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

Buying a funeral home in Ontario means working inside the Funeral, Burial and Cremation Services Act, 2002, which the Bereavement Authority of Ontario (BAO) publishes licensing information for. The Act says no person shall operate a funeral establishment, or hold themself out as its operator, unless licensed to do so, and it says a licence is not transferable. That one sentence changes how a purchase is built: the seller’s licence does not pass to you with the building, the name or the client files. This guide covers how the licence classes are set, what the Act says about operating and selling, what changes when shares are bought, how prepaid contracts follow the business, and what to request from the seller. It covers Ontario law only.

Who sets the licence classes in Ontario

The Act is administered through a registrar. Section 3(1), as now in force, says the deputy minister to the Minister shall appoint one or more registrars for the purposes of the Act; e-Laws notes an amendment, on a day to be named, that would have the board of an administrative authority appoint registrars for the provisions it administers. The BAO’s licensing page says the Act establishes the classes of licence for funeral and transfer service, and it separates personal licences from business licences. The business classes include Funeral Establishment Operator Class 1 and Class 2. Read the BAO page for the class that matches the establishment you are buying.

Why the seller’s licence does not come with the sale

Section 8(1) of the Act is the operating rule, and section 14(2) separately provides that a licence is not transferable. Section 8(2) also restricts who may sell or offer to sell funeral services to the public. A buyer can ask the BAO how the buyer, or the buyer’s corporation, becomes licensed before the purchase closes, and what the buyer may do in the meantime. Whether that question is answered before closing is something to settle with a lawyer. Licences and permits in an Ontario business sale covers the wider permit picture.

Buying shares: what the Act asks of a corporation

If the licensee is a corporation, the Act has ownership rules. Under section 15(1), a corporation applying for a licence or a renewal shall disclose to the registrar the identity of any persons, or associated persons, who beneficially own or control the share of its issued equity shares that section 15(1) sets. Under section 26(1), a corporate licensee shall notify the registrar in writing within 30 days after an issue or transfer of equity shares that results in a person, or associated persons, acquiring or accumulating beneficial ownership or control at the level section 26(1)(a) sets, or increasing a holding already at that level unless otherwise prescribed; section 26(2) sets the timing where the corporation learns of a transfer only afterwards. Section 26 is a notice duty. Do not read it as an answer to whether a licence carries on after a share sale; ask the BAO and your lawyer.

Prepaid contracts that come with the business

Funeral homes may hold money for services not yet provided. The Act says an operator who receives money for licensed supplies or services in advance shall ensure the money is held in trust if the regulations require it. It also says an operator shall not enter into a contract for licensed supplies or services unless the operator has made the payments to the prescribed compensation scheme that regulation requires. Under section 44(1), a purchaser under a contract for licensed supplies or services, other than interment rights and scattering rights, may cancel it at any time if a right to cancel under section 42 or 43 no longer applies and the operator has not fully performed it. Ask to see how each prepaid contract is funded and whether the trust or scheme payments are current.

Crematoriums and cemeteries are licensed separately

If the business also runs a crematorium or a cemetery, the Act has its own operating rules for each. Section 6(1) says no person shall operate a crematorium unless licensed, and section 4(1) says the same for a cemetery. A funeral home with a crematorium on site may therefore need more than one licence analysed. Ask the seller to list every licence the business holds, by class, and ask the BAO which of them the buyer needs in place.

Advertising and contract rules that carry on

The Act also says no licensee shall make a false, misleading or deceptive statement in any advertisement, circular, pamphlet or material relating to the sale or provision of licensed supplies or services. It says a contract for licensed supplies or services is not enforceable by an operator unless the conditions in section 40 are met. These rules bind whoever holds the licence after closing, so ask the seller for the current price lists, contract forms and advertising the business uses, and have your lawyer check them against the Act before you adopt them.

Building the agreement around the licence

BDC says due diligence gives information on a target’s finances, prospects and legal issues, and that a lawyer can assist with the letter of intent, draft the purchase agreement and conduct legal due diligence. BDC also describes closing conditions as undertakings the vendor agrees to complete in the period before closing. Ask your lawyer whether licensing, ownership disclosure and prepaid contract funding belong there. The wider steps are in how to buy a business in Canada.

What to ask the seller for

• The establishment’s current licence and the BAO class it is held under, plus the licences held by staff who arrange funerals.
• The corporation’s share register and the ownership disclosures filed with the registrar.
• A list of every prepaid contract, with the records showing how each is funded and held in trust.
• Proof of payments to the prescribed compensation scheme.
• Any correspondence with the BAO or the registrar about conditions, complaints or inspections.