Can a seller demand the buyer indemnify them for things that happen after closing?
Yes. Indemnities in a business purchase and sale are not one-directional, and it is common for the purchase agreement to include a reciprocal indemnity where the buyer agrees to indemnify the seller for matters arising from the operation of the business after closing, once the seller no longer controls it. This makes practical sense: the seller is giving up day-to-day control at closing, but may still have ongoing exposure on things like a personal guarantee left in place with a landlord or lender, or a lease the seller originally signed.
A seller negotiating the sale should think carefully about which of these lingering exposures actually exist and push for a buyer indemnity, and ideally a release or replacement of any personal guarantees, covering the period after closing. Buyers, in turn, will usually want that reciprocal indemnity limited to genuinely post-closing conduct, so it does not become a backdoor way for the seller to shift responsibility for problems that actually originated before the sale. Getting this balance right is a normal part of negotiating the indemnity section as a whole.
Key takeaways
- Buyer-to-seller indemnities for post-closing matters are a common, legitimate feature.
- They typically address lingering exposure like personal guarantees or assigned leases.
- Sellers should specifically identify what ongoing exposure they want covered.
- Buyers usually want this indemnity limited strictly to genuinely post-closing conduct.