Can I do a background check on the seller of a business?

Yes, within limits. Before you start, consider telling the seller what you plan to look at and why. Some searches use public records. Others involve personal information, where the seller’s consent may matter.

What public records can show

Corporations Canada says some of the information on the individuals with significant control of federal business corporations is available through its online search, and that you cannot search using the name of an individual with significant control. That covers federal corporations only, so ask a lawyer which registry covers the seller’s other companies. For an individual seller, the Office of the Superintendent of Bankruptcy says it maintains a public record of filings under the Bankruptcy and Insolvency Act. See searching a guarantor’s bankruptcy record. For court records, ask your lawyer which courts to check.

What needs the seller’s consent

The Financial Consumer Agency of Canada says that in most provinces you must give consent before a business or individual can check your credit, and in three provinces they only need to tell you they are checking your credit report. So ask your lawyer whether you may pull the seller’s credit report where you are, and how to get the seller’s agreement. For criminal record checks, ask your lawyer whether they are allowed and what consent they need, and let the seller see what you are asking for.

How privacy law applies

The Office of the Privacy Commissioner says PIPEDA applies to private-sector organizations that collect, use or disclose personal information in the course of commercial activity. Its page on PIPEDA’s consent principle says organizations are generally required to get meaningful consent, which means people must understand what they are agreeing to. It also says Alberta, British Columbia and Quebec have their own private-sector privacy laws, deemed substantially similar to PIPEDA, and that organizations subject to one of them are generally exempt from PIPEDA for personal information collected, used or disclosed within that province. Ask your lawyer whether a buyer’s search is covered where you are.

Seller questions can also be put in writing, as covered in what questions to ask a seller first. If a seller pushes back on a check, ask why, and see whether skipping due diligence is suspicious.