Buying a Business in Ancaster, Ontario: Legal Guide

Ancaster businesses range from shops and restaurants to professional offices and trades. If you are looking at one, you are buying under Ontario law but dealing with local rules set by the City of Hamilton, where Ancaster is located.

This guide covers the local checks to make and the general purchase process. Local rules change and depend on the property, so use this as a starting list and confirm details with the City and your lawyer.

Start with the general purchase process

The basic sequence is the same anywhere in Ontario. You decide whether to buy assets or shares, sign a confidentiality agreement, investigate the business, negotiate, sign a purchase agreement, close, and then complete follow-up filings. Confidentiality terms commonly reflect privacy law, which lets parties to a prospective deal share personal information without consent if an agreement limits its use to the deal, requires safeguards, and requires return or destruction if the deal fails.

Local deals often involve a small number of professionals: a lawyer for the agreement and closing, an accountant for the financials and tax, and sometimes a broker and a lender.

Zoning: can the business operate there?

Zoning controls what a property can be used for. A business that has operated for years may still have a problem if its use does not match current zoning, or if it relied on a past exception. Ancaster has older planning history, and which zoning by-law applies to a particular parcel should be confirmed with the City of Hamilton, not assumed.

Questions to ask about the property:

• What zoning applies to this exact address?
• Is the current business use permitted, or is it a legal non-conforming use?
• Are there open building or property standards orders?
• Does your plan to expand or change the use need approval?
• Are there parking or signage requirements the business must meet?

Zoning confirmation can often be requested from the City, and fees may apply. Ask the City for current details.

Municipal licences and permits

Whether your type of business needs a municipal licence is worth confirming with the City of Hamilton. Whether a Hamilton licence transfers to a new owner on a sale is not something to assume, and the licensing rules are subject to review. Ask the City how a change of ownership is handled before you rely on the licence in your price. Also check provincial and health-related permits that apply to your type of business.

Make the seller's cooperation on licences a closing condition in the purchase agreement, so you are not left operating without the permits you paid for.

The lease and the landlord

For many Ancaster businesses, the lease is the most valuable asset, because location drives customers. Read it carefully before you commit. Look at the remaining term, renewal options, rent increases, who pays for repairs, and whether the landlord must consent to an assignment.

A lawyer should review the lease and, where needed, negotiate with the landlord before you waive conditions in the purchase agreement.

Ontario and federal items that apply in Ancaster too

Several province-wide and federal items apply no matter where the business sits. The WSIB issues purchase certificates, and if a buyer does not obtain a valid one, the WSIB says it may hold the buyer liable for all amounts the vendor owes up to the sale date. You must request it before the sale date, and it is valid for 30 days from its issue date.

For GST/HST, buyer and seller can jointly elect so that no GST/HST is payable on the sale of a business or part of one. The buyer must acquire all or substantially all, at least 90 per cent, of the property needed to run the business. The form is due on or before the day the buyer's return is due for the first reporting period in which tax would otherwise be payable.

A lien search through Ontario's Access Now service can show claims against the seller's assets. If the seller carries part of the price, the Criminal Code criminal rate of interest is an annual percentage rate above 35 per cent. And if you want the seller not to compete, the Employment Standards Act, 2000 prohibits employment non-competes, with an exception for a sale of a business where the seller becomes the buyer's employee and the non-compete is agreed as part of the sale.

What to do next

• Get the exact address and ask the City of Hamilton about zoning and permitted use
• Ask the City whether the licence transfers on a change of ownership
• Obtain the lease and have it reviewed before you sign
• Plan for the WSIB certificate, lien search and GST/HST election
• Gather the seller's financial records for your accountant
• Speak with a lawyer before signing any offer or letter of intent

Frequently asked questions