California Business Escrow

Escrow Process of Selling a Commercial Property With an Operating Business in California

Navigating the Escrow Maze: A Guide for California Entrepreneurs.

Buying or Selling a lower middle market business with commercial property in California can feel like navigating a complex labyrinth. Thankfully, the escrow process serves as a reliable roadmap, ensuring a smooth and secure transaction for both you and your counterpart.

Disclaimer: While Rogerson Business Services doesn't offer escrow services directly, we partner with the trusted team at Glen Oaks Escrow, led by the highly experienced Cynthia Moller. We understand the intricacies of business with real estate transactions and are here to guide you through every step of the escrow process.

Now, let's shed light on the 15 crucial stages of your escrow journey:

1. Selecting Your Trusted Escrow Companion:

• Choose a licensed and reputable escrow company like Glen Oaks Escrow, ensuring your funds and documents are in safe hands. We've had a seamless experience with Cynthia and her team, and we're confident you will too.

2. Understanding the Purchase Agreement:

• This critical document outlines the deal's terms, price, closing date, and contingencies. Review it meticulously with your legal counsel to ensure its accuracy and alignment with your expectations.

3. Conducting Due Diligence:

• Leave no stone unturned. Scrutinize financial statements, leases, contracts, permits, and property details. Site visits and inspections are vital to uncover any potential issues.

4. Securing Financing (if applicable):

• Pre-approved financing streamlines the process. Prepare necessary documents like tax returns and bank statements for lender evaluation.

5. Title Verification:

• A title search ensures the seller owns the property free of liens or encumbrances. Your escrow officer will work with a title company to obtain a comprehensive report.

6. Protecting Your Investment with Title Insurance:

• Safeguard yourself against title defects with this invaluable insurance. Your escrow team will assist you in securing the right coverage.

7. Securing Property and Business Insurance:

• Protect your investment against damage or loss with appropriate insurance policies. Proof of insurance is often required by lenders.

8. Environmental Assessments (if necessary):

• If the property raises environmental concerns, assessments like Phase I or II might be necessary to identify potential liabilities.

9. Obtaining Permits and Licenses:

• Ensure smooth business operations by acquiring all necessary permits and licenses relevant to your industry and location.

10. Examining Lease Agreements:

• Thoroughly review any existing lease agreements for terms, rents, lease periods, and renewal options.

11. Prepping for Closing:

• The escrow officer orchestrates the preparation of crucial closing documents like bills of sale, deeds, and closing statements. Review and sign them meticulously before closing.

12. Final Walkthrough:

• Don't leave it to chance. Conduct a final walkthrough to confirm everything aligns with the purchase agreement and verify equipment functionality.

13. Utility Transfer:

• Coordinate the transfer of utilities to your name to avoid service disruptions after closing.

14. Closing Funds Preparation:

• Ensure you have the necessary funds ready, including down payment, loan proceeds, and closing costs. Your escrow officer will provide a detailed breakdown.

15. Closing the Deal:

• Once all documents are signed and funds deposited, the escrow officer finalizes the sale. Congratulations!

Final Note

Depending on California tax regulations, a portion of the seller's net proceeds from the business assets (not real estate) may be held in escrow until tax clearance certificates are received. Click here to learn more about escrow and tax clearance certificates.

Remember, Rogerson Business Services and Glen Oaks Escrow are here to navigate you through this journey with expertise and care. Don't hesitate to reach out with any questions or concerns. We're committed to guiding you towards a successful and secure transaction.

Together, let's turn the escrow labyrinth into a clear path to your entrepreneurial success!