(Ontario Real Estate Source)
By Brian Madigan LL.B.
What documents can you expect to be delivered?
The Real Estate and Business Brokers Act, 2002 is quite clear about this. You can find the provisions relating to the purchase of a business in regulation 567/05.
Here it is:
Purchase of business: statements to be delivered
21. (1) The definitions of "buy" and "buyer" in section 2 do not apply to this section.
(2) If the purchase of a business is negotiated by a brokerage on behalf of the person disposing of the business, the brokerage shall provide to the purchaser, before a binding agreement of purchase and sale is entered into, the following statements signed by or on behalf of the person disposing of the business:
1. A profit and loss statement for the business for the preceding 12 months or since the acquisition of the business by the person disposing of it.
2. A statement of the assets and liabilities of the business.
3. A statement containing a list of all fixtures, goods, chattels, other assets and rights relating to or connected with the business that are not included in the trade.
At the outset, the definitions of buy and buyer were said not to apply. Why?
Here is the definition:
2. In this Regulation,
"buy" means acquire or seek to acquire an interest in real estate, and "buyer" has a corresponding meaning;
Essentially, that definition opens up the floodgates and extends the obligation, perhaps too much. So, you don't have to provide full financial information to your competitors just because he asked.
There are three financial statements to be provided:
1) profit and loss,
2) assets, and
3) liabilities.
In addition, there is to be an "excluded" list. If there is something that is not to be part of the transaction, then it is to be mentioned, otherwise, in accordance with the Act, it will be deemed to be included. And, that could be quite costly.
Brian Madigan LL.B., Broker is an author and commentator on real estate matters, if you are interested in residential or commercial properties in Mississauga, Toronto or the GTA, you may contact him through Royal LePage Innovators Realty, Brokerage 905-796-8888
www.OntarioRealEstateSource.com
