What happens to parent deposits and prepaid fees when a daycare is sold?

Parents often pay a deposit to hold a space, fees in advance or a registration amount. When the centre is sold, those amounts were paid by the families, and each family expects the same service it paid for. Both sides should deal with this money openly and in writing, well before closing.

List what was collected

Start with a complete list: every deposit, prepaid fee, registration amount and any other money taken for future service, by family, with the date and purpose. Compare it with the bank account where it is held. Your accountant can help reconcile the list with the books. A buyer will ask for this early, and a clean list avoids disputes.

Adjust it in the purchase agreement

Money held for future service may be dealt with in the price adjustments at closing, since the buyer will provide the service and the seller holds the cash. Your lawyer will decide how it is written. Be specific about which amounts are covered and who holds any deposits. Ask your lawyer whether a general clause is enough.

Honour it after closing

The aim is that families receive what they paid for. If a deposit secures a space, the aim is that the space is still there. If a family prepaid a month, the aim is that it is not asked to pay again. Tell the buyer about any promises made to individual families, such as a reduced fee or a held space. Ask your lawyer whether to put them in the agreement.

Tell parents and check what was allowed

Include the topic in the message to families, plainly: what happens to their deposit, who to ask and when the new owner takes over. Some fees may be restricted in how they can be charged or whether they can be refunded. That is a legal question, so send it to your lawyer and the licensing office rather than assuming.