Overview
When a car wash is involved in a divorce settlement, one spouse may buy out the other using financing. These transactions can look like a refinance, but lenders typically require additional clarity on ownership transfer, valuation support, and settlement documentation to ensure the buyout is enforceable and the collateral is clean.
What a lender is trying to confirm
Lenders want to know who will own the business after closing, how the buyout amount was determined, and whether any liens, claims, or unresolved legal issues could interfere with the lender’s collateral position.
Valuation and payout support
Buyout amounts are often based on valuation logic or negotiated terms. Lenders may rely on appraisal for the real estate and require financial support for business cash flow to confirm the loan can be repaid.
Documentation that typically matters
- Settlement agreement or court order defining the buyout and ownership transfer
- Title and entity records showing current ownership and post-close ownership
- Financial support that reconciles to deposits and reporting
- Tax and insurance records to confirm continuity and compliance
Structuring considerations
Some buyouts are structured as a refinance with cash-out proceeds used for the settlement payout. Lenders often require adequate reserves so the business is not strained after the payout, especially if the buyout reduces liquidity.
Bottom line
Divorce settlement buyout financing is achievable when ownership transfer and payout terms are clearly documented. Clean records, realistic cash flow, and adequate reserves are the keys to a smooth closing.