The Florida Liquor License Exchange
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Why a Broker?
What Can Possibly Go Wrong?
The process involved with and during a transfer transaction involving a Florida Quota Liquor License can be very confusing and may include many potential pitfalls of unforeseen obstacles for either the Buyer or the Seller. Since 1996, we have heard scores of horror stories from both Buyers and Sellers who found themselves involved in transactions that did not go as planned. And most such problems have occurred because Buyers and/or Sellers have chosen to go it alone without a Broker ~ OR ~ they have opted to go with the wrong Broker.
1. First – you need to be working with the right kind of Purchase Agreement. This is usually a by-product of tremendous experience. Such an Agreement needs to accurately and timely protect both parties: the Seller and the Buyer. Each party should get be getting exactly what they are entitled to, and the Agreement itself should accurately detail the necessary steps and timeline and closing procedures.
2. The Seller needs to know that he or she is not just having the license listed for some extended or indefinite period of time. The Seller needs to know that execution by a qualified and motivated Buyer is imminent before executing any paperwork, and a Seller should demand a timely response of be free to work with another prospective Buyer.
3. The Buyer likewise needs to know that he or she has actually and officially “locked-in” a license that will be available and secured by the promised closing date.
4. The Seller needs to know that they are only working with a motivated and capable Buyer. The posting of an Earnest Money Deposit by the Buyer works to ensure that the Buyer is committed to the process and is at risk – should he or she fail to close as required by the Agreement.
5. The Buyer will also know that the license was REALLY “taken off the market” and is ready and available at closing.
6. As the parties approach closing, the Buyer needs to know that accurate and complete paperwork has been prepared by the Seller and is ready and available at closing. This step can be very involved and present many obstacles if not handled correctly.
A. The Buyer needs the assurance that a Bill of Sale of the proper style and format is being completed.
B. The Buyer needs the assurance that the proper Transfer Affidavit is being completed in accordance with DABT requirements.
C. The Buyer needs the assurance that the proper Florida Department of Revenue Clearance paperwork is being completed in accordance with DABT requirements.
D. The Buyer needs the assurance that the proper Transfer Fee is being calculated and verified with the necessary supporting documentation in accordance with DABT requirements.
E. The Buyer needs the assurance that any other necessary Affidavits that become part of the DABT Transfer Application packet are being generated as necessary. This should include a “No Liens Affidavit” among other possible items.
F. The Buyer needs assurances that all of this has been prepared and is available and ready at closing.
7. The transfer fees, if applicable, are of extreme importance to the Buyer.
A. For Example: Are you aware that transfer fees can be from $0.00 to $27,300.00?
B. And that the Buyer will be billed for the transfer fee after closing directly by DABT?
C. To create an “even playing field” for all Buyers, transfer fees are routinely payable by the Seller. But this is an area of incredible importance and many Buyers have been burned by Sellers because they did not fully understand what is occurring in the transfer process.
D. A Broker should properly calculate and verify the projected transfer fees and have such, if applicable, deducted from the Seller’s proceeds at Closing.
E. Why? Because the Buyer will be billed for the transfer fee by DABT later – after the closing and after the Buyer has submitted the Transfer Application to DABT.
8. To protect the Seller, the pro-rated license fee (annual license fee to DABT) must also be calculated and made payable by the Buyer to the Seller at closing as a reimbursement for fees already paid to DABT for the balance of the existing license year.
9. At Closing, the Buyer needs the assurance that in exchange for a cashier's check or official bank check for the balance due to the Seller that the Buyer is in fact getting 100% of the items necessary via the Seller to properly document ownership and affect a transfer via DABT.
10.After Closing, the Buyer then needs to know that he or she will have the experience on their side necessary to properly assist the Buyer in submitting the Transfer Application packet to DABT as required.
These are just some key Examples as to why a Broker is warranted…