Conditional sales contract

A business that bought equipment from a supplier on payments may still be paying for it. The supplier’s contract can say the supplier keeps title until the last payment. A buyer of the business can ask whether that arrangement will be assumed or paid out at closing.

PPSA provinces

Subject to the exclusions in section 4, Ontario’s Act applies to every transaction that in substance creates a security interest, without regard to its form, and its list includes a conditional sale. Subject to section 4, British Columbia’s Act likewise names a conditional sale, if it secures payment or performance of an obligation. Under these Acts, the supplier’s retained title is treated as a security interest, which a buyer can search for in the provincial registry.

Quebec

The Civil Code of Québec defines an instalment sale as a sale with a term by which the seller reserves ownership until full payment. Under article 1745, for movable property acquired for the service or operation of an enterprise, the reservation can be set up against third persons only if published; if it is published within seven days, it can be set up against them from the date of the sale. This entry covers Ontario, British Columbia and Quebec only; check the rules in the province where the business is.

• What is still owing, and who holds title today?
• Did the supplier register or publish its interest?
• Does the contract allow transfer to a buyer without consent?

See how to run a PPSA registry search and purchase-money security interest.