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 be getting exactly what
they are entitled to, and the Agreement itself should accurately detail the
necessary steps, 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 AB&T requirements. C. The Buyer needs
the assurance that the proper Florida Department of Revenue Clearance paperwork
is being completed in accordance with AB&T 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 AB&T
requirements. E. The Buyer needs
the assurance that any other necessary Affidavits that become part of the AB&T
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 and the transfer approval process directly by AB&T? C. To create an
“even playing field” for all Buyers, transfer fees are payable by the
Seller. The system is designed for every license holder to pay the transfer fee only once, when they are the Seller - as the transfer fee is based on how the Seller acquired the license and/or how they have used it over time. But this is an area of
incredible importance for Buyers, 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 AB&T later – after the closing and after the Buyer has
submitted the Transfer Application to AB&T. And if not proven otherwise, AB&T will charge the maximum transfer fee (ether $5,000.00 or $27,300.00, depending) as a penalty.
8. To protect the
Seller, the pro-rated license fee (annual license fee to AB&T) must also be
calculated and made payable by the Buyer to the Seller at closing as a
reimbursement for fees already paid to AB&T for the balance of the existing
license year.
9. At Closing, the
Buyer needs the assurance that in exchange 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 AB&T.
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 AB&T
as required. The Buyer needs to know that they have an experienced ally working for them through completion of the transfer process and beyond as needed or necessary.
These are
just some key Examples as to why a Broker is warranted…
And what can or could go wrong…
