🔧 How Do We Handle a Shop’s Warranty When Ownership Changes?

One of the most common questions buyers and sellers ask is, “What happens to our warranties after the sale?”

When a new owner takes over an auto repair business, the existing warranties on parts and labor need to be addressed clearly — in writing — before closing. That way, both sides know exactly who’s responsible if a customer comes back with an issue.

At RPM Shop Sales, we typically see three ways shops handle warranties in a transition:

1️⃣ Seller Keeps Responsibility

The outgoing owner covers any warranty claims for work completed before the sale — usually for a short period (30–90 days). This can make sense when warranty volume is small or easy to manage.

2️⃣ Buyer Honors Existing Warranties

Sometimes the new owner agrees to honor all outstanding warranties to preserve goodwill. In these cases, the expected cost is often factored into the purchase price or deal structure.

3️⃣ Split Coverage

The most common approach — the seller covers past work, the buyer covers future work starting from the hand-off date. It’s clean, fair, and easy to explain to customers.

⚙️ What About Parts and Major Repairs?

In most cases, parts warranties from suppliers remain valid regardless of ownership — so if a part fails, the buyer handles the labor, and the supplier or manufacturer handles the replacement cost.

However, when it comes to major repairs like engines or transmissions, it’s critical to spell out who’s responsible before closing.

If your shop recently installed a remanufactured engine in a 2008 BMW, for example, that warranty likely still exists. But whether it’s the seller or the buyer who honors that claim needs to be clearly defined in the purchase agreement.

This protects both sides — the seller from unexpected call-backs, and the buyer from inheriting someone else’s liability.

🧾 The Smart Move

Always include a warranty clause in the asset purchase agreement and attach a list of any open or pending jobs with warranty exposure. Transparency builds trust and keeps deals from falling apart after closing.

Handled the right way, warranty questions don’t create problems — they show professionalism and protect the reputation of the business for both owners.

📞 Have questions about selling your shop or structuring a fair hand-off?

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