What does a seller remain responsible for after selling?

Closing day feels like a clean break, and in the sense that ownership and control pass to the buyer, it is one. But several categories of obligation are specifically designed to survive closing, and a seller who assumes everything ends the moment the funds arrive is often surprised later.

Indemnity claims can still arrive within the survival period

Representations and warranties given in the purchase agreement are usually backed by a survival period, a window after closing during which the buyer can still bring a claim if one of them turns out to have been inaccurate. An escrow or holdback is often set aside specifically to fund claims made during that window, which means part of the sale proceeds can genuinely remain at risk well after the deal is done.

A non-compete or non-solicit starts at closing, it does not end there

Whatever restrictive covenant the seller agreed to as part of the deal typically begins running from closing, restricting the seller from competing with or soliciting away from the business they just sold for a period the agreement itself defines. Enforceability of these clauses varies by province and by how reasonably they are scoped, but the obligation itself is very much alive after closing.

Personal guarantees do not disappear just because the business was sold

A landlord, lender or equipment financier who obtained a personal guarantee from the seller before the sale generally keeps the right to enforce it against that seller until it is formally released or replaced with the buyer’s guarantee. Selling the business does not automatically release a guarantee, and this is one of the more commonly overlooked items heading into closing.

Tax obligations for the ownership period do not transfer to the buyer

A seller remains responsible for filing and paying taxes correctly for the period they actually owned and operated the business, regardless of what happens to the business afterward, and that obligation sits with the seller personally or with the selling corporation, not with the buyer.