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

President

OntarioTaxSales.ca





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
Report
Privacy
SHAREADD TO EBOOK








Android app on Google Play

Tax Sale Property Listings

Canada:
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

USA:
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: Taxsale help by mountainman
>> Re: Taxsale help by Dave2
>> Re: Taxsale help by mountainman
>> Welcome to any and all Newbies by Ernestbidder
>> Re: Taxsale help by Ernestbidder
>> Re: Taxsale help by Ernestbidder
>> Re: Taxsale help by raylak
>> Re: Infinity Wholesale Group by Frank
>> Infinity Wholesale Group by infinityusa
>> Re: Maybe we should rethink selling in a rush by Dave2
>> Re: Selling Property Overseas - Specifically China by Jayz
>> Re: Looks like tax sale Prices not big enough for Chinese by Dave2
>> No Sherriffs Sale Announcements by Dave2
>> Cambridge to Tax sale 18 properties in the fall - CBC News by asachs
>> Re: Selling Property Overseas - Specifically China by Dave2
>> Re: Selling Property Overseas - Specifically China by Jayz
>> Re: Selling Property Overseas - Specifically China by Dave2
>> Re: Selling Property Overseas - Specifically China by asachs
>> Selling Property Overseas - Specifically China by Dave2
>> Sherriffs Sale - Note Notice Last week is withdrawn and replaced by this by Dave2
>> Sherriffs Sale - Windsor by Dave2
>> Re: Norfolk by Dave2
>> Re: Sheriffs Sale of Lands - Owen Sound by NDR
>> Re: Sheriffs Sale of Lands - Owen Sound by heyu
>> Re: Norfolk by soldbybailey

Visit the tax sale properties discussion boards


Articles

>> Buying A Foreclosure Home - Using Services Online To Find Lists Of Foreclosed Homes by Carrie Reeder
>> Foreclosed Properties by Wilson Davalos
>> Investing In Tax Foreclosed Properties by James Ficarro
>> Property Tax Sale Process by City of Markham
>> Colorado Real Estate Foreclosures by Jason Murphy
>> Start Building Wealth With Foreclosed Real Estate by Kimberly Read
>> How to Use Tax Lien Manager to Protect Your Tax Lien Certificate Portfolio by Joanne Musa
>> How To Avoid Negative Equity In Real Estate Investment Financing by Joel Teo
>> Property tax crisis for horse farms by Canadian Free Press
>> Streamline Your Tax Lien Investing Business by Joanne Musa

View more tax sale property articles


Other

Tax Sale Property Books
Kindle

Tax Sale Property Links


Follow @taxsalesont



Privacy Policy