PART 1 OF 4: The Seller's Transition Obligations

What a selling physician still owes the practice after closing.

For a selling physician, closing is not a clean break. Most practice sales contemplate a period in which the seller remains involved, and the sale agreement usually imposes obligations that continue well past the closing date. Understanding and honoring these commitments protects the seller from liability and protects the value the buyer paid for. This article addresses the seller's post-closing responsibilities.

The transition period and continued involvement

Many sale agreements provide for the seller to stay on for a defined period — introducing patients, working alongside the buyer, and helping preserve continuity of care. The scope, duration, compensation, and expectations for this involvement should be clearly defined. A seller who treats the transition casually, or exits sooner than promised, can breach the agreement and jeopardize holdback or earn-out amounts.

Honoring the non-compete

A sale almost always includes a covenant not to compete, valid in California when tied to the sale of the practice's goodwill. The seller must understand its scope precisely:

• The geographic area and duration of the restriction.

• What activities are prohibited, and what remains permitted.

• How the covenant interacts with any continued or future practice.

Supporting patient and referral continuity

The goodwill the buyer purchased depends on patients and referral sources continuing with the practice. Sellers commonly agree to support that continuity — through joint patient communications, personal introductions to referral sources, and a genuine endorsement of the successor. Undermining that continuity, even passively, can breach the agreement and reduce contingent payments.

Post-closing representations and cooperation

The seller's representations and warranties survive closing for a negotiated period, and the seller typically agrees to cooperate on matters that carry over — records, billing questions, and the resolution of pre-closing issues. Continued good-faith cooperation is both a contractual duty and a practical necessity.

Winding down the selling entity

In an asset sale, the selling entity continues to exist and must be wound down properly — addressing remaining liabilities, final tax filings, retained records, and eventual dissolution. Handling this correctly closes the seller's exposure rather than leaving loose ends that resurface later.

How West Coast Health Law Can Help

We help selling physicians understand and meet their post-closing obligations — transition commitments, non-competes, and the proper wind-down of the selling entity — so the sale concludes cleanly.

West Coast Health Law offers a FREE consultation which you may schedule by clicking the button on our website.

This article is provided for general informational purposes only and does not constitute legal advice or create an attorney-client relationship. Laws change and every transaction is different; consult a qualified attorney about your specific situation.