The short version
- The buyer files the bulk sale notice, usually through escrow, but your closing date depends on it
- The notice must be recorded, published and sent to the county tax collector at least 12 business days before the sale
- Creditors can file claims with escrow, so your debts tend to surface before you see any money
- Liens are not wiped out by the notice; secured lenders still need to release them
- Have your creditor list, lien payoffs and every business name you have used ready before escrow opens
In this article
The Notice Belongs to the Buyer, but the Clock Belongs to You
California has a set of rules for what it calls bulk sales. In plain terms, when a business sells most of its assets outside the ordinary course, the buyer has to give the seller's creditors advance public notice.
The rules apply when the seller is located in California, and they come with a list of exceptions. Most owner operated companies selling equipment, inventory and goodwill to a new owner fall inside them.
The duty sits with the buyer. In practice, escrow prepares and files the notices for the buyer as part of the closing work. You do not sign the notice yourself, but nothing closes until it has run its course.
That is why a seller should understand it. The bulk sale notice is one of the few steps in a deal with a fixed minimum wait, and it starts only when someone actually files it.
Why Does a Sale Need a Public Notice at All?
The point is to stop a quiet sell and vanish. Without notice, an owner could sell the assets of a company that owes suppliers, landlords or lenders, collect the money and leave the creditors with an empty shell.
The notice tells those creditors a sale is coming, who the parties are and where they can file a claim.
It does not mean anyone suspects you of anything. It is routine paperwork in an asset deal, the same way a title search is routine in a home sale.
Structure matters here. A sale of the company's shares is a different kind of transfer, and the bulk sale rules are written around assets.
Our note on asset sales and stock sales covers why most deals of this size are asset sales anyway.
Three Places the Notice Has to Go
The buyer, usually through escrow, sends the notice to three places at least 12 business days before the sale:
- The county recorder, where it is recorded in the county where the assets are located.
- A newspaper of general circulation in that county, where it is published.
- The county tax collector, so the county knows the assets are changing hands.
The notice itself is short. It names the seller and the buyer, lists their business addresses and any other business names used in recent years, describes the assets and where they sit, and gives the expected date and place of the sale.
It also names the person with whom claims can be filed, which in most deals is the escrow holder, and the last day to file. That deadline is usually the business day before the stated sale date.
The bulk sale notice is the one part of your closing that runs on a calendar nobody in the room can speed up.
Twelve Business Days Is the Minimum, Not the Plan
Twelve business days sounds like a little over two weeks. In a real deal it is the shortest possible gap between filing and closing, and only if everything around it is already done.
The count starts when the notice is recorded, published and delivered. Newspapers and recorder offices keep their own schedules.
Holidays fall out of the business day count. Escrow will want some cushion on top of that.
A typical sequence looks like this. You and the buyer sign the purchase agreement and open escrow. Escrow gathers your information and prepares the notice.
The notice is filed. The claim period runs. Escrow pays valid claims from your proceeds, then closes.
If your deal also needs a landlord's consent, a tax clearance and a lender's sign off, those run in parallel.
The bulk sale notice is rarely the longest item, but it is the one that cannot start late without moving the date. That is why experienced deal teams file it early.
Escrow Is Where Your Creditors Get Paid
In many asset sales, the purchase money passes through escrow rather than straight to you. Creditors who read the notice can file claims with the escrow holder before the deadline.
Escrow then pays those claims out of the sale proceeds, according to the escrow instructions and the law, before it releases the balance to you. If a claim is disputed, expect escrow to hold money back until it is resolved.
For a seller, the practical effect is this. Every old vendor balance and forgotten equipment lease can show up at once, in writing, days before closing. Owners who have not checked their own payables are sometimes surprised by the total.
The notice also does not clear liens on its own. A lender with a security interest in your equipment or inventory keeps that interest until it releases it, which usually means a payoff letter and a payment out of escrow.
The bulk sale rules sit alongside a separate state rule on unpaid sales tax. Escrow will usually handle both at once, and our note on the CDTFA tax clearance explains that one.
What to Have Ready Before Escrow Opens
Most delays come from the seller's side of the paperwork, not the buyer's. Escrow needs accurate information to prepare a notice that will hold up, and fixing a recorded notice is slower than getting it right the first time.
- Your exact legal entity name and every trade name or DBA used in the last few years
- Every business address in that period, including closed locations
- A current list of creditors with contact details and balances
- Payoff letters for any loans secured by business assets
- A clear description of what is being sold and where it is kept
- Copies of equipment leases that will be paid off or assigned
If you have moved locations or changed names, say so early. A notice that leaves out a name a creditor knows you by is the kind of gap a buyer's attorney will catch late.
Mistakes That Push a Closing Back
The most common one is treating the notice as an afterthought. Owners sign a purchase agreement, then wait a week or two before escrow opens. The 12 business days cannot start until the notice is filed.
The second is a payables surprise. If creditor claims exceed what you expected, the buyer may ask to renegotiate, or escrow may hold funds while you settle. Clean up old balances before you go to market, not during escrow.
The third is a missing lien release. A lender that is slow to send a payoff letter can hold the closing on its own. Ask for those letters as soon as you have a signed deal.
The last is changing the closing date after the notice runs. A notice states an expected sale date. If the deal slips far enough, escrow may need to file again. A realistic first date beats an optimistic one.
Our overview of the sale process shows where escrow sits in the larger sequence.
This is general information, not legal advice. The rules have exceptions that depend on your deal, so confirm the specifics with your escrow officer, your attorney or your CPA before you set a date.
If you want a sense of what your company could sell for before you start on any of this, use the estimate form on this page or call (415) 555-0163.