8 Documents Every Business Escrow Needs
I have seen business escrows stall for weeks because one document was missing. Not a complex legal brief. A simple corporate resolution. A missing signature page. A bill of sale that forgot to list the equipment serial numbers. The escrow company cannot move funds until the paperwork is complete, and incomplete paperwork is the single most common reason for delay. At Secured Trust Escrow, we review every document before we open the file, and we tell the parties exactly what is missing before they deposit funds. Here are the eight documents that every business escrow needs to run smoothly from start to finish.
Pro tip: Gather these documents before you open escrow. Waiting until the last minute to find a corporate resolution or a tax clearance certificate adds days or weeks to your closing timeline. The escrow company cannot verify what they do not have.
1. The Fully Executed Purchase Agreement
This is the foundation. The purchase agreement defines what is being sold, who is selling it, who is buying it, and what conditions must be met before closing. The escrow company uses this document to draft the escrow instructions. If the purchase agreement is vague about the asset list, the escrow instructions will be vague too. Make sure the agreement includes a detailed schedule of assets, a clear purchase price, and specific closing conditions. Both parties must sign the final version, not a draft with tracked changes.
2. Corporate Resolutions or Consent Documents
If the seller is a corporation or LLC, the escrow company needs proof that the person signing the documents has authority to sell the assets. This usually means a corporate resolution or written consent from the members or board of directors. Without this, the buyer risks having the transaction challenged by a minority shareholder or a partner who claims they never approved the sale. The resolution should specifically authorize the sale, name the escrow company, and authorize the designated signer to execute all documents.
3. Bill of Sale
The bill of sale transfers title to the tangible assets. It should list the assets by description, model number, serial number, or location. Generic bills of sale that say “all equipment located at 123 Main Street” create problems when the buyer claims something is missing. The bill of sale should also state that the seller has good title and that the assets are free of liens except as disclosed. The escrow company holds the signed bill of sale and releases it to the buyer only after funds are verified.
4. Assignment of Contracts and Leases
If the sale includes customer contracts, vendor agreements, or a lease assignment, the escrow company needs the assignment documents. Many contracts require the other party’s consent before assignment. The escrow instructions should specify which contracts are being assigned and whether third-party consent has been obtained. The escrow company can hold funds until the landlord, vendor, or customer approves the assignment. This prevents the buyer from paying for a business only to find out the landlord will not approve the lease transfer.
5. UCC Search and Lien Clearance
A UCC search reveals whether the seller’s assets are pledged as collateral for a loan. If a lender has a security interest in the equipment or inventory, the lender must release that interest before the buyer takes clear title. The escrow company needs the UCC search results, the payoff letter from the secured lender, and the UCC-3 termination statement showing the lien is released. Without these, the buyer purchases assets subject to a lender’s claim, which means the lender can repossess the equipment after the sale.
6. Tax Clearance Certificates
California and many other states allow tax agencies to place liens on business assets for unpaid sales tax, payroll tax, or income tax. The escrow company needs tax clearance certificates or written confirmation from state and federal tax agencies that no liens exist. If the seller owes back taxes, the escrow company can withhold the tax amount from the purchase funds and pay the tax agency directly. This protects the buyer from inheriting the seller’s tax liabilities along with the assets.
7. Intellectual Property Assignments
If the sale includes trademarks, patents, copyrights, or proprietary software, the escrow company needs the assignment documents. For trademarks, the assignment must be recorded with the USPTO. For patents, the assignment must be filed with the USPTO patent office. The escrow instructions should specify which IP is included, the assignment documents required, and the government filing deadlines. The escrow company can hold funds until the buyer confirms that the assignments have been recorded and the USPTO records show the buyer as the new owner.
8. Escrow Instructions Signed by Both Parties
This is the document that governs everything. The escrow instructions tell the escrow company exactly what to do, when to do it, and what conditions must be met before releasing funds. The instructions should mirror the purchase agreement but add the operational details: who deposits what, when deposits are due, what documents must be delivered, how inspections are conducted, and what happens if the deal fails. Both parties must sign the same set of instructions. If the parties sign different versions, the escrow company cannot proceed until the versions are reconciled.
Frequently Asked Questions
What if the seller cannot find their corporate resolution?
The seller can draft a new resolution and have it signed by the authorized corporate officers or members. If the entity is no longer active or the officers are unavailable, the seller may need to reinstate the entity or obtain a court order. The escrow company cannot proceed without proof of authority. This is not a minor detail. It is a fundamental requirement.
Does the buyer need to provide documents too?
Yes. The buyer typically provides proof of funds, a signed escrow instruction, and corporate resolutions if the buyer is an entity. If the buyer is obtaining financing, the escrow company may need a lender approval letter. The buyer also signs the bill of sale and any assumption agreements. Both sides have document obligations.
Can escrow open without all documents?
Yes, but the escrow company will flag the missing documents and will not release funds until they are received. Some parties prefer to open escrow with the purchase agreement and deposit, then gather the remaining documents during due diligence. This is common, but it adds risk. If the missing documents never arrive, the deal stalls and the deposit may be tied up.
Who pays for the UCC search and tax clearances?
The purchase agreement usually specifies who bears these costs. In most business sales, the buyer pays for due diligence costs like UCC searches and inspections, while the seller pays for tax clearances and lien releases. The escrow company does not determine who pays. They follow the instructions. Make sure the purchase agreement addresses these costs so there is no dispute at closing.
Opening a Business Escrow?
Secured Trust Escrow reviews your documents before opening, flags missing items early, and keeps your closing on schedule. No surprises. No last-minute scrambles.
Licensed in California. Business escrow specialists.
About the Author: This guide was prepared by the escrow officers at Secured Trust Escrow, a California DFPI-licensed escrow company with experience in business escrow documentation, due diligence coordination, and secure fund handling for transactions throughout Los Angeles and surrounding areas.
Legal and Regulatory Disclaimer: This article provides educational information about escrow services. It does not constitute legal, tax, or investment advice. Escrow transactions involve complex legal and financial consequences that vary by transaction type and individual circumstances. Parties should consult with qualified attorneys and tax professionals regarding their particular transactions. California regulations and market conditions change periodically. Last reviewed: July 2026.
