Buying a nail salon or a restaurant? Five documents to hold before any money changes hands — miss one, and the seller's debts can become yours

What's going on

Buying a shop is a familiar dream around Bolsa. Work as a tech for a few years, save up, then find a nail salon, a phở restaurant or a hair salon whose owner is ready to sell. Listings on community classifieds run from a few tens of thousands of dollars to well over a hundred thousand. For many families, that is every dollar they have put away. And increasingly, it is the second generation writing the check — for a parent who is retiring, or for a first business of their own.

Most sales go fine. When one goes wrong, it goes wrong big, and usually in one of four ways:

• The landlord says no to transferring the lease. The buyer has paid, but cannot stay in the space.
• The old owner's tax debts land on the new owner: unpaid sales tax, unpaid payroll tax.
• The deposit went straight to the seller, with no escrow. The seller changes their mind, or disappears, and the money is gone.
• The shop isn't what the ad said: inflated revenue, missing licenses, unpaid suppliers.

Bolsa Bridge could not find a California prosecution in the past two years that fits the exact pattern of "selling a shop you don't own." But the mechanics — deposit first, paperwork later — have put plenty of immigrants on the witness stand. In late August 2026, the Stanislaus County District Attorney's Office announced that a Ceres man had been convicted on 18 counts of obtaining money by fraud. Prosecutors said he took deposits for custom food trucks from more than 40 people and targeted victims who were vulnerable because of their immigration status. The alleged losses topped $500,000. Not one truck was built. Sentencing is set for October 30, 2026. In July 2025, the California Attorney General charged two people in San Diego with selling fake pizza-franchise deals worth more than $1 million. According to the complaint, the victims had little or no investment experience, and included seniors and military veterans.

The same thing can happen in any shop sale around here. The good news: California law already spells out the defense. It fits on five pieces of paper.

The five documents to hold before you pay

Each document below blocks one of the four failures above. None is hard to get. But every one has to be in hand before your money leaves your account.

1. The landlord's written consent to assign the lease

A shop is its space. The space belongs to the landlord, not to the person selling you the business.

California's Civil Code (Section 1995.010 and following) gives a commercial lease three possibilities. If the lease says nothing about transfers, the tenant may assign it. The lease may flatly prohibit assignment (Section 1995.230). Or it may require the landlord's consent, in which case the landlord cannot refuse unreasonably — but the tenant carries the burden of proving the refusal was unreasonable (Section 1995.260). The same section adds that a landlord who fails to state written reasons within a reasonable time helps the tenant meet that burden. So ask for an answer in writing, not a verbal promise.

In plain terms: until the landlord has agreed in writing to put your name on the lease, you have nothing but the seller's word. Step one is to ask for the lease, read the assignment clause, and meet the landlord.

2. CDTFA-471: proof the shop owes no sales tax

The CDTFA — the California Department of Tax and Fee Administration — collects sales tax. State tax law (Revenue and Taxation Code Section 6811) requires a buyer to withhold enough of the purchase price to cover any tax the seller owes, until the seller produces a certificate showing nothing is due. Skip that step and you become personally liable for the seller's tax debt, up to the full purchase price (Section 6812). The CDTFA has three years from the date it learns of the sale to bill the buyer (Section 6814).

The certificate is form CDTFA-471, Certificate of Payment. The agency's Publication 73, available in Vietnamese, calls it a "tax and fee clearance" and says in so many words: if escrow closes without it, you may owe. You request it through the CDTFA's Online Services portal, under Request a Tax and Fee Clearance. If you are buying through escrow, have the escrow company request it for you. Under Section 6812, the CDTFA has 60 days to issue the certificate or tell you how much the seller still owes; if it does neither within 60 days, your duty to withhold ends.

One note for nail salons: a shop that only sells services, not products, may never have held a seller's permit, in which case there is no CDTFA account to clear. The Verify a Permit tool on the same portal will tell you whether the shop has one.

3. EDD's DE 2220: proof the shop owes no payroll tax

If the shop has employees, it owes payroll taxes to the EDD — the Employment Development Department. Under the Unemployment Insurance Code (Section 1732), the EDD has 30 days to issue a certificate once either party asks. While you wait, the money sits in escrow. The certificate is form DE 2220, Certificate of Release of Buyer; either side requests it with form DE 2220R. The EDD's own guidance is blunt: until the DE 2220 is issued, the buyer must hold enough funds in escrow to cover everything the seller owes the EDD.

Without this document, the old owner's payroll tax debt can follow the shop to you. With it — or if the EDD fails to respond within 30 days — Section 1732 releases the buyer from that liability.

4. Escrow and the bulk-sale notice

California's Bulk Sales Law (Commercial Code Section 6101 and following) applies when a business sells more than half of its inventory and equipment outside the ordinary course of business (Section 6102). But its reach is specific. Under Section 6103, the law applies only when the seller's principal business is selling inventory from stock — a market, a grocery, a bakery — or running a restaurant. Nail and hair salons are service businesses and generally fall outside it. The law also skips sales under $10,000 and over $5 million.

For restaurants and retail shops, two sections matter most to the buyer:

• Section 6105: the buyer must give at least 12 business days' notice before the sale closes. The notice is recorded with the county recorder, published in a local newspaper, and sent to the county tax collector. It tells the seller's creditors the shop is changing hands, so they can file claims.
• Section 6106.2: when the price is $2 million or less and paid substantially in cash, the money must be used to pay the seller's creditors who file claims, in the order the law sets. If the deal runs through escrow, the escrow agent does this. If it doesn't, the buyer does — receiving claims, holding disputed amounts, and going to court when necessary.

A buyer who skips the notice can be liable to the seller's creditors for up to twice the net purchase price (Section 6107).

So what about nail and hair salons, which the law doesn't cover? Escrow is still where the money belongs. The CDTFA tells buyers who use escrow to have the escrow company request the tax clearance for them. The EDD says flatly that the buyer must hold funds in escrow until the DE 2220 arrives. Escrow, in other words, is not the place to save a few hundred dollars. It is where every document in this article comes together before a dollar is released.

5. A new establishment license — and health permit — in your name

For nail and hair salons, the establishment license issued by the California Board of Barbering & Cosmetology cannot be transferred. Under Business and Professions Code Section 7347, anyone taking ownership of an existing establishment must apply for a new license. The board's FAQ puts it plainly: an establishment license is valid only for the location and the owner it was issued to. The old owner files a closure form; the new owner files a new application.

Restaurants carry a separate county health permit, and it doesn't transfer either. According to the Orange County Health Care Agency's Environmental Health division, a new owner starts by calling to schedule an inspection. Once conditional approval is granted, the new owner has 7 business days to submit the health permit application, proof of ownership, and the fee.
Restaurant change-of-ownership questions:
Orange County Environmental Health (714) 433-⁠6000

At the same time, the new owner needs a CDTFA seller's permit in their own name and a city business license. Publication 73 is explicit: a new permit is required to show you as the current owner. Keeping the old shop name means registering a fictitious business name — a DBA — with the county clerk-recorder.

Five-minute checks before you call the number in the ad

The five documents come into play when you buy. But the moment you read a listing, you can check a few things in five minutes, for free:

• Does the shop's seller's permit exist? Use Verify a Permit, License, or Account on the CDTFA Online Services portal.
• Establishment and technician licenses: search.dca.ca.gov, the license lookup run by the California Department of Consumer Affairs.
• Who registered the shop's trade name: the Orange County Clerk-Recorder's Fictitious Business Name search.
• The company behind the shop (if it's an LLC): bizfileonline.sos.ca.gov, run by the Secretary of State.
• City business license: Garden Grove lets you search by business name, address or owner at ggcity.org; Westminster and Fountain Valley each have their own lookup portal that opens in a regular browser.

If the names on the licenses don't match the name of the person selling, that is your first question — before anyone talks price.

Bigger than one shop

For many families around here, the shop is the biggest asset after the house. Sometimes bigger than the house.

The five documents are not about distrusting the seller. An honest seller needs them too — so they are not chased later for a debt they already paid, or sued over a former employee. Escrow, tax clearances, the landlord's signature: this is how two strangers trust each other on paper instead of on a handshake.

Who decides what happens next? The person holding the deposit check — and choosing to hand it to escrow instead of to the seller.

This article is for general information only and is not financial, tax, investment, or legal advice. Please consult a licensed professional before making decisions.

Translation assisted by AI and reviewed by an editor.