ABC liquor license transfer escrow

A California liquor license can move to a new owner, or to new premises, only with the approval of the ABC, the Department of Alcoholic Beverage Control (Business and Professions Code §24070).

When one owner sells to another, called a person-to-person transfer, the law sets the path: a notice recorded with the county, an escrow holding the full price, an application to the ABC, a 30-day posting at the premises, and the ABC’s review. The seller is paid only at the end.

Yes, with the ABC’s approval. A café or restaurant license, like a Type 41 for beer and wine at an eating place, moves to a new owner through the same person-to-person transfer: the recorded notice, the escrow holding the full price, the 30-day posting and the ABC’s review.

In the ABC’s own words, a person-to-person transfer “can average about 75 days.” The rest of the café sale may need a bulk sale notice too. How the two fit together.

1. 01

   Step 1: Open an escrow

   If any price or other consideration is involved, the buyer and the seller open an escrow with someone who isn’t part of the transfer, and the buyer deposits the full price, before the application is filed (§24074). The ABC counts anything of value as consideration: the license, inventory, fixtures, the lease, goodwill, a promise not to compete.

   HeldThe full price waits in escrow until the ABC approves.

2. 02

   Step 2: Record the Notice of Intended Transfer

   Before the application is filed, the notice (form ABC-227) is recorded with the county recorder where the premises are (§24073). It names the buyer, the seller and the escrow holder, the license and the premises, and the price and what it’s made of. A copy certified by the recorder goes to the ABC.

3. 03

   Step 3: File with the ABC

   The transfer application goes to the ABC district office. Within 30 days after filing, the buyer gives the ABC a statement, signed under penalty of perjury, that the price has been deposited, with copies to the seller and the escrow. The license won’t transfer until the ABC has it (§24074.3).

4. 04

   Step 4: The 30-day posting

   A notice of the application is posted at the entrance of the premises. The ABC won’t issue a license until it has been up at least 30 days in a row (§23985).

5. 05

   Step 5: Claims and the ABC’s review

   The seller’s creditors file claims with the escrow holder until the ABC tells the escrow the transfer is approved. The escrow holder acknowledges each claim within 10 days (§24074.1). The ABC doesn’t rule on whether a claim is valid.

   CheckedThe ABC’s approval, the tax agencies and the claims are checked first.

6. 06

   Step 6: Approval and payout

   After the ABC approves, taxes that could stop the transfer are paid, then creditors’ claims in the order the law sets, then the seller. Within 10 days after the transfer, and before paying out, the escrow holder tells each claimant whether there’s enough to pay everyone (§24074.1).

   ReleasedTaxes and claims are paid in the legal order, then the seller gets the rest.

It depends on the ABC. In the ABC’s own words: “The license can average about 75 days for a Person-to-Person transfer.” The 30-day posting runs inside that time (ABC application requirements).

The ABC also warns buyers against big financial commitments or grand-opening plans before the transfer is approved. And no license transfers until its renewal fee is paid.

Sometimes. The ABC may issue the buyer a temporary permit to keep operating at the same premises while a person-to-person transfer is pending (§24045.5). The premises must have operated under a license within 30 days before the permit application, the license must be surrendered under ABC rules, the transfer application must be filed, and the permit fee paid. It lasts up to four calendar months, and the ABC may extend it.

The permit request is its own form, ABC-282.

Yes. The ABC may refuse a transfer when taxes tied to the license are delinquent: alcoholic beverage, sales and use, income, bank and corporation, or unsecured property taxes, or unemployment insurance amounts owed by the business (§24049).

The Franchise Tax Board can also put a hold on the license that stops the transfer until the debt is paid. In an escrow, the escrow holder asks the FTB for a payoff amount and pays it from the sale (FTB).

It can, when the license sells with the business. The ABC says its notice doesn’t take the place of the bulk sale rules. The Commercial Code leaves a liquor license transfer out of the bulk sale law only when the buyer also records and publishes a notice that meets the bulk sale rules, at least 12 business days before the transfer.

Ask your attorney how the two fit together in your sale. How a bulk sale escrow works (Commercial Code §6103).

The ABC may also ask where the buyer’s money comes from. Transfers still go through the district office. Current fees are on the ABC’s fee schedule.

The ABC’s Santa Ana District Office handles Orange County: 2 MacArthur Place, Suite 200, Santa Ana, CA 92707, (657) 205-3533. For a Long Beach address, check the ABC’s district for that premises (ABC district offices).