Who honours past repair warranties when a transmission shop is sold?
The sale agreement and any warranty network the shop belongs to decide it, so settle it in writing before closing. Count the open warranties, review the claim history and decide who pays for work done before closing. Your lawyer can tell you what the law says about claims against the old business.
Transmission rebuilds are expensive for customers, so shops often stand behind them with long warranties. Some also sell coverage through a nationwide warranty network, so a customer far from home can have a repair covered at another shop. When the shop changes hands, buyer and seller need to agree who answers for work that was done before closing.
Count what is still open
Ask the seller for a list of warranties still running, with the date of the job, the work done and the coverage promised. A buyer can then see how much past work is still exposed. Ask how the shop tracks it. If the answer is a drawer of paper invoices, plan extra time to sort them.
Look at the comeback history
Ask how often rebuilds came back, why and what it cost the shop to fix them. A shop that logs the cause of each return tells you far more than one that only remembers the bad ones. See also the broader page on warranty liability after a trades sale.
Networks and how claims are split
If the shop belongs to a warranty network, ask what membership involves, whether it passes to a buyer and whether the network must approve the change. Then decide with the seller how claims will be handled after closing. Some agreements have the seller cover older jobs and the buyer cover new ones. Your lawyer should write whatever you choose.
- A list of open warranties and the work each one covers.
- The record of claims paid and what each cost.
- Network membership terms and any transfer steps.
- A written split of responsibility for jobs done before closing.
Related reading
13 pages on the same subject, grouped by topic.
Legal
Selling
- GuideSelling a transmission and drivetrain specialist in Canada
- Expert answerWhat customer and vehicle records come with an auto repair shop sale?
- Expert answerDo insurer direct repair programs transfer when a body shop is sold?
- Expert answerCan my print shop’s bindery work be sold as a separate piece?
Buying
- Expert answerCan I buy a transmission shop if I’m not a transmission rebuilder?
- Expert answerWill the technicians stay after I buy an auto repair shop?
- Expert answerHow do I check hoists and shop equipment before buying an auto repair shop?
- Expert answerWhat should I track in my first year running an auto repair shop?
- Expert answerHow do I check the quality of a solar installer’s past roof installations?
Sources
This answer is checked against primary sources. Links were last confirmed on the dates shown.
- 01Business Development Bank of CanadaGovernmentHow to conduct due diligence when buying a business
- 02Business Development Bank of CanadaGovernmentMajor pitfalls to avoid when negotiating a purchase agreement
- 03Business Development Bank of CanadaGovernmentBuying a business? How to protect yourself from potential liabilities
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