Washington Buy-Sell Agreement Template
The Washington rules that shape the document: both-spouse consent for a jointly-managed community business, and a common-law reasonableness limit on a seller non-compete.
Introduction
A buy-sell agreement is a contract among the owners of a Washington business that fixes, before any trigger, who may buy a departing owner's share, how it is priced, and the events, such as death, disability, divorce, or exit, that set it in motion. In Washington, the community property regime shapes the document beyond the national template. Either spouse acting alone may manage community property, but under RCW 26.16.030 neither spouse may sell, convey, or encumber the assets or good will of a business that both spouses participate in managing without the other's consent. Where only one spouse participates in management, that spouse may deal with the business in the ordinary course without consent. That joint-versus-sole-management trigger is the distinctive Washington rule your consent block must track. A non-compete on a departing Washington owner is not governed by a special sale-of-business statute; the employment non-compete rules in RCW chapter 49.62 do not reach a seller covenant, so a Washington buy-sell should keep any seller non-compete to what common-law reasonableness allows in duration, geography, and scope.
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Key Things to Know
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A Washington buy-sell agreement is a binding contract among the co-owners of a business that fixes who can buy a departing owner's interest, the price or valuation method, and the triggering events, so a death, divorce, or exit does not force the business into a dispute or a sale to an outsider.
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Washington is a community property state. Under RCW 26.16.030, either spouse may manage community property alone, but neither may sell, convey, or encumber the assets or good will of a business that both spouses participate in managing without the other's consent. A both-spouse consent block prevents later challenges.
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In Washington, the trigger for spousal consent is who manages the business. If both spouses participate in managing the community business, both must consent to a transfer of its assets or good will (RCW 26.16.030). If only one spouse participates, that spouse may act alone in the ordinary course of the business.
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A non-compete against a selling owner in Washington is not backed by a special sale-of-business statute. The employment non-compete limits in RCW chapter 49.62 do not reach a seller covenant, so a Washington buy-sell must rely on common-law reasonableness in duration, geographic area, and scope for any seller non-compete.
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In Washington, a transfer restriction imposed by the company is ineffective against a buyer without knowledge unless it is noted conspicuously on the share certificate or the registered owner is notified for uncertificated shares (RCW 62A.8-204). Add the legend when your Washington company issues or endorses certificates.
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In Washington, no notarization, witnesses, or government filing is required for a private buy-sell contract. It is valid as a signed writing, and the statute of frauds (RCW 19.36.010) requires a signed writing for certain contracts. Keep it with the company records and update the valuation periodically.
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Fund the Washington buyout before you need it. Owners commonly use life or disability insurance, a sinking fund, or installment payments so the agreed valuation can actually be paid when a trigger occurs. Match the funding to your valuation method so the price does not become a dispute.
Key decisions before you file
Before you file a Buy-Sell Agreement in Washington, a few decisions shape the document: which option to choose and what each one means. The Buy-Sell Agreement guide walks through them.
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Washington Requirements for Buy-Sell Agreement
Washington Both-Spouse Consent for a Jointly-Managed Community Business
Washington is a community property state. Under RCW 26.16.030, neither spouse may sell, convey, or encumber the assets or good will of a business that both spouses participate in managing without the other's consent. For a jointly-managed community business, include a both-spouse consent so transfers are not later challenged.
Washington Consent Trigger Depends on Who Manages the Business
In Washington, RCW 26.16.030 keys spousal consent to management. Where both spouses participate in managing the community business, both must consent to transfer its assets or good will. Where only one spouse participates, that spouse may act alone in the ordinary course, so identify the management structure before drafting the consent block.
Washington Seller Non-Compete Limited to Common-Law Reasonableness
A covenant not to compete against a departing owner is enforceable in Washington only to the extent reasonable in duration, geographic area, and scope under common law. The employment non-compete statute, RCW chapter 49.62, does not supply a sale-of-business rule, so keep any seller covenant tied to the good will sold.
Washington Transfer Restriction Noted on the Certificate
Under Washington's RCW 62A.8-204, a transfer restriction the company imposes is ineffective against a buyer without knowledge unless it is noted conspicuously on the share certificate, or, for uncertificated shares, the registered owner has been notified. Add the legend when your Washington company issues or endorses certificates.
Washington Signed Writing; No Notarization Required
A Washington buy-sell agreement is valid as a signed writing, and no notarization, witnesses, or government filing is required for the private contract. The statute of frauds (RCW 19.36.010) requires a signed writing for certain contracts. Keep the signed agreement with the company records and update the valuation periodically.