A tax sale home stems from unpaid property taxes. After taxes are in arrears for at least two years, and a Tax Arrears Certification has been registered on the property for a full year, the municipality can legally sell the property to recoup the unpaid taxes.

The municipality carefully regulates tax sales. In Ontario, some rules and regulations must be followed in purchasing and selling tax sale properties.

Here are a few of the key points in municipal tax sales rules.

Sale By Public Tender

When a tax sale home is put up for public tender, the municipality must advertise the tax sale once weekly for four consecutive weeks in the local newspaper, providing reasonable notice of the sale.

Tax Sale Ad Requirements

When tax delinquent properties are advertised, the posting must contain the name of the municipality, the street address or location of the land, the deadline to receive tenders, and the minimum tender amount.

There Is No Right to View

Prospective buyers do not have the right to view a tax-sale property before the sale. It is not in the possession of the municipality. While a bidder can drive by the property and view it from the road, they cannot enter without the owner’s permission.

Tax Sale Homes Are Free of Debts But With Exceptions

All estates, interests, and claims, including mortgages, are removed from a property during a tax sale. However, there are exceptions, such as if easements and restrictive covenants run with the land or if there are Crown interests. The best way to see what, if any, encumbrances exist is to complete a title search at the Land Registry office.

Tax Sale Tender Requirements

A tender must be submitted with Form 7, typewritten or legibly handwritten. In addition, a minimum deposit of 20% if the tender amount is required. If there is no deposit, the tender will not be accepted. A deposit can be made through a money order, bank draft, or certified cheque. The tender must be submitted in a sealed envelope with a short description of the tax sale and an indication that the envelope’s contents are for a tax sale included.

Nature of a Tax Sale Is Simple, Clear, and Fast

A municipality does not negotiate terms or prices. They pass the risk off to the bidders and are exclusively concerned with price. There is no agreement of purchase and sale, adjustments and statements of adjustments, or anything similar. The tax sale process is meant to be quick and easy for municipalities to recover unpaid taxes.

Tenders Remain Unopened Until The Final Day

After a tender is received, the date and time of receipt are marked, and it is set aside unopened in a safe place. If two tenders are received for the same amount, the earlier tender is accepted as the higher amount. All tenders are opened in a public forum after 3 pm local time on the last date for receiving tenders.

If Your Tender Is Unsuccessful, Your Deposit Is Returned

If your tender is not selected, your deposit is returned. Bidders can obtain their deposit with a photo ID on the day of the bid, the day after, or have it mailed to them.

If Your Tender Is Selected, Payment Is Required In Full

If your tender is the highest and selected, payment is required in full for the tax sale home. The winning bidder has up to 14 days to pay the bid price and total costs relating to the property. If the payment cannot be made, the tenderer’s deposit is forfeited to the municipality in full, and the tax sale property is then offered to the next highest tender.

Additional Costs May Be Required In Full As Well

There may be several costs to pay in addition to the bid amount. There is interest on outstanding taxes until they are paid in full, and interest is charged between the day of advertisement and the date the tax deed is registered. Water arrears are payable. There are also land transfer taxes, registration costs, and HST, which may be applicable in certain cases.

Keys Are Not Provided On Closing

Tax-sale properties are sold as-is. The municipality does not have keys to the property, and it is the bidder’s responsibility to find a way to gain access.

Someone May Be Living On the Property

As mentioned, tax sales homes are bought as-is and vacant possession is not guaranteed. If someone is found to be living on the property, such as a prior owner, it is your responsibility to consult a lawyer and engage in the legal eviction process.