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

Buying a funeral home in Newfoundland and Labrador means checking two separate licensing tracks. The Embalmers and Funeral Directors Board licenses funeral homes, funeral directors and embalmers under the Embalmers and Funeral Directors Act, 2008. Under the Prepaid Funeral Services Act, the Registrar of Prepaid Funerals issues licences to sellers of prepaid funeral contracts, and Government Services says it is responsible for licensing the pre-paid funeral home industry in the province. This guide covers Newfoundland and Labrador’s rules only. It builds on how to buy a business in Canada.

The funeral home itself is licensed

Newfoundland and Labrador’s Embalmers and Funeral Directors Act, 2008 says a person shall not operate a funeral home unless the home is licensed under that Act. The same Act requires individual licences too. A person shall not practise as a funeral director, or as an embalmer, in the province without the matching licence. The Act also says a person who fails to keep a licence displayed in a prominent position at all times where business is carried on is guilty of an offence, so ask to see the licences on the wall as well as in the file. Before closing, ask the Board how the home’s licence is treated when ownership changes, and get the answer in writing.

Crematoria and licensed funeral directors

The Act says a crematorium where human remains are disposed of shall not be operated except by a person who holds a licence to practise as a funeral director. If the funeral home you are looking at has a crematorium, or relies on one, the question is who will hold that licence after closing. A buyer who is not a licensed funeral director needs to know which licensed funeral director will run it, and whether that person will stay.

Insurance, inspection and appeal

As a condition of receiving a licence to practise as a funeral director or embalmer, a person must provide proof of professional liability insurance in a form and amount satisfactory to the Board. The Board’s representatives may enter the premises of an embalmer or a funeral director without notice, at all reasonable times, to make necessary inspections. A person aggrieved by the Board’s refusal to license a funeral home may, within 30 days after receiving notice of the refusal, appeal to a judge of the Trial Division by filing a notice of appeal with the court and serving a copy on the Board’s chairperson. That 30-day period comes from the Act itself. Ask the seller for any past inspection reports and Board correspondence.

Prepaid funeral contracts

Under the Prepaid Funeral Services Act, a person shall not act as a seller, or sell, offer to sell or arrange the sale of a prepaid funeral contract or service, unless that person holds a licence issued under section 3 and acts in accordance with the Act. The Act exempts a person acting as an agent or salesperson of a licensed seller. According to the provincial government, Government Services is responsible for licensing the pre-paid funeral home industry in the province, and it oversees the Consumer Protection Fund for prepaid funeral contracts. A buyer who wants to keep selling prepaid contracts should ask Government Services what a new seller must do.

Assigning prepaid contracts to the buyer

The Prepaid Funeral Services Act also says a seller shall not assign a prepaid funeral contract to another person unless the seller has first obtained the written consent of the contract’s buyer. Where that buyer is not available, the consent of the beneficiary or the beneficiary’s legal representative is required. For a purchase, this matters: an asset sale that assigns a book of prepaid contracts to a new owner needs that consent for each contract it assigns. Ask the seller how many contracts are outstanding, how consent will be gathered, and how the transfer fits the Act and the regulations.

Corporate structure on the sale

Whether the deal is a share purchase or an asset purchase affects what changes hands. Under section 303 of the Newfoundland and Labrador Corporations Act, a sale, lease or exchange of all or substantially all the property of a corporation, other than in the ordinary course of its business, requires the approval of the shareholders in accordance with that section. Neither funeral Act cited here was found to say how a licence is treated when a funeral home or a licensed seller changes owners, so confirm with the Board and with the Registrar of Prepaid Funerals what each of them requires when the owner changes, whatever the structure.

What to ask the seller for

• The funeral home licence issued under the Embalmers and Funeral Directors Act, 2008, plus the licences of each funeral director and embalmer on staff.
• The licence held by whoever operates any crematorium, and proof of professional liability insurance for the licensed individuals.
• The seller’s licence under the Prepaid Funeral Services Act, a list of every outstanding prepaid funeral contract, and the records of any consents to assignment.
• Inspection reports, Board correspondence, and any record of a refused licence or an appeal.
• Corporate records, title documents for the premises, and the results of a security-interest search against the seller.