Q. How long does it take to close a business escrow? A. Without a liquor license, the bulk sale notice has to be published and recorded one time, 12 business days prior to close. It takes an average three days to get into the paper. Therefore, you must allow a minimum of 15 working days after the opening instructions have been signed and returned to Escrow Agent. With a liquor license, the premises must be posted for 30 days and the average close is between 45 and 60 days.
Q. What items do I need to get together to close escrow? A. Information required from buyer and/or seller includes:
• The Allocation of Purchase Price (I.E., How Much of the Purchase Price Is for the Furniture, Fixtures & Equipment, Goodwill, Leasehold Improvements, Liquor License, & Covenant Not to Compete)
• The Fixtures & Equipment List • Inventory Amount
• Assignment of Lease with Consent If Landlord • Franchise Approval If Applicable
Q. How long does a creditor have to file a claim? A. For a business without a liquor license, creditors have up to the last day as listed in the notice to creditors. There is a cut off time. For a business with a liquor license, creditors have up to the time the license is transferred to submit claims.
Q. Why do you need tax certificates? A. Under California law, the Buyer can have successor liability for the Seller’s unpaid liabilities unless a Certificate of Release is issued. Releases are obtained from the State Board of Equalization (SBE), Employment Development Department (EDD), State Franchise Tax Board (FTB) and the County Tax Collector.
Q. Why can't the seller receive at least part of the purchase price outside escrow? A. The entire purchase price must be deposited to escrow and not released to the seller until close of escrow. The Escrow follows the regulations under the Business and Profession Code and Division 6 of the Uniform Commercial Code.
Q. Can the buyer take possession of the business before the close of escrow? A. Yes. The buyer is allowed to take possession of the business before the close of escrow under certain conditions.
Contact us with any other questions you may have regarding our escrow services.