How to buy a daycare in Newfoundland and Labrador: licences, ownership rules and what transfers

Buying a daycare in Newfoundland and Labrador starts with one provision of provincial law. Newfoundland and Labrador’s Child Care Act says that licences are not transferrable or assignable. Under the Act, the minister appoints the managers and inspectors who administer it, and the Department of Education says applications go to its regional Early Learning and Child Development Division. So a purchase agreement cannot hand the seller’s licence to you. Whatever you buy, the right to operate has to come from the province, and it comes to you in your own name. This guide covers how the Act frames that, what to ask before you sign, and what to raise about your closing timeline. It covers Newfoundland and Labrador law only.

Who regulates child care in Newfoundland and Labrador

The Child Care Act is provincial legislation. Under it, managers appointed by the minister issue, renew and vary licences, and inspectors appointed by the minister inspect facilities and records. The Department of Education says centres that do not meet the exemption requirements must be licensed before they can operate. It also says interested individuals apply by contacting the regional Early Learning and Child Development Division in the area where the centre would be located. Start there, before you commit to a price or a closing date, and ask what the division needs from you as an applicant.

The licence belongs to the licensee, not to the business

Under the Act, a child care service provider shall not operate a child care service unless it holds a valid child care service licence for that service, is approved by an agency whose agent holds a valid agency licence, or is exempt from the requirement to hold a licence. A licence also names what it covers. Licensees are entitled to operate only the child care service specified in the licence, in the facility specified in the licence, under the terms and conditions attached to it. The Act sets out the street address of the facility as part of what a child care service licence contains. Read together with the rule that licences are not transferrable or assignable, the practical point is that the seller’s licence does not pass to you under the purchase agreement. Ask a lawyer what the seller can transfer, such as equipment, the lease and contracts, and how the deal should treat the licence you still have to obtain.

What the seller cannot promise you

A licence application is made in writing to a manager, in the form the minister prescribes. The Act lets a manager refuse to issue a licence on several grounds, including where the applicant is under the minimum age the Act sets or fails to provide the documentation the Act and regulations require, where one or more of the applicant, the child care service, the agency or the facility do not meet the requirements of the Act and regulations, or where the manager is satisfied that it would not be appropriate to issue the licence. A manager may also refuse where the applicant was previously issued a licence that was later revoked, or made false or misleading statements in the application. An applicant whose application is refused may request a review, in writing to the minister, within 30 days after receiving the written reasons. Because a refusal is possible, ask a lawyer whether your offer should be conditional on your own licence being issued.

Timing: licence terms, renewal and your closing date

The Act says licences are valid for a maximum of 3 years, and a licensee must apply in writing to a manager to renew or vary a licence before it expires. Where a renewal application is made at least 60 days before the licence expires, the existing licence is considered valid until the licensee receives the manager’s decision. That protection belongs to the licensee who applied. It is a reason to ask where the seller’s licence stands in its cycle, and whether a renewal is pending, when you plan the closing. Ask the division, not the seller, how long a new application takes, and ask a lawyer how the answer should affect the conditions and the closing date of your agreement.

Inspections, orders and the centre you are really buying

An inspector appointed under the Act may, at all reasonable times and without a warrant, inspect the facilities, premises, processes, books and records of a child care service provider. The Act says an inspector shall inspect each child care service operated under a licence, and the facility in which it is operated, at least once a year. After an inspection the inspector prepares a written report within 30 days. Where it details non-compliance, a manager may issue a written violation order, which the Act requires to be posted. A manager may suspend or revoke a licence, and a prior revocation is itself a ground on which a manager may refuse a later application. Ask the seller for the inspection reports and any orders, and read them before you rely on the centre’s reputation.

Changes after you are licensed

A licensee that is a child care service provider must obtain written approval from a manager before making a material change to its program or renovating a facility in a way that modifies the configuration of the space. If you intend to change the layout or the program you are buying, raise it with the division at the application stage. A licence may be issued with or without terms and conditions, so also read the existing licence’s conditions on capacity and age range.

These are the documents worth requesting from the seller:

• The current licence, with its terms, conditions, expiry date, and the facility and capacity it names, plus any renewal or variation application filed.
• Inspection reports for the last several years, and any violation orders, suspensions or review requests.
• The lease or title for the facility named in the licence, since the licence is tied to that facility.
• Staff lists with the qualifications and certifications each person holds, so you can raise them with the division.
• Books and records the Act and regulations require the provider to keep, to confirm you can produce them when an inspector asks.

For deal mechanics that are not specific to this province, see buying a daycare business in Canada. You can also browse daycares for sale on Deavo. If the seller has employees, the Canada Revenue Agency says the seller must close the payroll account, and that a seller whose business has a GST/HST account must contact its tax services office to close it. Those are federal obligations, not provincial ones. If you plan to use the Canada Small Business Financing Program, which shares risk with lenders, confirm with the lender how a licence that cannot be transferred affects the loan, before you sign.