Transfer escrow

Definition

The account that holds the entire purchase price until the regulator and the creditors are done.

Why It Matters

California will not simply let money change hands. Before the transfer application is filed the parties must open an escrow with somebody who is not a party to the deal, and the buyer deposits the full purchase price there; the consideration is paid only after the regulator approves the transfer. The escrow then pays a statutory list of creditors, and claims for goods sold and delivered for resale at the licensed premises sit high on that list, which is where the unpaid wholesalers land. That is the same receivable the credit rules create, seen from the other end. Ask for a wholesaler aging report before agreeing a price, because those balances come out of the escrow before the seller sees any of it.