How to Check for Lawsuits and Judgments Against a Business in Alberta

If you are thinking of buying a business in Alberta, one worry is a lawsuit or unpaid judgment that you did not hear about. A claim against the business, or against its owners, can affect the price you should pay or whether you should buy at all.

No single search shows everything. This article explains what the Alberta registry searches can tell you, how to use them to decide which names to search elsewhere, and what to do with what you find.

This article covers the law of Alberta.

Start with who you are dealing with

Before searching for claims, confirm the exact legal name of the business and who stands behind it. Many businesses trade under a name that is different from the corporation that owns them.

Corporate Registry searches are requested through a registry agent. The options include a certified current search, a certified historical search, a certificate of status, a historical certificate of status, and certified copies of information, transactions and attachments. Current and historical searches can show the registration date, owners, directors and legal addresses, and cover current or formerly registered Alberta and extra-provincial corporations, partnerships, trade names and incorporated non-profits.

The names you find here are the names to search elsewhere: the corporation, any former names, trade names and the owners and directors.

Registry searches that point to claims

A certificate of status confirms status as of a given date only, and a historical certificate confirms status as of a past date. Certificates of status are not available for trade names and partnerships. The registry agent charges a government fee plus a service fee.

The Personal Property Registry is a separate search. The search types are individual debtor name, business debtor name, serial number, registration number, distribution seizure, and certificate of expired or discharged registration (form REG3329). Each is requested on a Search Request form submitted at any registry agent office in Alberta. Serial number searches cover vehicles, trailers, aircraft, boats and similar items.

A result will be an exact match, an inexact match, no match, or both exact and inexact matches. For inexact matches, you may need to search the inexact name again or search the specific registration number, and questions about a result go to the party that registered the interest.

These registries show registered interests and corporate details. They are not a complete list of lawsuits, so they are one step among several.

Court and judgment searches

Lawsuits and judgments are found through court record and judgment searches, which are separate from the registry searches above. Which searches make sense depends on the names involved, the courts where claims might have been filed, and whether the business is a corporation or a sole proprietorship. A lawyer can run or arrange these searches and tell you what each one does and does not show.

Search the business, its former names and trade names, and where relevant the individual owners. If the seller is a person rather than a corporation, the personal searches matter more, because the seller's own debts may be tied to the assets you are buying.

What to do with what turns up

• Ask the seller to explain each claim, registration or judgment in writing.
• Request the court documents or the registration details, and check the amounts and dates.
• Find out who registered an interest, because questions about a result go to that party.
• Ask whether the matter is settled, paid or discharged, and ask for proof, such as a certificate of expired or discharged registration where that is the issue.
• Consider adjusting the price, holding back part of it, or requiring the seller to clear the claim before closing.
• Ask for a written promise in the agreement that there are no other claims.

Whether a claim stays with the seller or follows the business depends on how the deal is structured, for example whether you buy shares or assets. That is a question to put to a lawyer before you commit.

What to do next

• Collect the legal name, trade names, owners and directors from the seller.
• Run a Corporate Registry search through a registry agent.
• Run Personal Property Registry searches by business debtor name and, for key assets, by serial number.
• Have court and judgment searches done on all relevant names.
• Do the searches again close to closing, because new claims can appear.
• Talk to a lawyer about any hit before you sign or release money.

Frequently asked questions