Specialty Escrow Transactions

Question 1

Specialty escrow transactions which require considerably more experience and knowledge in working with them include

(a) Transfer of liquor license
(b) Bulk sale transfers
(c) Both a and b
(d) Neither a nor b

Answer 1

(c) Both a and b

Question 2

A bulk sale subject to the requirements of state law is defined as any sale outside the ordinary course of the seller’s business

(a) Priced at more than 25% of the fair market value of the seller’s inventory and equipment
(b) Priced at more than 50% of the fair market value of the seller’s inventory and equipment
(c) Valued over $5 million
(d) Valued over $5 million

Answer 2

(b) Priced at more than 50% of the fair market value of the seller’s inventory and equipment

Question 3

Bulk sale laws require a buyer to record and publish a notice of the sale

(a) No less than 12 business days before the date of the sale
(b) No more than 12 business days after the date of the sale
(c) Both a and b
(d) Neither a nor b

Answer 3

(a) No less than 12 business days before the date of the sale

Question 4

In financing business opportunities, the instrument to be recorded with the buyer’s security agreement is

(a) Deed of trust
(b) Mortgage
(c) UCC-1 financing statement
(d) Promissory note

Answer 4

(c) UCC-1 financing statement

Question 5

The financing statement is

(a) Publicly filed with the county clerk
(b) Recorded with the California secretary of state
(c) Both a and b
(d) Neither a nor b

Answer 5

(d) Neither a nor b

The UCC-1 financing statement is publicly filed with the California secretary of state and recorded with the clerk of the county in which the business is located.

Question 6

An agreement between a buyer and seller which provides for the seller not to compete against the buyer with reopening the business or opening a new but similar business is called

(a) Condition Not to Complete
(b) Covenants, Conditions and Restrictions
(c) Covenant Not to Compete
(d) None of the above

Answer 6

(c) Covenant Not to Compete

Question 7

Off-sale liquor licenses include

(a) Beer only
(b) Wine only
(c) Beer, wine and spirits
(d) All the above

Answer 7

(c) Beer, wine and spirits

There are only two off-sale licenses (beer and wine and a general license that includes beer, wine, and spirits).

Question 8

In the sale of a liquor license, the escrow officer may not release any funds to the seller until the transfer has been approved by

(a) The secretary of state
(b) The ABC
(c) The IRS
(d) The buyer has authorized the release in writing

Answer 8

(b) The ABC

Question 9

Violations of the manufactured housing law and regulations may subject an HCD licensee to discipline including

(a) A monetary fine or suspension or revocation of the HCD license
(b) Prosecution as a misdemeanor by the District Attorney or State Attorney General
(c) Prosecution as a felony for embezzlement or fraud, or unfair business practices
(d) All the above

Answer 9

(d) All the above

Question 10

A mobile home not placed on a permanent foundation is

(a) Personal property
(b) Either real or personal property
(c) Recording with the county recorder office
(d) None of the above

Answer 10

(a) Personal property

Question 11

Prior to construction in a new development, to ascertain no work has commenced which could result in a mechanic’s lien, the land is inspected by the

(a) Appraiser
(b) Property inspector
(c) City or county building department
(d) Title company

Answer 11

(d) Title company

Question 12

Interested buyers may be taken on a subdivision project yet to receive the “white paper”

(a) May make reservations through the escrow holder
(b) May buy properties in advance of the white paper’s receipt
(c) Both a and b
(d) Neither a nor b

Answer 12

(a) May make reservations through the escrow holder

Question 13

Bulk sales laws are designed to prevent

(a) sellers from defrauding their buyers.
(b) sellers from defrauding the State of California.
(c) sellers from defrauding their creditors.
(d) creditors from defrauding their debtors.

Answer 13

(c) sellers from defrauding their creditors.

Question 14

Bulk sales laws require that an escrow be opened
(a) for all sales involving personal property.

(b) for all sales involving a business in which a real estate is not a part.
(c) for all sales involving a liquor license.

(d) only voluntarily.

Answer 14

(c) for all sales involving a liquor license.

Question 15

The purpose of notifying the state Board of Equalization of the bulk sale is to

(a) obtain a certificate of sales tax clearance and a seller’s permit.
(b) impound and control the distribution of proceeds.
(c) both a and b.
(d) neither a nor b.

Answer 15

(a) obtain a certificate of sales tax clearance and a seller’s permit.

Question 16

If a buyer fails to comply with the bulk sale notice requirements, the buyer is

(a) liable for damages in the amount of any claims against the seller.
(b) liable for double damages in the amount of any claims against the seller.
(c) not liable for damages against the seller.
(d) not liable if a good-faith effort was made to comply.

Answer 16

(a) liable for damages in the amount of any claims against the seller.

Question 17

The bulk sales law requires that for any claim to be valid, it must be filed within

(a) one year of the date of the sale.
(b) two years of the date of the sale.
(c) 180 days of the date of the sale.
(d) 45 days of the date of the sale.

Answer 17

(a) one year of the date of the sale.

Question 18

The document to be recorded as constructive notice for the security instrument for personal property involved in a bulk sales transaction is the

(a) deed of trust.
(b) financial statement.
(c) California UCC-1.
(d) security statement.

Answer 18

(c) California UCC-1.

Question 19

The two basic CATEGORIES of liquor licenses are

(a) off-sale and on-sale.
(b) new and previously issued.
(c) “beer and wine” and “general”.
(d) all of these.

Answer 19

(b) new and previously issued.

Question 20

The two basic GROUPS of liquor licenses are

(a) off-sale and on-sale.
(b) new and previously issued.
(c) “beer and wine” and “general”.
(d) all of these.

Answer 20

(a) off-sale and on-sale.

Question 21

If the buyer of a liquor license is liable for taxes to the Franchise Tax Board, the Board of Equalization, or the Employment Development Department, the escrow holder must

(a) obtain a written release from the department to whom the taxes are due prior to allowing escrow to close.
(b) hold back the amount of the taxes due at the close of escrow.
(c) withhold the monies due from the buyer’s funds and forward to the appropriate agency.
(d) obtain a written release from the Department of Alcoholic Beverage Control before allowing escrow to close.

Answer 21

(a) obtain a written release from the department to whom the taxes are due prior to allowing escrow to close.