Plumbing contractor due diligence

Once a letter of intent is signed, you have a limited window to confirm what you were told. This guide groups the plumbing-specific findings into work already done, people who hold credentials, and money the company may owe. This guide lists the documents to request, the searches to run and what each finding means. It is written for a buyer, and it assumes your lawyer and accountant are involved. For the general framework, see trades business due diligence.

Permits and inspections

Ask for the permit and inspection record for recent installations and for the list of any open permits or outstanding deficiencies. Ask the seller which authority issued each permit and request a copy of each file. Ask your lawyer whether unclosed permits or work done without a permit could pass to you and whether the agreement should address them. Ask your lawyer how a single missing permit, or a pattern across many jobs, should affect the price or whether to continue.

Certifications and credentials

Ask for a list of every technician, their trade certification and its expiry, and the separate certification for backflow or cross-connection testing if the company sells that service. Skilled Trades Ontario’s page treats certification as a matter for journeypersons and says its Public Register is updated to reflect a new expiry date on renewal, so check each person’s credential with the provincial body rather than relying on a photocopy. Match certifications to testing contracts: if a contract requires a certified tester and the only one is leaving, the contract’s value is in doubt from the day you close.

Workers’ compensation standing

Ask the provincial board for the account status. In Ontario, WSIB says that without a valid purchase certificate it may hold the purchaser liable for all amounts owed by the vendor up to the date of sale, that the request must be made before the date of sale, and that the certificate is valid for 30 days. WSIB also says that for a share sale no purchase certificate is required, because a new legal entity is not created. In Newfoundland and Labrador, WorkplaceNL’s clearance is for hiring contractors: it confirms whether a contractor has its own coverage and is in good standing, and if the contractor has its own coverage the letter clears the hiring employer of responsibility for the contractor’s unpaid assessments. If the company works as a contractor there, ask for a current clearance letter. An unpaid balance or no account at all is a finding to take to your lawyer.

Liens, vehicles and equipment

Trucks, jetting units and locating cameras may be financed, so run a personal property registry search on the company and on each asset’s serial number or vehicle identification number. Ontario’s Personal Property Security Act has provisions on perfection and priorities of security interests. Its section 30(1) sets priority rules that apply if no other provision of the Act is applicable, and between security interests perfected by registration it ranks them by order of registration regardless of the order of perfection. Ask which statute and registry apply in the province where the assets sit. The answer on how to check for liens on business assets explains the process. If a lien shows up, ask how it will be paid out at closing and get a payout letter.

Locate records and excavation work

If the company digs for service lines or sewers, ask about utility locates. Ontario One Call, now operating as Ontario Dig Authority, says requesting a locate is free and required by law, that contacting it before you dig helps protect a project from damage, injuries and potential administrative penalties, and that a new request is needed if the scope or location of the work changes. Ask for the locate packages on recent excavation jobs and for any record of a utility strike or claim. Ask which locate service applies in other provinces.

• Permit and inspection records, including all open permits and deficiencies.
• Technician list with certifications, expiry dates and the testing certification holder.
• Workers’ compensation account status and the clearance the province issues.
• Registry search results for the company and for each truck and major machine.
• Locate packages for recent excavation work and any strike or claim history.

Contracts and callbacks

Read the commercial service and testing contracts for assignment clauses, because some may need the customer’s consent to move to you. Ask for the log of warranty callbacks and the insurance claims history. Compare callbacks to revenue by technician; ask about any cluster around one person. Ask for the last several years of insurer correspondence. Your lawyer should decide which findings go into the agreement as representations and which as price adjustments.