Escrows for Business Sales
Business escrows are utilized for both asset and stock sale/purchase transactions to protect the buyer, seller, and any lender. It is the policy of Pacific Business Advisors to require the services of a business escrow for all transactions in order to make certain that all parties are protected.
While every transaction is different, business escrow holders generally perform the following important functions:
- Preparing written escrow instructions setting forth the duties of the escrow holder and the terms of the agreement between the buyer and seller;
- Complying with the Bulk Sale laws, if applicable;
- Obtaining and holding any funds from the buyer and lender, if applicable;
- Notifying and obtaining any required clearances from government agencies;
- Requesting any pay-off demands from lien holders, if applicable;
- Prorating any interest, taxes, and rents, if applicable;
- If required, preparing and filling any fictitious business name statements;
- Preparing estimated closing statements for the buyer, seller, and lender, if applicable;
- Securing tax clearances;
- Recording any UCC -1 forms, UCC-3 forms and deeds of trust, as required; and
- Closing the escrow when all instructions of the parties have been satisfied, including the distribution of funds and documents.
There are times when parties to a sale/purchase agreement want to waive the use of a business escrow. We strongly encourage the use of a business escrow holder for every transaction even if the dollar amount is small.