The following is a guideline for the business escrow process. Some transactions may be handled in a slightly different order or procedure depending on the business type and requirements:
l. In order to start the bulk sale escrow process. The title company needs to be in receipt of the Earnest Money deposit. Signed Preliminary Instructions and an Information Sheet completed by buyer and seller. (these two forms are provided by the title company) A copy of the contract is helpful, if available. In the event that the business includes the transfer of a Liquor License (either Beer & Wine or General) it is suggested that the buyer and seller make an appointment with the Department of Alcoholic Beverage Control and request an application package be sent to them for completion prior to the appointment. Because much of the information required by ABC is personal and confidential, escrow agent is unable to assist in the completion of the application package. However, included in this ABC package is a Notice of Intended Transfer (ABC Form 227). The title company is able to prepare this form and in fact, would prefer to do so. Once completed and signed, one of the parties or their agent (typically, the buyer) would personally deliver the form to the County Recorder for Recording. Once the parties have gone to ABC for their appointment and have posted the mandatory 30 day notice, we will begin the bulk sale process.
2. Once the title company is in receipt of items listed under item # l above, they will proceed as follows:
- Prepare, Publish and Record the Notice to Creditors of Bulk Sale, The Notice is published once in a Newspaper of Legal Jurisdiction at least 12 business days prior to the date of transfer. Unless the escrow includes an ABC License, last day for filing claims is the business day prior to the noticed sale date. Creditors may file a claim against an escrow involving an ABC license, right up to the date the license is transferred.
- Notify the County Tax Collector within 12 Business days as required by the bulk sale code.
- Conduct a State and County lien search using the name of the seller(s) and the business to determine the existence, if any, of liens, judgments and other matters that may attach the assets intended to be transferred.
- Notify and Request Releases from the State Board of Equalization (SBE), and the Employment Development Department (EDD).
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3. During the waiting period for the bulk sale, escrow agent will receive the search results and consult with the parties on any items that may reflect against the assets to obtain payoff or assumption information. Also during this time we will send a letter requesting status of items that may still be outstanding in order to satisfy all of the conditions to closing. Most commonly those items include. Commission Demands, the Allocation of Purchase Price, Fixtures and Equipment List, Lender Instructions/Loan Documents if applicable. Franchise documents and/or approval if applicable, Security Deposit and Rent amount for pro rations and copies of Lease Assignments/Consent of Landlord or New Leases as applicable. A letter with a list of outstanding items will be sent to the parties and any brokers/attorneys on the deal (as applicable) with the specific items needed for your transactions.
4. Once escrow is in receipt of all the items necessary for the close of escrow, escrow agent will prepare a set of final instructions and all necessary legal documents including Bill of Sale, Covenant not to Compete as applicable and Seller carry back Notes and Security Instruments if required.
5. When all documents are executed, good funds are deposited and any applicable filing and recordings are complete escrow will close and disburse funds as directed in Escrow Instructions. In the event of the escrow involves an ABC license, upon satisfaction of all conditions, including the deposit of all funds required to dose escrow, we will advise ABC that we are in a position to close escrow and formally request that the license be transferred. Once ABC is in receipt of our request to transfer and assuming all of the license transfer requirements imposed by ABC have been satisfied, the Department will begin the process of transferring the license to buyer. This process will generally take anywhere from 3 days to 3 weeks. Once transferred, ABC will provide escrow holder with written notice and an "Authorization to Close Escrow." Upon receipt of Authority to Close from ABC escrow agent shall release documents for filing and recording and upon recording confirmation escrow will close and disburse funds per escrow instructions.
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