1.Agent to ensure sufficient time period is provided for Buyer’s lawyer to complete search of title as well as off-title searches in order to enable satisfactory requisitions on title be submitted to the Seller’s lawyer.
2.If incoming producing property (office building, industrial building, regional shopping centre, neighbourhood shopping centre, strip plaza, apartment building) is being sold, Agent to ensure there are conditions inserted into the APS providing sufficient time for Buyer to satisfy condition(s). Without being exhaustive some examples of conditions found in these types of APS are as follows:
i)conditional upon Buyer receiving financing;
ii)conditional upon Buyer and its lawyer being satisfied with the Leases being assumed:
iii)conditional upon Seller providing to Buyer on or before closing executed Tenant Acknowledgments re all Leases;
iv)conditional upon Buyer being provided with every opportunity of entry to the real estate and investigating the physical and the environmental condition of the real estate being purchased and being satisfied with same;
v)conditional upon Buyer satisfying itself that real estate is zoned for the existing business being operated in the event Buyer is continuing on with said business and in the event Buyer is changing existing business, Buyer being satisfied real estate is zoned for the intended use by Buyer.
3.Agent to ensure that all outstanding work orders, if any, are to be rectified by the Seller at the Seller’s sole expense on or before closing.
4.Is the sale of the real estate a cash deal or is there a vendor take back mortgage? Agent to ensure Seller is in agreement with the terms of the vendor take back mortgage, ie. amount, term, interest, is vendor take back mortgage to be open or closed?
5.Agent to ensure that APS contains a provision whereby Seller provides to Buyer within an extremely short period after execution of APS with a current survey for the real estate being sold.
6.Agent to ensure APS contains a provision that GST is not included in the purchase price and that Buyer shall be registered under The Excise Tax Act and provide to Seller on or before closing with a copy of the Buyer’s Excise Tax Act registration failing which goods and services taxes will be due and payable by the Buyer upon closing to the Seller.
7.Agent to consider whether clause is to be inserted into APS whereby Buyer shall have the right at any time prior to closing to assign the APS to any person, persons or corporation either existing or to be incorporated and upon delivery to the Seller of notice of such assignment together with the Assignee’s covenant in favor of the Seller to be bound thereby as Buyer, the Buyer who originally executed the APS shall be released from all further liability.
8.If dealing with developer purchasing development land and no matter how sophisticated developer is or appears to be, Agent should canvas with developer as to whether developer has turned its mind to whether land is within/not within the greenbelt area, within the urban boundary/not within the urban boundary, is land ready to go, ie. zoned, serviced and ready to be built upon, if presently zoned agricultural, how long will it take to have property rezoned for what it intends to do, ie. single family residential, semi-detached residential, townhouses, condominium, industrial, office, retail etc.
1.Who is Seller? Insert actual legal name of Seller as opposed to only a trade name. Actual legal name can be determined by reviewing the articles of incorporation of the Seller. If Seller is not incorporated, then name to be inserted is either the individual(s) or the individual(s) carrying on business as for example, Harry’s Coin Laundry.
2.Who is Buyer? Confirm with Buyer whether Buyer is either buying in their own personal name, whether they will be executing the APS in their own name, in trust for a company to be incorporated or whether there is an existing incorporated company executing the APS and if so, insert actual legal name of Buyer by reviewing the articles of incorporation of the Buyer.
3.Deposit. Seller generally looks for a higher deposit. Buyer generally looks for a lower deposit. To be worked out between Agent, Seller and Buyer.
4.Asset or Share Purchase? To be determined between Seller and Buyer and their respective chartered accountants. If share purchase, income tax issues Sellers and Buyers must confirm with their chartered accountant are as follows:
i)change of control issues as that term is defined by the Income Tax Act of Canada;
ii)deemed year end;
iii)restrictions on net capital loss carry-overs;
iv)restrictions on deductibility of losses;
v)restrictions on deductibility of undepreciated capital cost;
vi)restrictions on deductibility of cumulative eligible capital;
vii)restrictions on deductibility of debts owing to a corporation;
viii)depreciable property;
ix)carry-forward of charitable donations;
x)$750,000.00 lifetime capital gains exemption;
xi)small business corporation as that term is defined by the Income Tax Act of Canada;
xii)qualified small business corporation shares;
xiii)holding company issues;
xiv)specified investment business as that term is defined by the Income Tax Act of Canada issues
xvi)limits upon the capital gains exemption
xvii)capital gains reserves
xviii)capital gain rollover for investment in small business
5.Purchase Price. To be worked out between Agent, Seller and Buyer. Is the sale of the business a cash deal or is there a vendor take back mortgage? If so, what is the collateral for same? ie. either the assets being sold, the Buyer’s personal guarantee and/or a charge over the Buyer’s principal residence. Agent to ensure Seller is in agreement with the terms of the vendor take back mortgage, ie. amount, term, interest and is vendor take back mortgage to be open or closed?
6.Closing Date. Agent, Seller and Buyer should ensure that sufficient time has been provided to complete all things to be done prior to closing.
7.Condition(s) to APS. Time for conditions to be fulfilled, waived/not waived should be settled between Agent, Seller and Buyer. Ensure sufficient time is provided for Buyer to satisfy condition(s). Without being exhaustive, some examples of conditions found in an APS and subject to the particularl industry, profession in question are as follows:
i)conditional upon Buyer receiving financing;
ii)conditional upon Buyer being satisfied as to feasibility of business;
iii)conditional upon Buyer’s chartered accountant being satisfied with financial statements. If there are no financial statements, conditional upon Buyer being satisfied as to the amount of sales by attending upon the business for a period of time to be agreed upon between Agent, Seller and Buyer;
iv)conditional upon Buyer receiving Franchisor’s/Licensor’s consent to assign existing
Franchise/License Agreement to Buyer;
v)conditional upon Buyer receiving Landlord’s consent to assignment of lease to Buyer;
vi)conditional upon Buyer receiving regulatory approval for the business being purchased, ie. if real estate brokerage business, doctor’s practice, dentist’s practice, engineer’s practice, architect’s practice, law practice, accounting practice, surveyor’s practice is being sold, regulatory approval of same is required by the respective governing body in question:
vii)conditional upon Buyer receiving either an assignment to existing liquor licence or Buyer being approved for new liquor licence;
8.Agent to ensure that equipment listing is in fact correct and completed. If some assets are to be excluded, ensure same are referred to in the APS as being excluded.
9.Ensure APS includes provision that Seller is to provide Buyer on or before closing with a Bulk Sales Act affidavit setting out all secured creditors, unsecured creditors and preferred creditors and a Bulk Sales Act tax clearance certificate.
10.Agent, Seller and Buyer should turn their minds to the following:
i)does sale price include/exclude inventory?
ii)are any accounts receivable being sold?
iii)how is cash in bank being treated?
11.Agent should ensure there is a clause in APS whereby Seller consents and authorizes Buyer to contact the appropriate taxing authorities re outstanding taxes, if any, ie. retail sales taxes, goods and services taxes, corporate taxes.
12.If real estate is a component of the sale and is actually being sold as opposed to an existing lease being assigned, Agent to ensure sufficient period of time is provided for Buyer’s lawyer to complete search of title as well as off-title searches in order to enable satisfactory requisitions on title are made.
13.If income producing property (strip plaza, neighbourhood shopping centre, regional shopping centre, industrial building, office building, apartment building) is being sold, Agent to ensure there are conditions inserted into the APS providing sufficient time for Buyer to satisfy condition(s). Without being exhaustive some examples of conditions found in these types of APS are as follows:
i)conditional upon Buyer receiving financing;
ii)conditional upon Buyer and its solicitor being satisfied with the Leases being assumed;
iii)conditional upon Seller providing to Buyer on or before closing executed Tenant Acknowledgments re all Leases;
iv)conditional upon Buyer being provided with every opportunity of entry to the real estate and investigating the physical and the environmental condition of the real estate being purchased and being satisfied with same;
v)conditional upon Buyer satisfying itself that real estate is zoned for the existing business being operated in the event Buyer is continuing on with said business and in the event Buyer is changing existing business, Buyer being satisfied real estate is zoned for intended use by Buyer;
14.Agent to ensure that all outstanding work orders, if any, are to be rectified by the Seller at the Seller’s sole expense on or before closing.
15.Is the sale of the real estate a cash deal or is there a vendor take back mortgage? Agent to ensure Seller is in agreement with the terms of the vendor take back mortgage, ie. amount, term, interest, is vendor take back mortgage to be open or closed?
16.Agent to ensure that APS contains a provision whereby Seller provides to Buyer within an extremely short period after execution of APS with a current survey for the real estate being sold.
17.Agent to ensure that APS contains a provision that GST is included in the purchase price and that Buyer shall be registered under The Excise Tax Act and provide to Seller on or before closing with a copy of the Buyer’s Excise Tax Act registration failing which goods and services taxes will be due and payable by the Buyer upon closing to the Seller.
18.Agent to consider whether clause is to be inserted into APS whereby Buyer shall have the right at any time prior to closing to assign the APS to any person, persons or corporation either existing or to be incorporated and upon delivery to the Seller of notice of such assignment together with the Assignee’s covenant in favor of the Seller to be bound thereby as Buyer, the Buyer who originally executed the APS shall be released from all further liability.
