Can I buy a business in Ontario with seller financing, and how is it secured?

Yes, a seller can agree to be paid part of the price over time, often called a vendor take-back loan. How it works is set by the written deal, and the seller will usually want security for the unpaid balance.

Ontario's Personal Property Security Registration (PPSR) is a public database of registrations under the Personal Property Security Act, and it does not cover real property. An unperfected security interest in goods is not effective against a transferee who gives value and receives delivery without knowledge of it. That is why you should search before you buy, and why a purchase of a business's assets outside the ordinary course of business calls for a PPSR search and lien discharges.

As a buyer of a business's assets outside the ordinary course, you do not get the protection given to buyers of goods in the ordinary course, so a PPSR search and lien discharges matter. Ask for a WSIB purchase certificate before the sale date, because without a valid one the WSIB may hold you liable for amounts the seller owed. Both sides should have the terms, security and payment schedule written down and reviewed by a lawyer.