This is a quick answer to a frequently asked question from ALF sellers.
“Who receives the money earned on closing day: buyer or seller?”
As we get closer to closing the sale of your assisted living facility, questions about the final details start to come up. One of the more common questions when we’re reviewing a closing statement with a seller is whether they get to keep the money earned on the closing day.
Revenue on closing day is a credit to the buyer (in most cases)
If you’re the seller, you might like the idea of collecting both the sale price and the revenue from customers both on the closing day. While you get to keep the sale price, you don’t get to keep the your residents’ revenue for the closing day. Buyers receive credit for revenue earned on closing day.
Payroll expense cuts off at midnight, too
Likewise, buyers become responsible for expenses of closing day, too. So a buyer normally becomes responsible for all expenses of the closing day, including payroll, starting at 12:00:01 a.m. on the night preceding closing. When preparing for closing as a seller, make sure to calculate your last payroll through midnight on the night before closing. And be sure to coordinate this with the buyer to ensure there are no surprises for the buyer – or your staff.
There are many other items to consider when preparing a closing statement for the sale of an assisted living facility, but the cutoff for revenue and expense is generally through midnight of the night prior to closing.
So to answer the question about who receives credit for money earned on closing day: it’s almost always the buyer who receives credit for revenue on the day of closing.
I’m not an attorney and this information is not intended to offer legal advice. Always consult your own attorney about your specific situation.