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To Protect Both the Seller and Buyer it is Important to Open an Escrow for the Sale or Purchase of a Business

Did you know that if you purchase a business without an escrow you are subject to successors liability and are responsible for all of the Sellers unpaid debts? When a Buyer purchases a business through escrow, the business transfers to the Buyer free and clear of any and all liens and the Buyer is NOT responsible for any debts or liens of the Sellers.


There are only a small number of escrow companies that have the experience and knowledge to handle the transfer of a business. At Sepulveda Escrow we are experts with decades of experience in Bulk Sales (Business Escrows), successfully helping our Clients to avoid successors liability and potential issues in the sale of a business.

About Bulk Sales (Business Sales)


The sale of a business is known as a Bulk Sale or Business Opportunity transfer, which customarily consists of the sale of a business and its equipment, often including furnishings, fixtures, inventory, leasehold interest, goodwill, licenses and the name of the business. While this type of transaction by law does not require an escrow, it is important nevertheless to have an escrow holder protect your interests so you will have the confidence to complete the sale.


Your escrow holder shall draw the Agreement and documentation required, and then holds all documents and funds until each and every condition has been completed by the Seller and Buyer. While the escrow process is different than the sale of real estate, the concept is the same.


While the sale of a business is considered personal property, the role of an escrow holder continues to be the same as in the sale of real estate, with the exception that the process to make the transfer is governed by a different set of laws, known as the Commercial Code of the State of California. These laws protect many parties, including Lien Holders and Creditors, as well as the State and Federal Agencies.


In addition to the recording and publication of a Notice to Creditors, your escrow holder will perform Searches on the Sellers and the business, which helps to determines what is required to transfer the business to the Buyer and avoid successors liability, so that the Buyer shall not be obligated to pay Sellers debts, a very important element of the Bulk Sale process. Sellers deposit into escrow of Releases from the California Department of Tax and Fee Administration (CDTFA) (formerly the State Board of Equalization), Department of Employment Development and the Franchise Tax Board is also required to close escrow. Ultimately the escrow process protects both Seller and Buyer and is advantageous to both parties.


A Bulk Sale can be used for:

  • Restaurants
  • Gas Stations
  • Mini Markets
  • Convenience Stores
  • Pharmacy Sales
  • Car Wash
  • Medical or Dental Practice
  • Senior Day Care Facilities
  • Board and Care
  • Cemetery Sales
  • Franchise Sales
  • And more


Links to State Agencies: