How do I release the vendor take-back security once the note is paid?

A vendor take-back ends with a final payment, but the seller’s security does not end with it. If the seller registered a claim against the business assets at closing, which is the point of taking security, often under a general security agreement, that public record keeps appearing on searches until someone discharges it. A stale registration can slow a refinancing or a later sale, because the next lender or buyer sees a claim that looks live.

Start with written confirmation of payout

Ask the seller, or the seller’s lawyer, to confirm in writing that the note is paid in full and that nothing else is owing under the sale documents. Then read the note and the security agreement for their release terms, which may say who prepares the discharge and how soon it follows payment. Keep it as proof in case the seller is slow.

Demand the discharge in writing

Ontario’s registry guidance says a registration can be changed, renewed or discharged, and British Columbia’s registry lists the same steps. Under Ontario’s Personal Property Security Act, once all the obligations under a security agreement have been performed, a person with an interest in the collateral can deliver a written notice demanding that the secured party register a discharge. A secured party that fails to do so within the time the Act allows after the demand, without reasonable excuse, becomes liable to pay a set sum and any resulting damages. Other provinces have their own rules, so have a lawyer send the notice.

Search the registry afterwards

Do not rely on a promise that the discharge was filed. Ontario’s registry service lets you check whether a lien has been filed, and Alberta’s registry offers a search for a certificate of expired or discharged registrations and directs questions about a search result to the party that registered the interest. Run the search yourself, keep a copy of the result, and chase the seller if the registration still shows.

Release everything else the seller took

• Pledged items, such as share certificates, that the seller still holds.
• Any personal guarantee you or your owners signed.
• Any charge over land, which is registered against the land rather than in the personal property registry.
• Any insurance endorsement or other document that still names the seller as a secured creditor.