Who do I need to notify of a business sale, like my landlord, insurer and lender?

A sale reaches more people than the buyer. Some of them only need to be told, some must consent, and some must approve the buyer before you can close. Which ones depends on what your own contracts say, so ask your lawyer whether selling shares rather than assets changes the list. Pull out the lease, the loan agreements, the insurance policies and your major customer and supplier contracts first. Each may set its own notice and consent terms, so read them before you agree to a closing date.

Landlord and other contract parties

BDC notes that there may be leases or contracts where the vendor needs the consent of third parties to transfer them to a new owner, which is why those consents can appear as closing conditions in the purchase agreement. In Ontario, section 23 of the Commercial Tenancies Act deems a lease covenant against assigning without consent to be subject to a proviso that consent is not to be unreasonably withheld, unless the lease contains an express provision to the contrary. Other provinces run their own regimes. Our landlord consent checklist lists what to gather.

Your lender

Check each loan agreement before you sign the sale agreement, because it may require the lender’s consent, or repayment, if the business is sold. If the buyer is to take over a loan under the Canada Small Business Financing Program, its guidelines say the lender must approve the purchaser as a borrower, and that a lender is not obliged to release the original borrower. Ask in writing what the lender will do about your own obligation.

Your insurer

None of the sources below sets an insurance rule, so the answer is in your policies. Look for conditions about a change of ownership, and ask your broker or insurer when your cover ends and when the buyer’s begins, so the business is never uninsured on closing day.

Tax authorities

The Canada Revenue Agency says that if you are selling your business you may be able to make a joint election with the purchaser so that no GST/HST is payable on the sale, if the conditions for the election are met. It also explains how to close a GST/HST account and says each business account has its own procedures. Where a corporation has been dissolved, the CRA tells owners to consult Form RC145 to see whether they must file it. In British Columbia, the Ministry of Finance says a purchaser should ensure they have a PST clearance certificate before buying a business.