THE OFF MKT Standard Transaction Process

A unified workflow for transferring childcare businesses and real estate in Washington State.

Childcare transactions require structure. They involve licensing, compliance, real estate, and financial considerations that must move in sync. The OFF MKT process creates consistency, protects confidentiality, and ensures every party knows exactly what to expect.

Below is the official standard process used across our marketplace.

1. Purchase and Sale Agreement (PSA) Executed

Once buyer and seller agree to terms, the PSA is signed.
The PSA includes four defined contingencies:

1. A short feasibility inspection period

2. A property and operational inspection period

3. A financing contingency

4. A license transfer contingency

All major timelines begin at this point, including lender underwriting and DCYF transfer review.

2. Five-Day Feasibility and Earnest Money Deposit

Within five business days, the buyer must:

1. Complete operational and financial review

2. Complete property inspection (if, and only if, real estate is included)

3. Deliver all lender-required documentation

4. Deposit earnest money

5. Confirm commitment to proceed

Failure to complete these items terminates the transaction early, limiting wasted time for all parties.

3. Buyer Initiates DCYF License Transfer

Immediately after feasibility concludes, the buyer files the license transfer application.

This creates full concurrency:
• DCYF’s 90-day transfer window and SBA’s 90-day financing window can run at the same time.
• No party is waiting idly for the other to finish.
• The transaction gains predictable forward momentum.

4. DCYF Inspection and Compliance Resolution

DCYF inspects the facility with the buyer present.

If compliance issues are identified:

1. The seller is responsible for completing all required corrections.

2. Repairs must be completed before closing.

3. The buyer does not inherit licensing risk.

This step maintains control and reduces deal uncertainty.

5. Financing Contingency Resolution

Financing and licensing remain separate but concurrent.
The financing contingency must be resolved before buyer introductions occur.

The financing contingency expires upon one of the following:

1. Issuance of a lender commitment

2. Expiration of the financing window in the PSA

3. Buyer electing to proceed based on conditional approval

If a lender requires DCYF approval before finalizing the loan, the financing contingency converts to a “gap clause” that only applies if the loan is denied specifically due to the license transfer.

This prevents misuse of financing as an escape clause.

6. Waiver of License Transfer Contingency

The buyer may waive the license transfer contingency after:

1. DCYF completes inspection

2. Compliance repairs are verified

3. Buyer is reasonably assured transfer will be approved

Once this contingency is waived, the buyer is fully committed.

7. Introductions to Families and Staff

Introductions may occur only when:

1. Financing contingency is fully resolved

2. License transfer contingency is waived

This protects confidentiality and prevents disruptions in the event a buyer fails to perform.

8. Coordinated Closing

Closing of:
• Business sale
• Real estate sale (if applicable)
• License transfer

occurs on the same day DCYF approves the transfer.
The buyer may enter into a short-term consulting or employment agreement with the seller to support transition.

9. Improvements and Best Practices

To ensure consistency and protect the integrity of the marketplace, The OFF MKT applies the following structural enhancements:

1. Require buyer to provide lender pre-qualification within 48 hours of PSA.

2. Require buyer to submit SBA documentation immediately following PSA execution.

3. Provide lenders with an OFF MKT childcare transaction timeline for alignment.

4. Limit financing contingency to failure to obtain financing, not timing delays.

5. Require weekly status updates from buyer regarding lender progress.

6. Require DCYF compliance repairs to be completed by the seller before closing.

7. Require buyer to initiate license transfer promptly after feasibility.

8. Allow seller to terminate if buyer delays initiating license transfer.

9. Require standard transition plan for introductions once contingencies are waived.

This standardized process reduces risk, shortens timelines, and increases overall deal certainty.

Parallel Structure: Lease or Assignment Transactions

Lease and assignment transactions follow a similar structure but are simpler because DCYF will not approve a transfer unless the incoming operator has a legally binding right to the space.

The OFF MKT standard workflow for lease or assignment transactions is as follows:

1. Lease or Assignment Agreement Completed Prior to License Transfer Filing

The landlord and prospective operator must fully execute one of the following:

1. A new lease

2. A lease assignment

3. A sublease

DCYF cannot move forward without this documentation.

2. Effective Date of Lease

The lease or assignment is signed now, but the commencement date is tied to the license transfer approval.

The structure is as follows:

1. Lease is fully executed

2. Lease commencement occurs only when the license transfers

3. If DCYF denies the transfer, the lease automatically terminates after 100 days from mutual execution

This protects both parties while allowing DCYF to process the transfer.

3. Buyer Initiates DCYF License Transfer

As soon as the lease or assignment is finalized, the incoming operator files the license transfer application.

DCYF begins review and schedules the inspection.

4. DCYF Inspection and Compliance

If compliance issues are identified, the landlord or current tenant (depending on lease language) must complete repairs.

This ensures the space meets licensing requirements at the time of transfer.

5. No Buyer Introductions Until Transfer is Assured

Introductions to families, teachers, or community stakeholders only occur after:

1. DCYF inspection is cleared

2. Any compliance issues are resolved

3. Incoming operator is comfortable that transfer approval is likely

This maintains confidentiality and avoids premature disruption.

6. License Transfer Approval and Lease Commencement

When DCYF approves the transfer:

1. The license transfers

2. The lease commencement date becomes effective

3. The incoming operator takes possession

4. Any transition employment or training agreements begin

If DCYF denies transfer within 100 days, the lease automatically terminates.

7. Advantages of This Structure

1. Landlords have clarity and control.

2. Operators are protected from liability if transfer is not approved.

3. The market is safeguarded from improvised or unstable deal structures.

4. All steps align with DCYF requirements, reducing transaction failure.

5. This creates consistency across all OFF MKT lease-based transactions.