Close the Transaction
When the closing occurs, you and the seller can either physically meet or handle the transaction virtually. Most closings are handled virtually these days.
For virtual closings, the documents are signed electronically or “overnighted” to the parties for signatures and are then sent back to the escrow agent, who releases the funds to the seller.
It’s common for the buyer and seller to share the closing costs.
The closing date is a suggested target and is not set in stone.
Wire Transfer Only
Closing funds must be made by wire transfer only.
Transferring Funds to Escrow
If escrow is being used, you as the buyer should transfer the balance of the purchase price to the escrow company three days prior to the closing.
Wire Transfer Delays
There are often delays with wire transfers, which can delay a sale if the transfer is made on the day of closing. To prevent problems, we suggest wiring the money to escrow at least three days before closing. Cashier’s checks are not accepted due to numerous recent incidents of fraudulent cashier’s checks.
The Purpose of Escrow
An escrow agent serves as a neutral third party that independently protects the interests of both parties. An escrow agent is an impartial agent who acts only on mutually agreed-upon instructions. Escrow agents ensure a seller transfers a clear title to the assets. Escrow agents often hold substantial sums of money during various phases of a transaction. It is critical that these funds be held by an independent third party. It is always a good idea to have an objective third party hold the funds to make sure there are no additional encumbrances against the business and to ensure that both you and the seller are in agreement on the closing prior to releasing funds.
The escrow fee is normally split 50/50 between the seller and the buyer.
On the closing date, you and the seller can physically meet around a table where you deliver the final payment and the closing documents are signed, or the closing can be handled virtually. Most closings today are handled virtually. For virtual closings, the documents are signed electronically or “overnighted” to the parties for signatures and are then sent back to the escrow agent, who releases the funds to the seller. It’s common for the buyer and seller to share the closing costs. Virtual closings are becoming more common with the integration of technology.
The closing date is a suggested target and is not set in stone. The buyer and seller can extend the time until the closing if they mutually agree upon it.
We recommended that all officers sign the closing documents. If all officers are not available, a corporate resolution can be used instead of a physical signature.
Transfer of Vehicles and Other Titled Assets
- Asset Sales: The parties should include any vehicles and titled property in the asset list, which will be attached to the purchase agreement. When the parties sign the Bill of Sale, legal ownership of all property in the asset list, including any vehicles listed, transfers from seller to buyer. While you gain legal ownership of the vehicle at the moment of signing the Bill of Sale, the parties must still arrange for the registration of the transfer with the Department of Motor Vehicles, which may happen days or weeks later.
- Stock Sales: For stock sales, legal ownership of all property transfers from seller to buyer when the stock certificates are handed over, if the assets are owned by the seller’s corporation. If the assets are owned by the seller as an individual, then they must be separately transferred.
Dealing with Last-Minute Problems
The sale or purchase of a business never goes as smoothly as expected. Problems almost always remain post-closing. For this reason, it is best to maintain an excellent working relationship with the seller so that you can easily cooperate to solve such problems.