Child care licence on a change of ownership — British Columbia

Buying a licensed child care centre means dealing with a licensing regime as well as the purchase itself. In British Columbia, the licensing rules sit in the Child Care Licensing Regulation, B.C. Reg. 332/2007, made under the Community Care and Assisted Living Act. That regulation sets out who may apply for a licence, what the application must contain and what a licensee must tell the medical health officer. It does not say in terms what happens to an existing licence when the centre is sold, so a buyer should treat the licensing step as something to confirm in writing before the deal closes, not after.

A person without a licence cannot use the regulated names

Section 4 of the regulation says a person who does not hold a licence must not use listed phrases, among them “Group Child Care”, “Preschool” and “Family Child Care”, in the title or advertising of a program for children. It also bars implying, directly or indirectly, in any part of the title or advertising, that the program’s primary purpose is to provide care regulated under the Act. For a buyer, that means those phrases cannot appear in the title or advertising of a program the buyer runs without a licence. Ask the medical health officer, before closing, whether the buyer applies fresh or the existing licence can be dealt with, and get the answer in writing.

Who may apply, and what the buyer must be

Under section 9, a person who meets the minimum age set in section 9(1) and is not disqualified under section 9.1 may apply by submitting both an application and records respecting all of the matters in Schedule B to a medical health officer. Section 9.1(1) says a person is not qualified to be a licensee if the person is a limited liability partnership within the meaning of the Partnership Act, subject to section 9.1(2), under which a licence an LLP already held when that section came into force stays valid until it expires or is surrendered or cancelled, and may be renewed. If the buyer plans to hold the licence through a new entity, check the entity type against that rule first. Section 9(2) also says that, for a facility below the size it sets, the medical health officer must not issue a licence unless satisfied that, in the event of a fire or other emergency, each person in care can either exit unaided or be removed safely by employees.

The premises must be secured in the buyer’s name

Section 9.1(3) says a person is not qualified to apply for a licence respecting particular premises unless the person owns the premises, leases them and is not prohibited under the lease from operating a community care facility there, or is authorized in writing by the owner to operate a community care facility on the premises. That makes the lease or the owner’s written authorization a licensing document, not only a real estate one, so ask the medical health officer how it applies to your deal structure. Read the lease for its use clause and its assignment terms, and see commercial leases in a BC business sale for the landlord side.

What the application package asks the buyer to produce

Schedule B lists what an applicant must submit with the application, with shorter lists in its sections 1.1 and 1.2 for School Age Care on School Grounds and Recreational Care. Several items are about the applicant and the proposed manager, so ask the medical health officer which of the seller’s existing records, if any, can be reused, and plan to produce the rest:

• Three references and a criminal record check for the applicant, if not a corporation, and for the proposed manager, if not the applicant.
• An employee plan covering the proposed manager’s duties, qualifications and experience, the number and qualifications of employees, and the supervision and staffing plan.
• A site plan drawn to scale and a floor plan, each with the details Schedule B sets out, including the location of exits and toilets and, on the site plan, the outdoor play area.
• A detailed description of the care program, and a statement of projected monthly revenues and expenditures.
• If the applicant is a society, a copy of its constitution and bylaws, on request of a medical health officer.

Duties that run through the transition

Section 10(1) requires applicants for licences and licensees to notify a medical health officer immediately of any change in the information provided under section 9. If a pending sale would change information given under section 9, such as the manager or the premises, raise it with the medical health officer at once. Section 10(2) adds that a licensee must not make a structural change to a community care facility without first submitting plans to a medical health officer and receiving written approval, subject to the exception in section 10(3) for School Age Care on School Grounds and Recreational Care (a Recreational Care licensee must still notify a medical health officer as soon as is practicable of a structural change planned to an area where the program is provided), so a buyer’s renovation plans should wait for that approval. Section 11(1) requires the licensee to display the licence, with its terms and conditions, and the manager’s name in a prominent place in the facility, subject to the exception in section 11(2) for Family Child Care and In-Home Multi-Age Child Care.

Employees, tax and liens still apply

Licensing is one track among several. BC’s Employment Standards Branch notes that under section 97 of the Employment Standards Act, if all or part of a business is disposed of, an employee’s employment is deemed, for the purposes of the Act, continuous and uninterrupted by the disposition, and its interpretive guide says that where employment is continuous the purchaser assumes all of the seller’s liabilities and obligations under the Act toward those employees; the guide treats a trustee’s sale of a bankrupt business differently. The Ministry of Finance says a purchaser should ensure they have a PST clearance certificate before buying a business, and that without one the purchaser is liable for an amount equal to any outstanding amount owed by the collector. BC Registry Services notes that personal property should be checked for registered liens before it is bought privately or taken as loan security, so search the equipment and fixtures too.