What Is A Tax Sale

Serving Tax Sales Investors Since 2005

What is a tax sale?

A tax sale is the sale of one or more properties by a municipality to recover unpaid property taxes on those properties.

What is the advantage of buying a property at a tax sale?

Tax sale properties can often be bought at prices far below market value. This is because a municipality does not have to obtain market value for these properties. They only have to obtain the amount of taxes owing (including interest and penalties), plus their costs in conducting the tax sale.

Are there mortgages on tax sale properties?

When the tax deed is registered, mortgages are deleted from title except Crown Mortgages – Federal or Provincial. All mortgages held by BMO, Royal Bank, CIBC, TD, Scotia Bank, Credit Union, etc., are deleted.

Reason
1. Anyone with an interest on title is sent notice from the Municipality that the property is in tax arrears.
2. In Section 379(7) of the Municipal Act, 2001 (Effect of Conveyance): It says “free from all estates and interests” and banks are not listed as an exception; therefore, their interests will not be carried forward after the tax deed is registered.

Crown Mortgages
1. Mortgages held by the Government of Ontario or the Government of Canada, or one of their agencies or crown corporations will remain on title.
2. This gives the Crown the power to possibly seize the property and sell it to recover what is owed to them unless the debt is paid. You would need to contact the specific Government Agency to see how to pay this debt if you choose to purchase a property with a Crown Interest.

This information can be obtained by ordering a Title Search Summary. Choose the property you are interested “Click for More Details” and then scroll to the bottom to purchase. If you are an OTS Member, make sure you are logged in to receive 50% off the regular price.

 

Are there liens on tax sale properties?

When the tax deed is registered, any lien except those of the Crown – Federal or Provincial are deleted from title. Examples: Construction Lien, Mechanics Lien, The Law Society of Upper Canada, Legal Aid Ontario, etc.

Reason: Anyone with an interest on title is sent a notice from the Municipality that the property is in tax arrears. In Section 379(7) of the Municipal Act, 2001. It says “free from all estates and interests” and lien holders are not listed as an exception.

Crown Liens:
1. This is a lien held by the Government of Ontario or the Government of Canada, or one of their agencies or crown corporations and will remain on title.
2. This gives the Crown the power to possibly seize the property and sell it to recover what is owed to them unless the debt is paid. You would need to contact the specific Government Agency to see how to pay this debt if you choose to purchase a property with a Crown Lien.

This information can be obtained by ordering a Title Search Summary. Choose the property you are interested “Click for More Details” and then scroll to the bottom to purchase. If you are an OTS Member, make sure you are logged in to receive 50% off the regular price.

 

How are tax sales conducted?

Tax sales are conducted either by public auction or by public tender (a tender is a written document that advises the treasurer how much you will pay for the property). The vast majority of tax sales in Ontario are done by way of public tender.

“Minimum Tender Amount” or “Minimum Bid Amount”

This is the minimum amount that the municipality must receive in order to sell the property. This amount is the total of the outstanding taxes, penalty, interest, and the municipality’s costs in conducting the tax sale procedures. “Minimum Tender Amount” refers to a property that is being sold by public tender. “Minimum Bid Amount” refers to a property that is being sold by public auction.

Can I buy a property for the Minimum Tender Amount or Minimum Bid Amount?

Not necessarily. The person who submits the highest tender or bid will be permitted to buy the property. The Minimum Tender Amount or Minimum Bid Amount is simply the lowest amount that the municipality is allowed to accept. Any tender or bid that is received for less than that amount must be rejected by the municipality.

When does the highest bidder or tenderer become the owner of the property?

Shortly after receiving payment in full from the purchaser (including Land Transfer Tax, Accumulated Taxes, and if applicable, HST) the municipality will have a “tax deed” registered on title. As soon as a tax deed has been registered the purchaser becomes the owner of the property.

Can the former owner redeem a property?

After a tax deed has been registered the former owner cannot redeem the property; however, before a tax deed is registered, the owner might be able to redeem the property by paying the full amount of taxes and other costs to the municipality, thereby stopping the tax sale.

Will a tax deed give me clear title to a property?

Not necessarily. After a tax sale, properties are subject to any interests in favour of the Crown in right of Ontario or Canada. Some examples of such interests are a mortgage in favour of the Business Development Bank or a lien or ‘execution’ in favour of Canada Revenue Agency. Tax sale properties may also be subject to other interests such as ‘easements’, ‘restrictive covenants’ and ‘adverse possession’.

This information can be obtained by ordering a Title Search Summary. Choose property you are interested “Click for More Details” and then scroll to the bottom to purchase. If you are an OTS Member, make sure you are logged in to receive 50% off the regular price.

What happens if I buy a property that is “environmentally contaminated”?

“Environmentally contaminated” lands are lands that are in some way polluted. Among the most common types of environmentally contaminated lands are properties that have been used for a gas station or for some type of industrial use.

If you buy an environmentally contaminated property you could be held legally liable for the cost of an environmental clean up. Such a clean up could potentially cost thousands or even millions of dollars.

You should not buy an environmentally contaminated property unless you have the expertise and the funding to have a clean up done that will satisfy all legal requirements.

In order to guard against buying an environmentally contaminated property it is advisable to view a property before submitting a tender or a bid. If you suspect that a property may be contaminated it is best to not submit a tender or a bid unless you are willing and able to have an environmental clean up done. Again, keep in mind that a clean up could cost thousands or millions of dollars, and you could be held legally liable.

What happens if I buy a property that is subject to an interest in favour of the crown?

You will be responsible to pay whatever money is owing to the Crown as a result of that interest. If you do not pay that money the Crown could seize the property that you just bought and sell it. For example, if you bought a property that was subject to a mortgage in favour of Business Development Bank, which is a Crown Corporation and, therefore, creates an interest in favour of the Crown, you would have to pay that mortgage. If you failed to do so the Business Development Bank could seize the property and sell it.

This information can be obtained by ordering a Title Search Summary. Choose property you are interested “Click for More Details” and then scroll to the bottom to purchase. If you are an OTS Member, make sure you are logged in to receive 50% off the regular price.

How can I find out if a property will be subject to any such interests before I submit a bid or tender?

It will be necessary to obtain both a Title Search Summary which includes a search of the property (parcel register), an execution/writ search of the owner(s), and any outstanding interests that will affect the lands after the tax deed is registered.

To order a Title Search Summary. Choose the property you are interested in, “Click for More Details” and then scroll to the bottom to purchase. If you are an OTS Member, make sure you are logged in to receive 50% off the regular price.

How can I obtain a title search and an execution search?

OTS Members can obtain Title Search Summaries and Updates for Featured and Members Only properties at 50% off the regular price. Our searches come with a summary in plain English, not legal jargon, and will show any interests that would be outstanding after the tax sale.

Title Search Summaries for Featured listings are available to the General Public at the regular price.

Unfortunately, if the property is in the old Land Registry system (the PIN ends with an “R”), we will not offer a title search through our website as complete title information is not available to us online.

This information can be obtained by ordering a Title Search Summary. Choose property you are interested “Click for More Details” and then scroll to the bottom to purchase.

Can I inspect a house that is being sold at a tax sale?

You do not have a right to enter onto a property that is being sold at tax sale. The person who owns the property is not obligated to allow people to inspect the house or the property. When you buy a property at a tax sale, you take it “as is”. There are no warranties of any kind.

You can view the property from the road. If you venture onto the property you will be trespassing.

What happens if I buy a house and there are people living in it?

It will be up to you to decide what to do. Please note that the municipality is not obligated to evict people who may be living on the property. If you wish to evict people who are living there, you should consider hiring a bailiff or lawyer to handle the eviction process.

Tax sales are conducted either by public tender or by public auction. More than 90% of the tax sales in Ontario are conducted by Public Tender. Please click on the links below for step-by-step instructions on buying properties at a tax sale.

Tax Sales by Public Tender

Tax Sales by Public Auction

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Tax Sales Results

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