Most municipalities in Ontario seize properties for non-payment of taxes. Each municipality has a different way of dealing with properties they have seized. Sometimes they sell these properties through a tax auction, sheriff sale, etc. For example, Hamilton has a tax auction twice a year and it is well documented on their web site. You can sometimes buy these properties for the value of the taxes outstanding and the cost of some legal fees. All municipalities have by-laws that outline the process.

 

Buyer Beware!

·         Most auctions are closed bidding and require a refundable deposit, you don’t know if you won until the bidding is complete. If you win you may have to pay the full amount within a few days.

·         All tax sales are as-is, you may be bidding on an abandoned, fire damaged, or derelict property that needs a lot of work to get up to code. Some odd-sized lots and city owned lots are also sold this way.

·         Not all mortgages and liens are forgiven on a tax sale. Some mortgages, like the ones given out by the Government of Canada, are assumed by the new owner. You may need to visit the local Sherriff’s office, local lawyer, or the land registry office to conduct a lien search if you are interested in a tax sale property. Don’t forget to talk to your lawyer about any liens you find.

·         The municipality does not have resources to show you around the property. You may have to “sneak” around the property on your own.

·         The current owner that is in default of their taxes could make a partial payment and agree to a payment schedule effectively cancelling or delaying the tax sale at the last minute and wasting all the time and money (lien searches) you spent researching the property.