Ontario Tax Sale Property     

Providing free tax sale property listings for Ontario, Canada    

Getting a mortgage to buy a tax sale property - BE CAREFUL!

Source: OntarioTaxSales.ca - Canada

Here’s a true story that involves a municipality that we do business with.  It points out a couple of dangers that you need to be aware of if you are considering getting a mortgage to buy a tax sale property.

It starts out fine

A person, who we’ll call the purchaser, submitted a tender to buy a tax sale property.  As required, their tender was accompanied by a deposit of 20% of the amount tendered, by certified cheque.  This cheque was for many thousands of dollars.

The tenders were opened and the purchaser had the highest tender.  The municipality mailed the purchaser a notice advising the purchaser that he or she has fourteen days to pay the balance owing on their tender, plus Land Transfer Tax, GST and Accumulated Taxes.  The notice also stated that this amount must be paid within fourteen days of the mailing of the notice or the purchaser will lose their deposit and the property will be offered to the second-highest tenderer. 

The municipality was doing exactly as it’s required to do by law.

The purchaser phoned the municipality to tell them that it would take at least a week to pay the remaining balance, as they were arranging a mortgage.  The municipality reiterated that the full amount must be paid before the fourteen days had passed.

Here comes the problem

The bank agreed to lend the purchaser the necessary money.  However, before the bank would release the money, the purchaser had to give the bank a registered tax deed. 

The municipality is required by law to prepare and register a tax deed only after it has received payment in full.  That makes sense.  Imagine what would happen if the municipality prepared and registered a tax deed, and then, for whatever reason, the money didn’t come through.  It would have just given away a property for free.  That is why the law states that a tax deed should be prepared and registered after the municipality has received payment in full.

So the bank wanted to see a tax deed before they would release the mortgage money, and the municipality couldn’t prepare a tax deed until after they had received the mortgage money.  Meanwhile, the two weeks were nearly up.  It looked like the purchaser was about to lose their deposit, which was many thousands of dollars.

The treasurer of the municipality phoned the bank manager.  After much discussion, and the manager checking with the bank’s legal department, they were able to come to an agreement.  The bank would send a certified cheque for the full amount owing directly to the municipality.  The municipality would prepare and register a tax deed as soon as possible after that. 

The municipality received the money on the fourteenth day.  They then had a tax deed prepared and had it registered at the land registry office. 

So the story had a happy ending.  But it could easily have turned out differently.  If the bank manager hadn’t agreed to the above arrangement, or if the cheque had taken one more day to arrive, the municipality would have been required by law to keep the purchaser’s deposit and to offer the property to the second-highest tenderer.

The lessons

There are two valuable lessons from this story:

  1. If you don’t pay the balance owing on your tender, plus Land Transfer Tax, Accumulated Taxes and GST (if applicable) within 14 days of the day that the municipality mails its notice to you, you will lose your deposit! 

  2. If you’re counting on getting a mortgage to buy a tax sale property, talk to the bank before you even submit a tender.  Make sure that the bank knows that you can’t get a deed until after the municipality has been paid in full.  And of course, make sure that the bank is okay with this.

Jeff Oberman



Previous: Tax sales that get cancelled--how to protect yourself

Add to del.icio.us Add to Reddit Add to Digg Add to Del.icio.us Add to Google Add to Twitter Add to Stumble Upon
Add to Informational Site Network

Android app on Google Play

Tax Sale Property Listings

Current Ontario Tax Sale Properties - EBook Guide

Ontario Tax Sales - 2014
Ontario Tax Sales - 2013
Ontario Tax Sales - 2012
Ontario Tax Sales - 2011
Ontario Tax Sales - 2010
Ontario Tax Sales - 2009
Ontario Tax Sales - 2008
Ontario Tax Sales - 2007
Ontario Tax Sales - 2006
Ontario Tax Sales - 2005
Ontario Tax Sales - 2004

Current Alberta Tax Sale Properties

Alberta Tax Sales 2014
Alberta Tax Sales 2013
Alberta Tax Sales 2012
Alberta Tax Sales 2011
Alberta Tax Sales 2010
Alberta Tax Sales 2009
Alberta Tax Sales 2008
Alberta Tax Sales 2007
Alberta Tax Sales 2006
Alberta Tax Sales 2005
Alberta Tax Sales 2004

Nova Scotia Tax Sale Properties

New Brunswick Tax Sale Properties

New York Tax Sale Properties
Texas Tax Sale Properties

Sheriff's Sales
Ontario Sheriff Sales Properties

Ontario Tax Sale Research

Listing by Date
Listing by Counties, Listing by Districts, Listing by Regions, Listing by Single Tier

* My Properties *

Latest Discussion Posts

>> Re: Difference Between Tax Sale And Sheriff Sale. by hannamarin
>> Re: How far would you go? - Lets up the stakes - how about Free by Dave2
>> How far would you go? by raylak
>> Re: Strip of land? I don't get it by raylak
>> Re: Halton Hill Results? by raylak
>> The Nike Air Max BW For the Fall by Maria007
>> Adidas accented with premium leather overlays by Maria007
>> adidas Unveils Flagship Store in New York City by Maria007
>> Re: Halton Hill Results? by The Home Hunter
>> Re: Strip of land? I don't get it by Dave2
>> Re: Strip of land? I don't get it by Frank
>> Re: Ray: we live in interesting times by raylak
>> Re: Strip of land? I don't get it by raylak
>> Re: Tax Sale Lawyers by Jayz
>> Lots of Toronto Sherriffs Sales this week. by Dave2
>> Re: Strip of land? I don't get it by Frank
>> Re: Tax Sale Lawyers by mountainman
>> Dysart et al results by mozzy
>> Re: BROCK by pjdd
>> Re: BROCK by mozzy
>> BROCK by pjdd
>> Re: Blue Mountains Lot by matt
>> Re: Blue Mountains Lot by mozzy
>> Re: Tax Sale Lawyers by Jayz
>> Blue Mountains Lot by matt

Visit the tax sale properties discussion boards


>> How the Rich Become Richer by Martin Lukac
>> Investing in Tax Lien Certificates - Three Ways to Profit by Joanne Musa
>> NOT available to public by William Noel
>> The Pros And Cons To Buying Foreclosed Properties by Tim Lee
>> How TO Buy A Foreclosed Home by Gregg Hall
>> Native rights claimed in tax sale lawsuit by IAN FAIRCLOUGH Valley Bureau
>> Cheap Property For Sale - How To Make Huge Gains by sacha tarkovsky
>> How To Buy Before It Gets To Foreclosure by D. Brownlee
>> Start Building Wealth With Foreclosed Real Estate by Kimberly Read
>> Massachusetts Foreclosure Process by frontgateconsulting.com

View more tax sale property articles


Tax Sale Property Books

Tax Sale Property Links

Follow @taxsalesont

Privacy Policy