Why is escrow important?

Escrow is a service that protects the public and minimizes the potential risk involved in any real estate transaction. With an experienced neutral third party in possession of the legal documents and funds, which party is obligated to safeguard the instruments and funds, buyers and sellers, as well as lenders and borrowers, can safely interact with one another and be assured that no legal documents will be recorded, and no funds will be released, until all of the conditions of the real estate contract or agreement between the parties have been completed.

What is a Bulk Sale Escrow?

A Bulk Sale escrow is also known as a Business Opportunity escrow. It is a transaction opened for the purpose of transferring ownership of a business from the present owner (Seller) to a new owner (Buyer), at a sales price and conditions agreed upon between the parties. An impartial, neutral third party (Escrow Holder) is selected between the parties to handle the money and documents required to complete the transaction.

The process of handling a Bulk Sale escrow is slightly different. A business is considered "personal" property whereas land with structures on it is known as "real" property. The main difference lies in that the sale is of the fixtures, equipment, inventory, goodwill and sometimes the name of the actual business. Unless stated, it does not include the actual structure, which would remain under the Landlord/Owners name. The Seller in a Bulk Sale is the operator of the actual business at that location. You will note below that the normal responsibilities that pertain to handling the sale of a real property still stands, but the process is different:

What does a Buyer need to "open" an escrow?

1. Your good faith deposit payable to Team Escrow which will be deposited immediately (will be used to pay for publication and UCC charges)

2. A copy of the Purchase Contract and all Counter Offers, Addendums, etc. signed by all Buyers and Sellers.

3. What is the final acceptance date?

4. Your name, address, phone numbers and e-mail address for better communication.

5. Do you have a real estate agent representing you? Please provide the names and phone numbers of your agent.

6. If you do not have a real estate agent representing you, then we need the name and phone number of the Seller.

7. What is the name you are using for the purchase? Are you forming a corporation? Contact independent legal counsel on this. Remember, we want to have the correct names right from the start.

8. What are the conditions that need to be fulfilled in this transaction? For instance, getting a new loan, selling your other business, etc.

9. Do you need to get a loan? Name and number of the person doing the loan.

What do you need to watch for during the transaction?

1. Contact the Landlord for the lease early. In fact, it is best if you contact the Landlord BEFORE you open the escrow. Negotiate the lease to your satisfaction first before Escrow starts spending money on publication, etc.

2. If there is a liquor license involved, submit your application to the Department of Alcohol and Beverage Control (ABC) expeditiously. An escrow with a liquor license may take up to 60 days to complete.

3. Check out your new loan interest rate early, even before you enter into a contract so that you know how much is the minimum down payment you will need and what are the conditions that you will need to watch for with regards to your own financial situation.

4. Are you changing or adding Buyers? Is the Sales Price changing for a certain reason? Let the Escrow Officer know immediately. Documents have to be generated to reflect these changes

5. In a transaction with a liquor license to transfer, ABC is very strict on who the applicants will be. If you are married, the spouse needs to join in the purchase. If you are using a corporate entity, all the officers and partners need to submit their individual applications to ABC. DO NOT change names once the ABC license has been submitted. You will have to re-do the process.

6. Call around for insurance quotations and choose the best price for what you want. Your Landlord will want to be sure there is sufficient coverage before they sign the lease.

7. Be sure your down payment is in the accounts that you have stated on your loan application form for easy verification by the Loan Officer.

8. When there is a liquor license involved and there is a new Lender funding a new loan, the Lender needs to know in advance that Escrow Holder will need an "unconditional letter of funding" ( they will fund the loan immediately upon our request) before we turn in the "Authorization to Close" (form 226) to ABC to request transfer of license.

9. Be sure the funds for down payment and closing costs are readily accessible and can be wired to Escrow Holder upon request.

10. Schedule the final walk through at least 5 days before the closing. No surprises!

11. Buyer will need to file their own Fictitious Business Name early so that they may start conducting business and open a bank account under that dba name.

12. Are you going out of town? Let your Loan Officer and Escrow Officer know! We may need to prepare documents in advance.

13. Most important- Keep in close communication with your Loan Officer and Escrow Officer!

Tips for Seller and Buyer doing bulk sale escrow

  • When there is a liquor license involved, everything hinges on the ABC.
  • ABC does not allow Escrow Holder to pre-release any funds to Seller before the "Authorization to Close" is issued.
  • Cigarette and tobacco licenses are handled through the State Board. The license is not transferable; Buyer has to apply for his own. There is a 30 day waiting period. Escrow Holder does not have to do anything except make a disclosure in the instructions that it is to be handled by Buyer outside of escrow.
  • The Notice to Creditors must be published in the judicial district of the business AND in the judicial district of Seller's corporate address.
  • If the Seller corporate entity was incorporated in another state, Escrow Holder will need to do a UCC Search in the state of incorporation as well as the State of California.
  • If there is any possibility that the sales price may not be sufficient funds to pay all creditors, it is important to alert all creditors that they may have to take only a prorated percentage of what they are owed.


Buena Park
6025 Beach Blvd.,
Buena Park, CA 90621

Tel: 714 228-8600
Fax: + 714 228-8605

17310 Red Hill Ave., Ste 140
Irvine, CA 92614

Tel: 949 752-0011
Fax: + 949 752-0088

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