, they could sue you under your personal guarantee in their home state.
This situation does not just impact bank loan documents. If you look at any agreement you sign for any service provider, possibly even NDA's you sign, you will find the state for jurisdiction is likely going to be the home state for the business and not your state.
I hope this helps. As has already been said, SBA loan documents are pretty standard. I would not let the state of jurisdiction make you redo the deal this late in the process. But that is ultimately your choice and comfort.
from Chapman University in Los Angeles, CA, USA
John - It is a pleasure to connect. Congratulations on nearing the close of your transaction. Short answer - I do not agree with your Maine attorney.
My recommendation is that you first set up a virtual meeting with your Maine attorney, NC Banker and the NC Bank attorney. There are obviously differences between Maine & North Carolina statue law, however the Bank attorney & your attorney MAY be able to nail down the final legal parameters to close your deal. It is important that all get on the phone & talk.
Second option, perhaps your Maine attorney hire a NC attorney to complete a final review of the final documents to support your/his efforts of putting together the documents. I say this because perhaps your Maine attorney have completed a substantial amount of legal work thus far. Feel free to call me to talk through at###-###-#### if would like to talk. Best - NN