Buying a Business in Ancaster, Ontario: Local Rules and Legal Steps

If you are looking at a shop, restaurant or professional practice in Ancaster, you are buying inside the City of Hamilton. That matters because licences, zoning and permits may all affect whether you can run the business as you plan, so it is worth confirming how they apply to your situation.

This article explains which local checks to put on your list and how they fit into the usual Ontario purchase process. The details of Hamilton licensing and zoning depend on the type of business and the property, so treat the local items as questions to confirm with the City.

Start with the type of business and the property

A clothing shop, a restaurant and a regulated professional practice face different approvals. Some businesses need a municipal licence, some need health or fire inspections, and some are regulated by a professional body. Which ones apply to you depends on what the business does.

Just as important is the property. Many Ancaster businesses operate from leased space, and the right to operate there depends on the lease and on what the land is zoned for. A business can be perfectly legal today and still raise problems for a buyer who wants to change the use, expand or add a patio.

Hamilton licensing and zoning checks

Before you sign, ask the seller and the City the practical questions below. A licence held by the seller may not simply pass to you on closing, so do not assume it does.

• Does this type of business need a City of Hamilton licence, and is the seller's licence current?
• Can the licence be transferred to you, or do you have to apply in your own name?
• Does the zoning of the property permit the business and your planned use?
• Are there open building, fire or property standards orders against the premises?
• Were signs, a patio, renovations or an addition done with the right permits?
• Are any health, liquor or professional approvals needed for the business to operate on closing day?

Make the answers part of the deal. A condition that the licence, zoning confirmation or approvals are in place before closing gives you a way to step back if they are not. Whether a given City licence or zoning classification applies to your business is worth confirming with the City of Hamilton and with a lawyer.

The lease: landlord consent in Ancaster plazas and storefronts

If the seller rents the premises, you will usually need to take over the lease or sign a new one. Look for a clause against assigning, subletting or parting with possession without the landlord's consent. Where such a clause exists, the lease is deemed to say consent is not to be unreasonably withheld. That protection does not apply if the lease expressly provides otherwise.

If the landlord refuses or neglects to consent, the tenant, assignee or subtenant can apply to a judge of the Superior Court of Justice, who decides whether consent was unreasonably withheld and can order the assignment permitted. Whether a refusal is unreasonable depends on the facts, so get advice early rather than after you have paid a deposit.

The usual Ontario purchase process

Whatever the neighbourhood, a purchase tends to follow the same path: a letter of intent, due diligence, a purchase agreement, then closing. The key decisions are the same too.

• Asset or share purchase: in a share purchase, the corporation's WSIB account, including any amounts owing, stays with the corporation.
• WSIB: in an asset purchase, request a purchase certificate before the date of sale; it is valid for 30 days from issue, and without it the WSIB may hold you liable for the seller's amounts up to the date of sale.
• Liens: a PPSR search covers personal property and does not cover real property. Buying business assets outside the ordinary course does not give you the protection available to ordinary customers, so discharges matter.
• Employees: if you employ the seller's employees after the purchase, their employment is deemed not terminated and time worked for the seller counts as time worked for you for Employment Standards Act purposes. This does not apply if you hire the employee more than 13 weeks after the earlier of their last day with the seller and the day of the sale.
• GST/HST: a buyer who acquires all or substantially all of the property needed to carry on the business can jointly elect with the seller on Form GST44 for no GST/HST to be payable. Services the seller supplies and property supplied by lease or licence are still taxable, and the election cannot be used if the seller is a registrant and the buyer is not.

Older pages may still tell you to follow bulk sales procedures. Ontario's Bulk Sales Act was repealed on March 22, 2017. One related rule remains: Retail Sales Tax Act s. 6 still applies to a bulk sale by a seller who holds, or must hold, a vendor permit, as a restaurant or shop seller may. The seller must first get a certificate from the Minister, and a buyer who does not get the duplicate certificate is responsible to the Minister for the seller's unpaid taxes, penalties and interest.

What to do next

• List every licence, permit and approval the business uses today and ask for copies.
• Confirm zoning and licensing questions with the City of Hamilton before you waive conditions.
• Get the lease, any landlord consent and any renewal options reviewed.
• Order the PPSR search and WSIB purchase certificate early, since timing matters.
• Ask your accountant about GST/HST, price allocation and the asset or share structure.
• Have a lawyer review the purchase agreement before you pay a deposit.

Frequently asked questions