One of the most important aspects of the sale of a liquor license is the escrow process. Section 24074 of the Business and Professions Code require that an escrow be established by the licensee and the intended transferee before the completion of the application for transfer with the Department of Alcoholic Beverage Control.
The full amount of the purchase price or consideration must be placed in the escrow and may only be released after the transfer of the liquor license is approved by the Department, which is usually forty-five to sixty days after application.
The purpose of the escrow is to ensure payment to the bonafide creditors who file their claims with the escrow agent in a timely manner prior to the license transfer.
An escrow agent can provide many services to the parties in the sale, especially in assisting with the completion of various governmental agency requirements. In addition to follow up work with the ABC, the escrow agent normally will contact the State Board of Equalization and Employment Development Department for releases, as well as the County Tax Collector for statements of any current or back taxes.
Since most license transfers are combined with the sale of the underlying businesses, the escrow agent generally will complete, record and publish the Notice of Bulk Sale and contact the Secretary of State and local County Recorder for Certificates of Information setting forth the names of any secured creditors. Other escrow responsibilities often include contacting the landlord concerning any lease or rental requirements assisting with financing documentation and interrelating with any brokers to affect an orderly closing.
Along with the payments to the creditors, the Escrow Agent performs all required prorations adjustments and charges, issues settlement statements to the parties and finally sends out all necessary documentation at the completion of the escrow.
The Escrow Agent performs an important service to the principals in the license sale. His or her expertise and knowledge of the governmental procedures, laws and regulations often prove to be invaluable aids in expediting the transaction. The difference between an efficient and timely closing and protracted difficult conclusion often rests with the selection of the escrow agency.
Green Escrow Services stands ready to assist you with your next liquor license transfer.