[CA] Can a buyer deduct repair costs from payments after an “as-is” business sale with working equipment?

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Legal Eagle

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The buyer agreed in writing to take the equipment as is, so repairs months later are her responsibility. She cannot legally deduct repair costs from the monthly payments without his consent. Your dad can insist on full payments and treat short payments as a breach.

That’s the short answer, here’s the long answer: California contract law enforces written terms (CA Civ Code § 1638), and an as is clause (CA Com Code § 2316(3)(a)) shifts the risk of future repairs to the buyer unless there was fraud or a hidden defect known at the time of sale. The equipment was in good working condition at transfer, which satisfies the only requirement stated in the bill of sale. A buyer cannot unilaterally change payment terms by withholding money for repairs that arise after closing. She must continue to make full payments under the agreement, and deductions can be treated as partial payment or default. Your dad can formally demand the full amount and document that she is not following the contract. If she continues, he has grounds to pursue the missing amounts in California small claims or enforce the payment agreement as written.

Here is what you can do legally, step by step:

Send her a written notice stating she must pay the full agreed monthly amount because the contract sold all equipment as is and does not allow repair deductions.
Keep screenshots and payment records so there is a complete timeline of every underpayment.
If she keeps short paying, file a small claims case to recover the missing amounts. California’s filing portal is here and works statewide: https://www.courts.ca.gov/selfhelp-smallclaims.htm
Review the payment agreement or promissory note for default language so your dad knows when he can declare a default and require full payment of the balance.

As a bonus tip: Some sellers stop this issue by offering the buyer a low cost service contract only if she pays full monthly payments. This reframes repairs as an optional add on, not a forced obligation, and creates a cleaner business relationship.

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I sold a business and now the new owner is expecting me to replace equipment at the business. What should I do?

Lexi, Chatbot

I understand how concerning it can be when expectations from a business sale are unclear. Can you tell me if there was a written agreement regarding the sale that outlines responsibilities for equipment replacement?

Yes, there is a bill of sale that states the owner will take on all equipment "as is" and that at the time of the sale, all equipment will be in good working condition, which it was. It’s been 3 months since the sale and she’s now reaching out to me to pay for repairs.

Lexi, Chatbot

Have you had any discussions with the new owner about their expectations and your obligations after the sale?

Yes, and she says the day I left the business, things stopped working. But that isn’t my responsibility anymore.

Lexi, Chatbot

Is there anything else the corporate lawyer should know before I connect you? Rest assured they’ll be able to help with your equipment dispute.

Yes.

Legal Eagle

Hello, I’m Legal Eagle. I’m an attorney who works in your area of law and I’ll help you sort this out today. I’ve read what you shared, so let’s go over what’s happening and what your best next steps look like. What specific equipment is she claiming failed and has she provided any documentation showing when the problems started?

No documentation or proof, but she’s just texting about repairs needed. I’m contacting you on behalf of my dad. He’s the one who sold his restaurant and the lady he sold to is making monthly payments. She’s been claiming that equipment is failing and if my dad doesn’t do anything, she’s been paying for the repair and deducting that amount from her monthly payments.

Legal Eagle

Thanks for sharing that. It sounds like a tricky situation. Could you let me know where your dad's restaurant is located? The laws can vary depending on the state or country.

Now she’s claiming the ice machine doesn’t work and threatening that if my dad doesn’t pay to get it fixed, she’ll buy a new machine and deduct the cost from her monthly payment.

California

Legal Eagle

Got it, California. Thanks for that. Now, regarding the bill of sale, does it specify any conditions or timeframes related to equipment maintenance or repairs after the sale? This could be important in addressing her claims.

So my dad texted me photos of the bill of sale, and I can forward that to you as well. It just states that the new owner is buying the business with equipment "as is" but that they should all be in good working condition.

Legal Eagle

So you're just wondering what it is you can do here, correct?

Yeah, what’s the best course of action for my dad to protect himself from this new owner not paying him the correct amount every month?

Legal Eagle

Ok! I just need a little time to draft up a high-quality answer. I'll be with you as soon as possible. It won't be terribly long, ok?

He’s already eaten the cost of a few thousand to fix small issues after the sale, but now issues keep coming up and now he wants it to stop.

Ok, that sounds great.

Legal Eagle

Here is what you can do legally, step by step:

Send her a written notice stating she must pay the full agreed monthly amount because the contract sold all equipment as is and does not allow repair deductions.
Keep screenshots and payment records so there is a complete timeline of every underpayment.
If she keeps short paying, file a small claims case to recover the missing amounts. California’s filing portal is here and works statewide: https://www.courts.ca.gov/selfhelp-smallclaims.htm
Review the payment agreement or promissory note for default language so your dad knows when he can declare a default and require full payment of the balance.

Ok, I will relay all of this info.

Legal Eagle

For sure! Did I thoroughly address your question? Did I provide top-tier service to you? If the answer is no to either, please let me know so I can help! I know it's a lot.

Yes, you addressed it for now. Thank you.

Legal Eagle

Thank you so much for contacting us! We're happy to help whenever you need it.

Thank you.

Legal Eagle

You're welcome!

Legal Eagle

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