ABC Requires Escrow Before Any License Transfer Filing
California law requires that the full purchase price for an ABC license transfer be placed in escrow with a neutral third party before the transfer application is filed. No escrow means no filing.
The California Department of Alcoholic Beverage Control does not process license transfers unless an escrow is in place. This requirement exists to protect both the buyer and the seller. The seller knows the buyer has the funds. The buyer knows the funds will not be released until ABC approves the transfer. At Secured Trust Escrow, we specialize in ABC license transfer escrows for restaurants, bars, and retail stores throughout California.
The Escrow Must Be Neutral
The escrow holder cannot be the buyer, the seller, or their attorney. It must be an independent third party. This neutrality ensures that neither side controls the funds and that both parties have equal protection under the escrow agreement.
Full Consideration Must Be Deposited
The entire purchase price or consideration must be placed in escrow before filing. The escrow agreement must provide for payment to the seller only after ABC approves the transfer. If any portion of the payment is outside escrow, the transfer may be denied.
Form ABC-226 Is Required
Within 30 days of filing the transfer application, the applicant must submit Form ABC-226. This is a statement under penalty of perjury that the purchase price has been deposited in escrow. The escrow holder receives a copy. Misrepresentation can result in denial or revocation of the license.
Escrow Stays Open Until ABC Approves
The escrow cannot close until ABC approves both the applicant’s qualifications and the premises. This can take weeks or months depending on the complexity of the application. During this time, the funds remain secure in escrow and neither party can access them unilaterally.
ABC License Transfer Escrow
Secured Trust Escrow handles ABC license transfer escrows for buyers and sellers throughout California.
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 holding escrow, relocation escrow, liquor license transfers, and mergers and acquisitions throughout Los Angeles, Torrance, 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.
