How to Do a PPSA Search Before Buying a Business in Alberta

When you buy a business, you usually want the equipment, inventory, vehicles and other business property to come without strings attached. A lender may have registered a claim against that property. If you only find out after closing, you may have paid for assets that someone else has an interest in.

A search of the Alberta Personal Property Registry is one of the simplest checks you can run. This article explains the search types, how the results read, and what to do when a registration turns up.

This article covers the law of Alberta.

What a Personal Property Registry search is for

Lenders and other creditors often register their interest in a debtor's personal property, such as equipment or vehicles. A search lets you see whether anything is registered against the seller or against specific items you plan to buy. It is a way to learn about claims before you pay.

This matters most in an asset purchase, where you are buying particular items. In a share purchase, you are buying the company itself, so how its existing debts and registrations are affected depends on the facts and is worth confirming with a lawyer. Either way, the search is a starting point for questions to put to the seller.

The types of search available in Alberta

Alberta offers several search types, and each is requested on a Search Request form submitted at any registry agent office in the province. The right one depends on what you know about the seller and the assets.

How to read the result

A search returns one of four outcomes: an exact match, an inexact match, no match, or both exact and inexact matches. An exact match means a registration lines up with the name or number you searched. An inexact match is close but not identical, so it may or may not relate to your seller.

For inexact matches, you may need to search the inexact name again or search the specific registration number. If you have questions about a result, they go to the party that registered the interest.

Names matter. Search the seller's exact legal name, and consider any trade names or former names the business has used. A Corporate Registry search can show the registration date, owners, directors and legal addresses of a corporation, partnership or trade name, which gives you something to compare against the names you plan to search.

What to do if a lender has a claim

A registration does not always mean a problem. Many businesses have equipment financing, and it may be paid out at closing. What matters is how the claim is handled in your deal.

• Ask the seller what each registration secures and whether the debt is still owing.
• Contact the party that registered the interest if you have questions about a result.
• Ask for the registration to be dealt with at or before closing, and build that into your purchase agreement.
• Consider holding back part of the price until you have proof the claim is cleared.
• Have a lawyer confirm how priority and discharge work for your specific assets, since this depends on the facts.

What to do next

• Collect the seller's exact legal name, any trade names, and serial numbers for vehicles or similar items.
• Request the matching searches through a registry agent, using the Search Request form.
• Run a Corporate Registry search too, so the names you search match the legal record.
• List every match, exact or inexact, and ask the seller to explain each one.
• Raise any registration with your lawyer before you sign or remove conditions.

Keep a copy of your search results with your deal records. Whether and when to search again before closing depends on your deal, so it is worth confirming with a lawyer.

Frequently asked questions