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HALLMARK ESCROW CO. 

Institutional Asset Management

• Performance reports
   
• Holdings and transaction summaries
   
• Market value and risk insights
  Investment & Mergers / Acquisitions

• Award-winning research & analytics
   
• Structuring tools and multi-product trading
   
• Post-trade support and reporting
   
• Faster, more transparent execution
  

HALLMARK ESCROW CO. 

In any bulk sale of business assets, an experienced Escrow Agent plays a critical role in managing both financial and legal responsibilities. Beyond handling creditor claims required in small cash sales of assets, the escrow agent typically oversees tax obligations, ensuring all parties are protected and reducing potential risks.

A “Bulk Sale” or “Business Opportunity Transfer” involves selling a business along with its assets, which often include inventory, furniture, fixtures, goodwill, leasehold interests, licenses, and equipment. Because these transactions can be complex, it is essential to work with an escrow officer who has experience handling such sales.

Why Hire an Experienced Escrow Agent

Business escrows protect Buyers, Sellers, and creditors throughout the transfer process. California’s Bulk Sale regulations, under the Commercial Code, safeguard government agencies, lien holders, and creditors when more than half of a company’s assets are sold. These laws are designed to shield Buyers from unexpected obligations that could arise after the transaction.

Failure to comply with Bulk Sale requirements can leave the Buyer liable for the Seller’s debts. To prevent this, escrow officers conduct thorough searches of the Seller and the business, issue a Notice to Creditors, and ensure it is properly recorded and published. These steps guarantee legal compliance, facilitate smooth asset transfer, and protect the Buyer from successor liability.

Managing Taxes and Employee Liabilities

Bulk sales can trigger audits by the California State Board of Equalization (BOE) to review the Seller’s prior sales and use tax payments. Funds must be placed in escrow to cover any potential tax liabilities until the BOE confirms all taxes have been paid or issues a “Certificate of Tax Clearance.”

If the business includes employees, additional funds are held in escrow to cover any contributions, interest, or penalties related to unemployment insurance or disability benefits. This ensures the Buyer is not personally responsible for the Seller’s outstanding obligations.

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What is a “Bulk Sale”?

A Bulk Sale is any sale outside the ordinary course of a business in which more than half of the seller’s inventory and equipment is sold, based on fair market value on the date of the bulk sale agreement (California Commercial Code §6101(a)(3)).

California’s Bulk Sales Law generally applies when two conditions are met:

          *The seller’s primary business involves selling inventory from stock, including manufacturers or restaurant owners.
         *The seller is located in California.
There are important exemptions. Bulk Sale rules do not apply if the net value of assets (after liens and security interests) is:

          *Less than $10,000

          *More than $5 million
If the net asset value is between $10,000 and $2 million, the transaction is considered a small cash sale and must follow additional requirements outlined in California Commercial Code §§6101–6111.

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Net Asset Value

– $0 to $9,999: Exempt from California Bulk Sales Law
– $10,000 to $2M: Small Cash Sales with additional requirements
– $2M to $5M: “Standard” Bulk Sales requirements apply
– Over $5M: Exempt from California Bulk Sales Law

What are the Requirements of a Bulk Sale

To comply with the law, there are two steps that are essential. First, the buyer prepares a notice of bulk sale that provides the following information:

– Statement that a bulk sale is about to be made
– The buyer’s name and business address
– The seller’s name and business address
– A list of any other business names and addresses used by the seller during the three years prior to the sale
– A description of the assets and their physical location
– The place of the bulk sale
– The anticipated date of the bulk sale
– A statement whether the bulk sale is a Small Cash Sale, and if so: the name and address of the person with whom claims may be filed. Also, the last date for filing claims, which must be one business day before the anticipated date of the bulk sale set forth in the notice.

Second, at least twelve business days before the sale takes place, the buyer must:

– Record the notice of bulk sale in the county recorder’s office
– Publish the notice in a local newspaper of general circulation
– Deliver the notice of bulk sale to the county tax collector

 HALLMARK ESCROW CO.  

Hallmark Escrow Co. is licensed by the Department of Financial Protection and Innovation to handle holding escrows. We are a trusted third-party escrow provider for attorneys and professionals who need secure fund management under agreements made outside of traditional escrow transactions.

Holding escrows do not involve real estate transfers or California Bulk Sale transactions, making them ideal for a wide variety of industries including entertainment, legal, receiverships, judiciary, private money, technology, and vacation ownership assets such as memberships or intervals.

What is a Holdback? 

A holdback is a portion of the purchase price withheld at closing and placed in a third-party escrow account to secure future obligations or conditions. Holdbacks are common in business sales, vacation membership transfers, and interval ownership transactions. They often relate to:

       *Achieving specified working capital levels
      *Addressing pending litigation

       *Completing vacation membership or interval transfers
Holdbacks usually do not exceed 5% of the purchase price and are limited to issues that can be resolved shortly after closing.

Why Use a Holding Escrow?

      *Protects buyers from accounting differences in working capital
     *Secures funds for ongoing litigation or potential losses 

      *Ensures smooth, compliant transfers of business assets, vacation memberships, and intervals
Whether your transaction is simple or complex, Hallmark Escrow Co. provides reliable, professional holding escrow services tailored to your needs. Contact us today to learn how we can help safeguard your funds.

 HALLMARK ESCROW CO. 

At Hallmark Escrow Co., we help clients manage and protect equity accrual in a variety of transactions. Whether you’re purchasing real estate, investing in a business, or acquiring vacation ownership intervals, our escrow services ensure that your payments and contributions are properly tracked and secure.

How It Works:

• Real Estate: Each payment toward your property builds equity. We hold and manage funds to ensure ownership stakes grow as intended.
   
• Business Transactions: Escrow can release funds based on milestones or contractual agreements, ensuring equity accrues accurately for all parties.
   
• Vacation Ownership / Intervals: Payments toward timeshares, memberships, or interval properties are secured and applied properly to your ownership stake.
   

By using our equity accrual escrow services, buyers and investors gain peace of mind knowing that their funds are protected, ownership is tracked, and all conditions of the agreement are met.

HALLMARK ESCROW CO.  

Hallmark Escrow Co. At Hallmark Escrow Co., we provide professional profit sharing escrow services to ensure fair and secure distribution of profits in a variety of transactions. Whether you’re involved in a business sale, partnership, joint venture, or interval ownership, our escrow services protect all parties and guarantee that funds are handled according to the agreement.

How Our Profit Sharing Services Work:

• Business Transactions & Partnerships: Escrow securely holds profits and releases them according to the agreed-upon formula, protecting both buyers and sellers.
   
• Vacation Ownership & Interval Investments: Rental income or resale proceeds can be managed through escrow, ensuring fair distribution to all owners or investors.
   
• Performance-Based Releases: Funds can be disbursed based on milestones or earnings targets, giving all parties peace of mind.
   

With Hallmark Escrow Co., you can trust that profit sharing is transparent, secure, and compliant, reducing risk and maintaining confidence for every participant.