Quality and Speed !!! Commerical Escrow Services provides a comprehensive line of business escrow services. Antoinette (Toni) Hardstone, CSEO (Certified Senior Escrow Officer), CBSS (Certified Bulk Sales Specialist) and CEI (Certified Escrow Instructor), has been serving the business and legal communities since 1977.
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Verifying that there are no unpaid obligations or unsatisfied requirements when the business transfers, is obviously of critical importance to the buyer. He or she wants no surprises. This process also protects the seller from claims that he or she collected proceeds from the sale without settling all the business’s prior obligations.
BULK SALE PROCEDURE
One of the escrow holder’s duties is to search in public records to determine what assets of the company being sold are encumbered and to make sure that the obligations will be satisfied or will be acknowledged and assumed by the buyer before escrow closes and to clearly define the function of verifying that the business is “free and clear” for a “no surprises” sale to a new owner, California’s Uniform Commercial Code details the procedures to be followed for a legal transfer of a business in the state.
The rules specify that the seller--and this is usually the work of escrow--files a notice of intended bulk transfer with the recorder of the county or counties in which the business is located, and publishes the notice in a general circulation newspaper in the area. Along with listing the name, address (or addresses) of the business, name of the buyer and related information, the notice provides the name and address (usually of the escrow company) where any of the company’s creditors can file their claims. And the notice includes the intended transfer date, which must be at least 12 business days (30 calendar days when transferring a liquor or beer-wine license) following the date the notice was filed and published. That will allow the time, specified by the statute, for claimants to register their claims.
Any claims acknowledged by the seller are usually paid out of the seller’s proceeds at close of escrow. If there is a dispute, the escrow still can close on time, but the amount of the claim is not turned over to the seller--or the claimant--until the seller and claimant resolve their differences and give escrow written instructions for distributing the money in question, or it is determined with court action, whether the claim is legitimate, and who is entitled to the funds.
PAYING ESCROW FOR THESE AND OTHER SERVICES
The escrow may be asked to prepare documents called for in the agreement, such as a covenant not to compete and an allocation of purchase price. Additionally, escrow will usually prepare any promissory notes to the seller from the buyer, as specified in the contract, and complete any security agreements which pledge the business and/or the buyer’s assets as security for the note(s). Escrow files these documents with appropriate government recorder’s offices and handles related paper work.
For its services, escrow is usually paid its fees by both parties on a 50/50 basis, although it is not uncommon for the principals to negotiate a different understanding about who pays what percentage of the escrow fees. Meanwhile, the escrow company’s costs incurred in complying with state and local requirements, are reimbursed by the party on whose behalf the filings or other actions were taken.
KEEP IT MOVING
Buyers and sellers are reminded that the importance of keeping a deal moving toward close, and avoiding long, “deal killer” delays, is particularly applicable when a transaction is in escrow. So it’s a good idea to check in with escrow every few days to make sure there are no unexpected claims registered, and no other actions which might require postponing the close date. And it’s critical to work with escrow to resolve any problems so the buyer can take over, as and when expected, and the seller can retire or pursue other interests.
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Phone Toni at 800-279-2423 or 925-933-9960 at Commercial Escrow Services
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