What closing deliverables should a buyer expect in a business sale?

The purchase agreement sets out what each side delivers on closing day, and your lawyer will build the checklist from it. This page covers the items worth asking about because a public source says they matter. The seller’s side of the same day is in what closing deliverables a seller must provide.

Proof the assets are free of liens

BDC advises searching the Personal Property Security Registry to find out whether there are liens on the assets you are about to buy, getting registration documents to confirm the seller owns buildings and vehicles, and checking for registrations under section 427 of the Bank Act. Alberta’s government says to search its personal property registry before buying personal property. Other provinces run their own registries, so ask your lawyer to search the right ones and to bring the results to closing.

Workers’ compensation clearances

Saskatchewan’s Workers’ Compensation Board says a purchaser needs a section 156 clearance certificate to be released from legal responsibility for the previous owner’s account, and that without one, if the previous owner owes the board money, the purchaser becomes responsible for the outstanding balance. WCB-Alberta says you have a responsibility to get a clearance when buying a business, its stock or equipment. Other provinces have their own boards and rules, so ask whether your province requires one.

Tax elections and certificates

Under section 167 of the Excise Tax Act, a supplier and a recipient may make a joint election in prescribed form for the supply of a business or part of one where the recipient acquires all or substantially all of the property reasonably regarded as necessary to carry it on as a business, except where the supplier is a registrant and the recipient is not. If the recipient is a registrant, it files the election with the Minister. Separately, section 116 of the Income Tax Act can make a purchaser liable when a non-resident sells taxable Canadian property, unless a certificate was issued, the purchaser, after reasonable inquiry, had no reason to believe the seller was a non-resident, or another exception in the section applies, such as for excluded property. Both rules have exceptions, so ask whether either applies.