California Liquor Licenses: What is a Liquor License Escrow?

As escrow is a small and short-lived trust arrangement that has become an indispensable mechanism in the state of California for the consummation of real property transfers and other transactions such as exchanges, leases, sales of personal property, and liquor license sales.

An escrow holder is the depository agent; a third-party person having and holding possession of money, written instruments, or personal property until the happening of conditions. In the case of a liquor license sale, it is held until the sale of the license has transferred to the buyer. Once conditions are met, the escrow agent or holder can close the escrow.

The escrow agent is any person engaging in the business receiving escrows for deposit or delivery. The escrow holder acts to ensure that all parties to the transaction comply with the terms and conditions of the agreement. The escrow holder can also coordinate the activities and services involved in the transaction, such as the activities of the lender, Title Company, buyer and seller.

Why does the transfer of a liquor license need to go through escrow?

California Business and Professions Code (B&P) 24074 requires that if there is any purchase price or consideration in connection with the transfer of a business operated under a retail license, an escrow must be established with some person, corporation, or association that is not a party to the transfer itself prior to the filing of such transfer with the California Department of Alcoholic Beverage Control (ABC).

Source: California Business Escrow, Inc.

 

Source: California Business Escrow, Inc.

Filed under: California Liquor License Escrow, getting a CA liquor License

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