| Office | County recorder, county tax collector and a newspaper of general circulation |
|---|---|
| Paperwork | A notice of the intended bulk sale, recorded and delivered before the sale date |
| Timing | At least 12 business days before the bulk sale date |
Watch for this: California's bulk sale rules reach restaurants and businesses that sell from inventory, so a sale of that kind may need the notice even when everything else is in order.
What a Bulk Sale Is
California's bulk sale law covers a sale of most of a business's inventory or equipment outside the ordinary course. It applies to restaurants and to many companies that make their money selling goods.
The purpose is to warn the seller's creditors before the goods leave, so unpaid bills are not left behind.
How the Notice Works
The buyer is generally the one who prepares the notice. It is recorded with the county recorder where the assets sit and delivered to the county tax collector.
It is also published in a newspaper of general circulation. If the seller's address is in another county, the notice may need to go there as well.
All of this has to happen at least twelve business days before the bulk sale date. That gap builds a delay into the closing calendar.
The Seller's Part
- Give the buyer a full list of creditors, including those you dispute
- List the business addresses you used in the past few years
- Pay or arrange to pay old debts from closing proceeds
- Confirm with your attorney whether your sale falls under the law
Escrow companies often handle the mechanics and the payoff of creditors from sale proceeds.
Why Restaurants Get Caught
A restaurant sells food, but its main assets are equipment, fixtures and a lease. When those change hands as a group, the sale looks like a bulk sale. Many owners hear about the law only when escrow asks for the creditor list.
Gather unpaid supplier invoices, loan balances, equipment leases and tax debts now. A full list helps escrow pay everyone from your proceeds and keeps the closing on schedule.
What Happens if It Is Skipped
A buyer who skips a required notice may find the sale ineffective against the seller's creditors. That is exactly the risk lenders and buyers want to avoid, so expect your deal team to raise this early.
Build It Into the Calendar
Ask your attorney about the notice when you sign the letter of intent. Count back twelve business days from the planned closing and set the other steps around that date, so the notice never becomes the reason a closing slips.
Other Pieces of the Closing
Tax debts ride along with the sale too. Read CDTFA tax clearance and, for bars and restaurants, the ABC license transfer.
See asset allocation for how the price is divided.
This page is not tax or legal advice. Confirm each step with your attorney, escrow officer or CPA.
For a price range, request a valuation.