A transaction in which an Impartial, Neutral third party receives Money and/or Documents to hold and to act upon instructions given by Buyer and Seller, or Borrower and Lender.

This neutral third party is called an “Escrow Holder”.

The escrow is handled by an “Escrow Officer”, who is a professional in the industry with many years of experience.

If an Escrow is being used for the sale of a business, the escrow is called a Bulk Sale Escrow.

The process of handling a Bulk Sale escrow, also known as a “Business Opportunity” 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 Escrow 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:

1. Prepare escrow instructions and all appurtenant documents, including future amendments that reflect any changes agreed upon by the parties. The escrow instructions are the “Map” which will guide the Escrow Holder through the transaction.

2. Order a UCC Search from the Secretary of State. Review for financing statement and judgments filings which evidence liens against the business.

3. Publish and record the Notice to Creditors and the Intent to Transfer ABC license (if any).

4. Review the publication for accuracy.

5. If there is a liquor license involved, we must submit the necessary paperwork required by the Department of Alcohol and Beverage Control.

6. When claims come in from Vendors after publication is made, we must acknowledge receipt and remit to Seller for approval.

7. Contact and provide necessary information to Buyer’s new Lender, if any.

8. Contact and obtain payoff information on Seller’s existing liens and judgments.

9. Send request for release notification to State Board of Equalization (SBE), Employment Development Department (EDD) and the Franchise Tax Board (FTB).

10. Track all conditions stated in the transaction and ascertain that they are done before the transaction closes.

11. Follow up on lease on property. New or assigning old? Contact Landlord.

12. Receive and review Buyers loan documents. Are the Buyers’ names correct? Business address? Alert everyone if there are any special lender conditions that need to be fulfilled.

13. Arrange for loan documents signup with Buyers.

14. Figure how much money Buyer needs to bring in.

15. Figure how much money Seller will receive.

16. Package signed loan documents together with all special lender conditions for transmission to Lender and request for funding.

17. If all the contingencies are met, the Buyer’s funds are in then we are ready to close. If there is a liquor license, we need to send back the “Authorization to Close” paperwork (form 226) to ABC to instruct them to transfer the license. When ABC signs off on form 226, then we are ready to close.

18. Communicate the closing date to all parties and Landlord for the transfer of keys, final operation date for Seller, and starting lease date for Landlord.

19. Update any Vendor claim figures.

20. Balance the file with Buyer’s downpayment, Lender’s funding amount, pay all liens and invoices given to Escrow.

21. Provide an individual accounting of the monies received and spent to each party.

22. Hold the Seller’s net proceeds until Escrow Holder has received the necessary Releases from SBE, EDD and FTB.