What is a Tax Sale?
We're glad you asked! A tax sale is the sale of a property by a municipality, in an effort to recover unpaid property tax arrears. These properties have been in arrears for a minimum of 3 years by the time the property is eligible to be advertised for tax sale.
Tax sales are conducted 1 of 2 ways, either by public tender, or by public auction. These are both procedures for generating competing offers from prospective purchasers.
In many cases these properties have the potential to sell for amounts well below market value. The reason these properties can be sold for so much less than the typical market value, is that municipalities are only required to sell the lands to recover the amount of:
• All current property tax owing
• The costs associated with conducting the Tax Registration & Tax Sale
• Plus any accumulated interest or penalties
Even more, most mortgages and liens are eliminated by way of a tax sale, aside from those interests that are registered in favour of a provincial or federal crown agency.
I want to purchase tax sale property, where should I begin?
If you are not at all familiar with municipal tax sales, first and foremost, you should review the municipal tax sales rules at https://www.ontario.ca/laws/regulation/030181. These are the legislative rules that govern the sale of tax sale properties in Ontario.
You are also invited to register for a free membership to Tri-Target.com, this will grant you access every single tax sale listing on Tri-Target.com, to our Tax Sale Tips & Tricks, our Tax Sale Tool utilities, will allow to to purchase competitively priced Title Search Reports for most properties listed on our website and much more! A membership to our website will ensure you are making informed decisions, backed by Ontario's tax sale property experts.
A great place to start once you have reviewed the above, is by gathering any readily available information about a property and if you wish to proceed, to obtain a title search and execution search to determine if there are any interests that may continue to affect the property after a tax sale, such as, but not limited to, crown liens, easements, restrictive covenants, etc. Once you have this information, it is important to research other aspects of the property that are not included in a Title Search Report, such as, but not limited to, environmental or contamination concerns, land use restrictions, zoning information, planning information, building information, permit information, property access information, outstanding work orders, property occupancy issues, information regarding conservation authorities, etc. If you have any questions regarding the above noted examples, email our office at firstname.lastname@example.org, we would be happy to help provide you with direction.
Once you have thoroughly researched the property, the next step is to decide if you will be submitting a tender based on the information that has been revealed by your research. If you have decided you would like to submit a tender, you will need to do so in accordance with the municipal tax sales rules (Ontario Regulation 181/03).
Oftentimes a tender package will be available directly from the municipality (sometimes for a fee) or a 3rd party advertising agency like Tri-Target.com, free of charge. These tender packages include everything you need to submit a tender on a tax sale property. In most cases you will find information such as, but not limited to, a copy of the tax sale advertisement, the required 'form 7 - tender to purchase' (this is the prescribed document you will use to submit your tender), any additional property information, available street-level and aerial photos, maps, and a tax sale envelope.
To ensure your tender won't be rejected, download a free Tri-Target Tender Submission & Requirements Checklist, today! This free tool is invaluable if you are serious about bidding on tax sale properties in Ontario.
Don't forget, along with your tender, you must include a 20% deposit of your submitted tender amount. Your 20% deposit must be calculated to 3 decimal points, that means, if you tender $10,000.01, 20% of that amount rounded to 3 decimal points is $2,000.002, so your Deposit would need to be $2,000.01) (Carrocci v. The Corporation of the Township of McDougall, ), and must be made by way of money order or by way of bank draft or cheque certified by a bank or authorized foreign bank within the meaning of section 2 of the Bank Act (Canada), a trust corporation registered under the Loan and Trust Corporations Act or a credit union within the meaning of the Credit Unions and Caisses Populaires Act, 1994. If your deposit is not equal to at least 20% of your submitted tender amount, your tender will be rejected.
Take the guesswork out of calculating your 20% deposit, use our free 20% deposit calculator, available for our members on our Tax Sale Tools page.
If you are selected as the highest tenderer, you will have exactly 14 calendar days to complete payment of your remaining tender amount, any accumulated taxes, relevant taxes such as HST or NRST, if applicable, or your deposit will be forfeited to the municipality and the property will be offered to the second highest tenderer.
For tax sale properties that are for sale by public tender, be sure to submit your tender before the deadline for tender submission. If your tender is not received before this deadline, it will not be accepted.
If you are not the highest or second highest tenderer, you will not have an opportunity to purchase the property and your tender and deposit will be returned to you by the municipality after the tax sale.
What is included in a Title Search Report from Tri-Target.com?
Our Title Search Reports include a copy of a current and up to date parcel register, an execution search on the registered owner(s) (in the region the property is situated), all relevant documents, such as, transfers, charges, liens, easements, restrictive covenants, reference plans, any filed writs, etc. (where available) and of course our detailed, easy to understand report outlining any interests that will continue to affect the property after a tax sale.
For more information about tax sales, learn 1 tip at a time, visit our Tax Sale Tips & Tricks page. If you can't find the answer to your question, please email our office at email@example.com, we would be happy to help!
(The comments contained on this site are for information purposes only and do not constitute any form of legal advice whatsoever.)