I received this question by email:

If you sell a business does the purchaser buy the debt along with the assets – there was no written agreement?

This is my answer:

It really depends on how the transfer was structured.  However, I will assume that since there is no written agreement, the purchasers did not notify the state authorities about the transfer in ownership.

Generally, yes, the purchaser of a business purchases a business’ assets and liabilities.   That is why “due diligence” is so important.  As the purchaser, you must research every aspect of the business prior to purchasing it.  You want to “know” what you are purchasing.  On the other hand, a seller has legal duty to disclose known debts.  If the seller deliberately hid information about an outstanding debt, the purchaser may sue for fraudulent misrepresentation.  

This is not a great situation for either the buyer or the seller, because the parties’ obligations are not clear.  I strongly recommend written agreements, because they ensure that each side understands the situation.  Written agreements do not have to be long or dramatic.  If you and the other person answer these four questions, you will have the basis of a great contract:
 1. What am I promising to do?
2. What happens if I break my promise?
3. What is the other person promising to do?
4. What happens if the other person breaks his/her promise?
 

This is a great starting point for every significant negotiation.  You can also download checklists and questions from Google for your specific type of transaction.