California Commercial Code – Buyer’s Notice Requirements in a Bulk Sale

As a business law firm in Orange County California, we believe it is important to keep our small business clients up to date with the latest California Codes that apply to their small business corporations. Amongst those laws is the one that pertains to the notice requirements of a bulk sale.

California Commercial Code Section 1605 describes the notice requirements placed upon a buyer to satisfy the requirements of the California Bulk Sales Law. The notice must contain certain specific information regarding the seller, location of goods, description of the assets and when the sale will take place.

Uniform Commercial Code Section 6105

§ 6105. Notice

In order to comply with subdivision (b) of Section 6104 each of the following shall be satisfied:

(a) The notice shall comply with each of the following:

(1) State that a bulk sale is about to be made.

(2) State the name and business address of the seller together with any other business name and address listed by the seller (subdivision (a) of Section 6104) and the name and business address of the buyer.

(3) State the location and general description of the assets.

(4) State the place and the anticipated date of the bulk sale.

(5) State whether or not the bulk sale is subject to Section 6106.2 and, if so subject, the matters required by subdivision (f) of Section 6106.2.

(b) At least 12 business days before the date of the bulk sale, the notice shall be:

(1) Recorded in the office of the county recorder in the county or counties in this state in which the tangible assets are located and, if different, in the county in which the seller is located (paragraph (2) of subdivision (a) of Section 6103).

(2) Published at least once in a newspaper of general circulation published in the judicial district in this state in which the tangible assets are located and in the judicial district, if different, in which the seller is located (paragraph (2) of subdivision (a) of Section 6103), if in either case there is one, and if there is none, then in a newspaper of general circulation in the county in which the judicial district is located.

(3) Delivered or sent by registered or certified mail to the county tax collector in the county or counties in this state in which the tangible assets are located. If delivered during the period from January 1 to May 7, inclusive, the notice shall be accompanied by a completed business property statement with respect to property involved in the bulk sale pursuant to Section 441 of the Revenue and Taxation Code.

If the tangible assets are located in more than one judicial district in this state, the publication required in paragraph (2) shall be in a newspaper of general circulation published in the judicial district in this state in which a greater portion of the tangible assets are located, on the date the notice is published, than in any other judicial district in this state and, if different, in the judicial district in which the seller is located (paragraph (2) of subdivision (a) of Section 6103). As used in this subdivision, “business day” means any day other than a Saturday, Sunday, or day observed as a holiday by the state government.

Cal U Com Code § 6105 (2013)

What if I need help understanding California Commercial Code Section 1605?

It is important to understand that failure to follow the rules can result in a buyer of assets of a business suffering sever penalties for not doing things correctly.

If you are not sure how this law may apply to you, please call the Business Attorneys in Orange County at 714-634-4838.