Patient records, staff, leases and non-competes: the legal side of selling

Price gets the attention, but it's often the legal and regulatory details that decide whether a deal closes on time. Here's what to have on your radar. The specifics vary by province and profession, so always confirm with your college and a lawyer.

Patient records and your regulatory college

• Physicians in Ontario: CPSO policy requires notifying patients when custody of records is transferred, and records generally must be kept for 10 years after the last entry (or 10 years after a minor patient turns 18).
• Dentists in Ontario: RCDSO guidance requires written notice to patients of a change in ownership. Under health-privacy law, the selling dentist is responsible for transferring records properly to the new custodian.
• Buyers who need to review records during due diligence should sign confidentiality agreements first.
• A sale agreement can't restrict patients' freedom to choose their provider or access their records.

Staff

In many provinces, if a buyer continues to employ your staff, their length of service carries over. In Ontario, for example, the Employment Standards Act treats employment as continuous on the sale of a business. That affects notice and severance obligations, so decide early who is responsible for what and reflect it in the purchase agreement.

Your lease

Most leases require landlord consent to assign. Landlords may ask for financial information about the buyer, a personal guarantee or a lease amendment. Leases with fewer than five years remaining (including renewal options) can reduce value and make it harder for buyers to get financing. Start the conversation early.

Non-competes

Ontario banned most non-compete clauses in employment in 2021, but there's an exception for the sale of a business. Courts generally give more latitude to restrictive covenants agreed to by a seller. In a 2024 decision, the Ontario Court of Appeal upheld a five-year, 15-kilometre non-compete given in the sale of a dental practice. Make sure any covenant you agree to is one you can live with.

Your pre-sale legal checklist

1. Confirm your college's rules on records custody, patient notification and practice transfers.
2. Gather employment agreements for every staff member and associate.
3. Review your lease for term, renewal options and assignment clauses.
4. List equipment leases, supplier, software and banner agreements that need consent to assign.
5. Engage a lawyer experienced in healthcare practice transactions before you sign a letter of intent.