Liquor License escrows are very different from other types of escrows because they cannot close until the California Department of Alcoholic Beverage Control provides written authorization to the escrow holder. Furthermore, California law requires that if a transfer of an alcoholic beverage license or a liquor license and business is for consideration, then the licensee and the intended transferee must establish an escrow with a qualified escrow holder prior to filing an alcoholic beverage or liquor license transfer application.

The use of a third party depository protects the transaction by:

  • Holding funds into escrow until both parties are ready to close
  • Eliminates potential conflicts of interest between the buyer and seller
  • Monitors conditions to bet met by seller and buyer in order to close escrow and disburse funds.

What is Escrow?

Very simply defined, escrow is a deposit of funds, a deed or other instrument, by one party for the delivery to another party, that is held by a third party (escrow holder or escrow company) until certain conditions are met. The escrow holder is a neutral third party.

Whether you are a buyer, seller, lender or borrower, you want the assurance that no funds or property will change hands until all of the instructions in the pending transaction have been followed. The escrow holder has the obligation to safeguard the funds and/or documents while they are in the possession of the escrow holder, and to disburse funds and/or convey title only when all provisions of the escrow have been complied with.

Why Escrow?

  • Escrow serves as a neutral depository for money and documents. The escrow holder does not favor one party or another and acts impartially towards all.
  • The escrow holder assures that all conditions are satisfied before the deeds are recorded or other transfer documents are filed or distributed.
  • The escrow holder provides expertise in escrow practices, document preparation and in understanding the title insurance process.
  • The escrow holder provides a clear, concise accounting of all funds involved in the escrow process.
  • The escrow holder arranges for the safe delivery of all funds and documents to their proper recipient.