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: Sherriff's Sales Toronto - Mountainman's Feast by Dave2
>> Re: NON- Deeded access question by DRD
>> Re: No Sherriffs Sales this week by mountainman
>> Revision - Lots of Sherriffs sales this week by Dave2
>> One Sheriff Sale in York this week by Dave2
>> Re: Minden Hills by peach17
>> No Sherriff action this week - I need Winston Churchill's doctor by Dave2
>> Re: Minden Hills by mozzy
>> Re: Hydro Poles on my property without easement by mountainman
>> Minden Hills by Jayz
>> Re: Tax Sale Lawyers by Jayz
>> Re: Hydro Poles on my property without easement by New_in_Otawa
>> Brantford is where the action is this week by Dave2
>> Re: Hydro Poles on my property without easement by mountainman
>> Hydro Poles on my property without easement by New_in_Otawa
>> No Sherriffs Sales this week by Dave2
>> Re: NON- Deeded access question by mountainman
>> Re: NON- Deeded access question by Pfm1011
>> Re: NON- Deeded access question by mountainman
>> NON- Deeded access question by Pfm1011
>> Re: Execution searches by Pfm1011
>> Re: Execution searches by Jayz
>> Re: For those bidding Toronto - Manor Road Property on CBC by jt
>> Re: Execution searches by raylak
>> Execution searches by worldjohn

Visit the tax sale properties discussion boards


>> How To Find Investment Properties by Steve Gillman
>> How To Find Free Lists of Foreclosures Houses by Ed Allen
>> How To Buy Before It Gets To Foreclosure by D. Brownlee
>> Buying Foreclosed Properties: Important Pitfalls by Teve Torbes
>> Introduction To Buying Pre Foreclosures by Masni Rizal Mansor
>> Foreclosure 101 by Robert Thatcher
>> Investing in Foreclosed Properties by Martin Lukac
>> Buying A Foreclosed Home Or Property - A Wise Decision? by Wain Roy
>> Property tax crisis for horse farms by Canadian Free Press
>> Purchasing my first Forclosure by Jonathan Cochran

View more tax sale property articles


Tax Sale Property Books

Tax Sale Property Links

Follow @taxsalesont

Privacy Policy