For secure liquor license buying and selling, a third party entity will need to hold money or escrow during the transaction. There are many different benefits of opening an escrow during a liquor license transaction.
Contact us to learn how Liquor License Leaders can help with opening an escrow during your California liquor license application.
Step 3: Open an Escrow
If your business is interested in selling alcohol, you will need a liquor license in California. But if you plan on getting a California liquor license, you are going to find that the process of getting this license isn’t as simple as applying for it.
Instead, California requires that anyone who will be buying a liquor license will have their funds placed with an escrow holder. This is designed to help ensure that sellers have all their debts satisfied that they owe, while the buyer is meeting the requirements for Alcohol Beverage Control.
The use of escrow for a liquor license in California allows the Department of Alcohol Beverage Control to reduce the amount of fraud that can take place in the state, while ensuring the buyers and sellers maintain the legal process.
As an additional benefit to the buyer and the seller the escrow company handling the transfer of the California liquor license will have no vested interest in either side of the transaction, ensuring that the transaction does not benefit one party more than the others.
During the escrow process, the full purchase price of the liquor license must be held before a license can be considered for transfer. Within 30 days of an application to the Alcohol Beverage Control department, the buyer must provide statement that states the funds have been placed in escrow. Once approved by the ABC department, the transfer of the liquor license in California may take place.
Acceptable funds for this process may include:
- Cashier’s Check
- Items of Value
- Promissory Notes
It is important to understand that unlike other forms of escrow, the transfer of a California liquor license will only close when the Department of Alcohol Beverage Control has provided written authorization for the transaction to take place.
Here are a few tips to ensure that you choose the right escrow company to handle this transaction:
- Look into the amount of time that they have been in business.
- Ensure that the escrow company isn’t pressuring a sale to take place.
- Check with the Department of Alcohol Beverage Control to ensure the escrow company is reputable.
Since it is vital that all the requirements be met in this process, you will need to ensure that you are working with a company that understands the process of transferring a liquor license like Liquor License Leaders. We will help you get connected with a trusted escrow company before you enter a liquor license transaction. Call our liquor license consultants at 800-846-0064.