Ontario Tax Sale Property Forum
Sheriff Sales / Foreclosures => General Discussion => Topic started by: Les Pisrael on December 09, 2010, 02:12:35 AM
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>:(
Spoke to the city clerk in charge of Tax sales and was shocked to hear that OntarioTaxSales charges BIG bucks for listings showing bare bones info on tax property sales.OK OK -pictures do show some what info--but 5-7 years out of date.
Here is the kicker--the town/city then adds the cost on the tax arrears total. Clerk told me that the fees are so great that already the city fees are so great--no body would want the property in question.
How many of you know that BIB FAT legal fees are added and some cases clean up fees in the 10s of thousands to the bottom figure.One recent one property had a min price tag of $90K+- and from that $60 k was added for Legal/clean up--fee (abandoned cars and some tires and of course Photo @ OntarioTaxSales.
Shamefull [:^/
;D Here is my best Utube video--Cheers me up and so will you
http://www.youtube.com/watch?v=cw2IIU0a9qw
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I have always wondered how much OTS charges the townships. Do you have a dollar figure on this?
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I have always wondered how much OTS charges the townships. Do you have a dollar figure on this?
The answer is not entirely clear to me but I do have some insight that I will share in a public forum.
My information is as follows:
Real Tax is owned by OTS (or they are owned by the same principles.) Real Tax provides one stop shopping for municipalities. They advertise in the Gazette for the municipality, provide advice and provide all of the forms etc. They also attend to registration of the tax deed. I hope that I am not "outed" by this post because there is no doubt that the people behind OTS and Real Tax are active here, but on a successful sale, they charge about $800 to the municipality. The municipality simply adds this to the tax bill. If the municipalities wish to use OTS as a form of advertising, the price is significantly higher. There are many municipalities that use Real Tax and pay the $800 but who will not pay the extra OTS fee. Then of course OTS double ends by selling subscriptions to us, tax sale packages and searches that cost over $100. The beauty of this is that they pay only $32 plus the cost of instruments and executions only once for each property that they have searched. So if they sell 5 searches they make........ and if they sell 10 searches they make............. you do the math.
So, who do you think is making the real money on tax sales? A brilliant business plan if I do say so. I wish that these people would come clean on this forum. If I am wrong, please correct me as it is not my intention to mislead or provide a false impression (watch my Karma take a hit for this post) ;) The biggest beef that I have with OTS and Real Tax is that municpalities take everything that they are told by these people as the gospel truth. Why do you think that some municiplaites charge HST while others do not? The answer is quite simple - those municipalities that use Real Tax or OTS have been told to charge HST.
Having said all of the above, they are real pros and provide a valuable service to municipalities that are either too lazy or not sophisticated enough to do their own work.
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OTS and Real Tax provide a valuable service...to smaller municipalities who don't have the resources to maintain a level of professionalism that is required in handling tax sales. Municipalities the size of Hamilton each year go after in excess of 2,000 properties that are three years in arrears. By the time repeated dunning notices are affect and various threats reacted to, they generally have about a hundred properties that they register for arrears...then after a year goes by they will end up with 20 or so that get advertised...following redemptions they end up selling 5 per year.....this requires constant diligence and staff that have the capabilities to handle the various intricacies that ensue with legal action of this sort.
Most Municipalities levy charges far in excess of $800 that are heaped on top of the tax arrears. When a property goes into arrears, and this action must be taken...can anyone here tell me why the general taxpayers should pay for the cost of collection. No one...I see, and the Province thinks so too as it permits Municipalities to add these costs to the balance owing.
Ever dealt with a small municipality that didn't know what they were doing...and wouldn't admit it. I did, and ended up taking them to court to prove my point. 8)
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Frank:
We can debate the merits (or lack thereof) of OTS and Real Tax but I think that people can draw their own conclussions. The question that I have is simple "is my information factually correct, or is it in error"? If it is correct, some may view these organizations in a positive light while others may not. People will think as they wish but I value transparency. As an aside, it is also my information that more than a few municipalities resent the fee structure that is charged to them. Again, I may be wrong, but I have heard things right from the sources. Remember, nothing lasts forever.
If you are watching (and I think you are)..... be mindful of killing the goose that laid the golden egg. There is a growing resentment (and competition on the horizon).
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Frank:
We can debate the merits (or lack thereof) of OTS and Real Tax but I think that people can draw their own conclussions. The question that I have is simple "is my information factually correct, or is it in error"? If it is correct, some may view these organizations in a positive light while others may not. People will think as they wish but I value transparency. As an aside, it is also my information that more than a few municipalities resent the fee structure that is charged to them. Again, I may be wrong, but I have heard things right from the sources. Remember, nothing lasts forever.
If you are watching (and I think you are)..... be mindful of killing the goose that laid the golden egg. There is a growing resentment (and competition on the horizon).
Had I been managing a small municipality I would have welcomed the service provided by Real Tax...they've been developing their skills for about 20 years if my memory serves me, and they have hit a market niche that was definitely lacking. Just because you or someone else didn't come up with the idea first, doesn't mean that it isn't a good one.
The last resource which they are now providing is the property search, and I have used it a few times...mostly I do my own. You can hire a lawyer, or a freelance title searcher, but they don't know the intricacies of tax sales and what they are really looking for, they can either cost you more in the short term for the service, or cost you more in the long term for errors. I for one (being a former tax collector) commend them for the valuable service they provide, and I should note that I do not have any stake in their enterprise. 8)
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Like I said, we are free to draw our own conclussions. I have no grudge against OTS or Real Tax and I have said what I wanted to here and in other posts where I expressed the view services like OTS have the effect of raising prices that tax sale properties sell for. I also do not care that they came up with this admittedly good idea to service municipalities since I have been busy with ventures of my own.
My only other comment is that if their service is so beyond reproach, why doesn't OTS/Real Tax engage in the public process that this forum provides? You are here, so speak up!
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What is "Real Tax"?
Thanks... Bruce
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What is "Real Tax"?
Thanks... Bruce
http://www.realtax.ca/
8)
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>:(
How many of you know that BIB FAT legal fees are added and some cases clean up fees in the 10s of thousands to the bottom figure.One recent one property had a min price tag of $90K+- and from that $60 k was added for Legal/clean up--fee (abandoned cars and some tires and of course Photo @ OntarioTaxSales.
Shamefull [:^/
Les:
I tend to agree with Frank on this one regarding Ontario Tax Sales Everything is relative. Your post covers two subjects. A municipality wants to get their taxes.
In that light the cost is cheap if it works. None of us like it because it increases competition and raises prices.
The added cost for land for environmental cleanup is cheap in the example quoted. I know of some that were several million. I will not bid on industrial land because of that risk. Tax sales are are sold on an as is basis.
The only bitch I have is the poor sucker who have the misfortune to buy the property. Tax sales are not for amateurs. When my lawyer warns me that his bill will be higher then normal because there are fifty pages of documents registered against title I decide to pass.
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What is "Real Tax"?
Thanks... Bruce
http://www.realtax.ca/
8)
Thanks again.
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way to call them out netpred!!
but they want to hide i guess?............
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I don't see what they would have to come on here and post about. If they are running a successful business, good for them. They do not have to justify it to anyone on here. If there is so much money to made with their service then there will certainly be more competition and competition will bring out the best for the consumers (be it the municipalities or the buyers). If people do not want to use their services they are free to go about things a different way.
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I don't see what they would have to come on here and post about. If they are running a successful business, good for them. They do not have to justify it to anyone on here. If there is so much money to made with their service then there will certainly be more competition and competition will bring out the best for the consumers (be it the municipalities or the buyers). If people do not want to use their services they are free to go about things a different way.
I agree. The people behind OTS and Real Tax have no legal obligation to post here or anywhere. They are both, to my knowledge, privately held companies with no legal requirement to publicly report. I also commend them for a great business plan. However, I have posted information about their business practices and if I am wrong, then I would certainly like to hear about it. I don't think that there is anything wrong with consumers having a full and complete picture of the companies that they deal with. If you are buying a new car from a dealer, would you like to know the dealer's cost or would you simply be happy to pay whatever the dealer asks? At the least, you would want to know what other dealers sell for. In this game, there is only one dealer. Think about that for a bit before you speak.
Second, It is inconceivable that OTS is ignorant of this site. We all have found it so there is no doubt that a sophisticated outfit like OTS has also found it. So, it is my view that if OTS has the benefit of of monitoring this site, they should also have the obligation of at least acknowedging their activity. On other non-tax forums where I am active, I notice that corporations that have a vested interest are extremely active in explaining their products and dealing with any issues that may arise. It is to their advantage. OTS should see this as an opportunity to help sell their product instead of hiding behind an alias or lurking silently.
Third, I have a moral issue with double-ending. When I eat my cake, I do not expect to have it the next day for lunch.
Last, do I have a beef with OTS and Real Tax? Perhaps, but only to the extent that they make this game far too easy to play or that they may be providing wrong information to municipalities that costs me money. It does bother me that a municipality will engage in a course of conduct only because OTS tells them to. Many municipalities rely on the advice that they receive from lawyers and do not blindly follow what they are told by OTS. They do things differently. Maybe OTS and Real Tax are not right all of the time. Why should I pay for their mistakes without any recourse? So yes, OTS costs me money and I believe that they are wrong on some significant issues.
Finally, Real Tax should check the Law Society rules about acting for both sides on a transaction. Rule 2.04.1 of the Law Society's Rules of Conduct deals with acting for transferors and transferees on the same transaction. OTS/Real Tax, I believe, appear to be in violation of the Law Society's rules when they register deeds. You cannot avoid the rule by simply discaiming that you do not act for both sides. If it was that easy, would smart lawyers not do the same? Again, if I am wrong and there is no violation of the Law Society's rules, please enlighten me.
Again, if anything here is in error, I invite OTS and Real Tax to correct me. It is not my intention to deceive and I am only posting what I honestly believe. In fact, If I am wrong, I want nothing more than to be corrected. So, although you are technically correct in that neither company has a legal obligation to post here, if you were running these companies, would you sit silent in the face of this post?
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I certainly would not come on to a forum on the net to try to explain myself because everyone knows exactly how those things turn out....flaming, arguments with no basis behind them, statements taken out of context, etc. Keyboard warriors who will make comments and hide behind their computer screens. If you have a beef with them, contact them privately. If you think that they are somehow breaking the law, look into what can be done about it. A forum such as this is not a place that I would come to post about my own company's policies nor would I expect anyone else to do so.
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I have said what I wanted as you and others have. This is a public forum and if OTS/Real Tax wishes to speak, they can. If not, so be it.
Time to move on and look for some new listings.
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I just noticed that our newest member is OTS Jeff. The email suggests that this is legit and not an imposter. Welcome!
Jeff, it is not my intention to run your company down. Please engage in this forum and answer any legit questions or issues that we may have. I for one look forward to your imput. It may also be good for your business.
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Not off topic but related.
If you been following USA's major media (print/TV) since 9/II , Anthrax attacks and the 3 invasions (Iraq, Afghastain,Pakistan), yoy'd come to the conclusion that Media is a paid whore for Government.Most Americans beLIEve most of what media tells them--Arabs did 9/II and Iraq/Saddam had WMD.
With OTS--the same problem arises--Government pays OTS for publishing photos and locations for selected few municipal townships, while others you have to join for information and searchs at HIGH fees . Banners atop sucker new comers--what they missed--never to include a blog or at least tell--land is SWAMP or regulated or had Fed.income tax liens.(very dangerous Fed liens)
-TSP is open to public comments and deserves recognition of reputable and not a government hack like OTS
Many properties that are listed for Tax sales are dogs.Be very carefully in how OTS packages them--nothing is free from them--at the end--someone pays for the extra cost.Who is the loser--the mortgage holders or the liens placed on the property.Prior to the property being listed as a tax sale--township notifies all lien holders registered on title. After the sales is completed the township collects the arrears and sends the rest to the lien holders.If none liens--all gravey for the town. And do they pad the tax arrears amount-you'd be shocked to know what is added! :-*
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Not off topic but related.
If you been following USA's major media (print/TV) since 9/II , Anthrax attacks and the 3 invasions (Iraq, Afghastain,Pakistan), yoy'd come to the conclusion that Media is a paid whore for Government.Most Americans beLIEve most of what media tells them--Arabs did 9/II and Iraq/Saddam had WMD.
With OTS--the same problem arises--Government pays OTS for publishing photos and locations for selected few municipal townships, while others you have to join for information and searchs at HIGH fees . Banners atop sucker new comers--what they missed--never to include a blog or at least tell--land is SWAMP or regulated or had Fed.income tax liens.(very dangerous Fed liens)
-TSP is open to public comments and deserves recognition of reputable and not a government hack like OTS
Many properties that are listed for Tax sales are dogs.Be very carefully in how OTS packages them--nothing is free from them--at the end--someone pays for the extra cost.Who is the loser--the mortgage holders or the liens placed on the property.Prior to the property being listed as a tax sale--township notifies all lien holders registered on title. After the sales is completed the township collects the arrears and sends the rest to the lien holders.If none liens--all gravey for the town. And do they pad the tax arrears amount-you'd be shocked to know what is added! :-*
So how does this post help the conversation? It helps to stick to facts as much as possible. I want OTS to engage here but posts like yours are inflammatory and serve no positive purpose.
Sorry.
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Netpred
Obviously, you are correct and Real Tax can speak for themselves.
However, your logic absolutely blows my mind. Municipalities can do it themselves or hire it out...in either case they recover their costs through the sale...it can legally be added as part of the cancellation fee, when someone redeems their property at the last minute - they pay the costs of having put the municipality through the hoops with their delinquency. I as a tax payer would be very upset if I found out that I were paying for that. As for environmental costs, those are normally added by the MOE after they have done a major clean-up of a toxic site...they have the power to do that, and I as an Ontario that wants these sites cleaned, I thank them. On occasion you will find other Municipal charges such as weed cutting, or by-law charges such as boarding up of abandoned properties...again they have the right to do that type of thing to protect us, vacant properties that are open to the public can become rather bad places.
When Real Tax acts for the municipality in preparing and registering a deed...how are they possibly acting for you? If the Municipal lawyer does it, he is doing exactly the same thing - the Legislation requires the Municipality to prepare and register a deed in you name...how (or whom) they do it is academic. Again, your logic is somewhat flawed my friend. There is no bogey-man here.
8)
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Frank:
I understand that municipalites can and do charge fees to the tax bill. The $800 or so does not make any significant difference. If not Real Tax, then a lawyer would charge the municiplity. This is fine.
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I may be mistaken that the LSUC rules require seperate representation. The Land Registration Reform Act provides for certain exemptions for conveyances from Federal, Provincial or Municipal governments. So I am not absolutely sure, but one lawyer might be able to register for both on tax sales. :-[
However, I would like clarification on a number of other issues, for example, HST. Does OTS have an opinion from a tax expert? I would like to know the reasons for charging HST. The tax may very well apply in certain situations but I would like to know why I am paying this tax.
I think that it can be advantageous for OTS / Real Tax to become active in this forum. I know that I for one would welcome their participation.
I'm pretty sure that I covered this off in a previous post, but here it is again. Several years ago, I purchased three tax sale properties in one year...two municipalities let me off the hook with gst (these were all vacant cottage properties by the way). One insisted I had to pay up the 5% (at that time)...I got mad, and went the CRA for an advance ruling.
They classify these types of sales as forfeitures, and in this case they deem that municipality has (if only for an instant) taken possession of the property, and you are not buying from the previous owner and there it cannot be claimed as tax exempt by way of a person use property. There was a court case in Quebec just prior to this which they proved their point.
Some municipalities still haven't awakened to this requirement. If they get audited by the CRA they will have to pony up the tax. 8)
p.s once you have paid the tax, you can always apply to the feds for a refund and see what you get.
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p.s once you have paid the tax, you can always apply to the feds for a refund and see what you get.
[/quote]
How?
As an aside, then if this logic is correct, why does Real Tax tell municipalities to not charge HST where there is an existing residential building? In neither case can the municipality validly claim a personal use exemption, or am I mistaken?
Also, do you have the citation for the Quebec case? Any other details regarding the ruling in your situation would be helpful and much appreciated. ;)
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Wow ... I slag off OTS due to their making it too easy for idiots to come to the table. I also am totally pissed that they are listing data on parcel which they are not paid to market..Sticking their nose where it doesn't belong ...however...
Should OTS respond....absolutely not as nothing good can come from it..they will be slaughtered by internet idiots including some on here who have claimed to be lawyers but are completely full of sh*t
Do they make false claims..absolutely not. I have not seen them make any claims or statements on the property condition IE dirty or clean..If someone is too stupid to check ..sorry about your luck. OTS cannot make any statement as they can be sued by the winner or the old owner if they make any statement that effects the value either plus or minus.
OTS fees effect the sale price....You could only bitch if you
A: are the property owner and you could argue that the costs are excessive and get them reduced
B Are the township and the site did not sell as the minimum was too high due to their fees.
As a purchaser, you have no right to bitch, and in reality what pieces actually sell for minimum??Only the junk
They are violating LSUC rules.....They aren't lawyers so LSUC has no authority over them ( Not like LSUC would actually do anything even if they were breaking rules)
The ultimate message to them is to not use them. Additionally I stand to be corrected but the calculation of the minimum should be public information so you should be able to get the fees charged by them fairly easily
And new sites coming...great , more assholes at the party
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Can't seem to locate it quickly, but I know it is out there...Rev Can. pointed it out to me. Here's a helpful site you might want to visit. http://www.plzlaw.com/blog/index.php/2010/06/11/understanding-municipal-tax-sales-everything-and-anything-you-need-to-know/
You can file an appeal to Rev Can and hope that they buy your arguement as to why you consider the property to be tax exempt.
PFM...all that OTS has done, for its paying memebers, is to provide information on all tax sales, not just the ones listed with them....just as Rob has done with this forum...you get what you pay for??
p.s once you have paid the tax, you can always apply to the feds for a refund and see what you get.
How?
As an aside, then if this logic is correct, why does Real Tax tell municipalities to not charge HST where there is an existing residential building? In neither case can the municipality validly claim a personal use exemption, or am I mistaken?
Also, do you have the citation for the Quebec case? Any other details regarding the ruling in your situation would be helpful and much appreciated. ;)
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Hello, my name is Jeff Oberman. I?m the founder and president of both Realtax and OntarioTaxSales.ca (?OTS?).
There are a number of issues and questions in the recent string of posts that deal with my companies. I will address all of them. But rather than one long post, I?ll break it in to a number of relatively short posts. I probably won't be able to deal with all the issues today. In this post I'll address the issue of GST/HST.
Back in 2004 I asked Realtax's lawyer to provide us with guidance on when and if a municipality should charge GST on a tax sale. Our lawyer worked with us to come up with a detailed letter to the Canada Revenue Agency ("CRA"). This letter gave details of the applicable legislation, and requested that CRA provide us with a ruling on if GST had to be paid on a tax sale property.
CRA replied to our lawyer in 2005, with a six-page letter. Here's the gist of that letter:
A municipality must charge GST on a tax sale property, unless either:
1. It is the resale of a residential property. That means that there must be a house or some other kind of residence on the property, and the property has been sold before with a residence on it (if it?s the first time the property has been sold with a residence on it, it wouldn't be a resale of a residential property).
Please note that land that is zoned residential, but does not have an actual house or some other residence on it, does not qualify as a residential property for the purposes of GST.
Or,
2. The purchaser is a GST registrant (meaning that they have a valid GST number) and they supply the municipality with their GST number and the required paperwork to indicate that they will ?self-assess? and remit the GST themselves.
Unless either #1 or #2 is true, GST must be charged on a tax sale property
We have been advised that with regard to tax sales, the rules for HST are the same as they were for GST.
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Jeff:
Welcome and thank you for your post. I am sure that you and I may not agree on all issues but I for one would like to keep our discussions civil and factually correct. I continue to be of the view that your company costs me money but this is simply reality and part of the game. I suggest that we all extend this same courtesy to Jeff. It is important that we have the means to address concerns about OTS and and it is also, I believe, equally important for Jeff to address any misconceptions that may exist. You have also earned my respect for becoming involved here.
I will deal with the HST issue. I plan on taking a run at CCRA on this point. I have retained the services of a prominent but semi-retired GST (as it then was) expert. He has some good ideas. I will let you know how things work out. In the meantime, would you be kind enough to help me out by providing (via pm) further details of the GST ruling - perhaps a copy of the ruling or where I can get it. You can edit out any information that you wish. I would also appreciate some more information on the information that you have on the HST.
Thanks.
PS - I always have to edit my posts because of spelling errors. I will try to use spell check in the future.
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netpred:
With regard to further info about the ruling from CRA, we'll get something about this up on OTS in the next couple of days. I'll let everyone know when this has been done.
To help clear up any misconceptions about what Realtax does, here's some info:
Tax Registrations
Before a municipality can advertise a property for tax sale, it must conduct a procedure commonly called tax registration. This is part of the work that Realtax does for municipalities. Here's a very brief overview of what's included in a tax registration:
Prepare and send notices under the Farm Debt Mediation Act
Deal with any questions or concerns the municipality may have, every step of the way
Conduct a title search and execution search
Analyze the searches to determine a proper legal description of the property and a list of who has an interest in the property; deal with any possible discrepancies between searches and assessment roll
Prepare a tax arrears certificate
Have the tax arrears certificate registered on title
Update the title search and execution search
Prepare Notice of Registration of Tax Arrears Certificate (commonly called a first notice) for each party who has an interest in the property
Send these notices by registered mail, within 60 days of the registration of the tax arrears certificate
Prepare a Treasurers Statutory Declaration Regarding Sending of Notice and have it executed
If the taxes remain unpaid 280 days after the tax arrears certificate was registered, prepare Final Notices and send them to the interested parties by registered mail, within 30 days
Track the foregoing statutory deadlines and ensure that they are complied with
If the taxes remain unpaid 1 year after the tax arrears certificate was registered, prepare a Treasurers Statutory Declaration Regarding Sending of Final Notice and have it executed
Begin tax sale procedures
Tax Sales
Send Mining Act information to Ministry of Northern Development and Mines, if required
Prepare Treasurer's Statutory Declaration, advertisement for tax sale, tender packages, notices to Higher Tenderer and Lower Tenderer, Successful Purchaser form
Be available to answer any questions, especially at the time the tenders are opened or the auction is conducted
Prepare Tax Deed or Notice of Vesting or Acknowledgement and Direction, and Land Transfer Tax Affidavit
Register deed or Notice of Vesting, send to municipality with ?PAYMENT INTO COURT? documents
Send copies of ?PAYMENT INTO COURT-STATEMENT OF FACTS? to Interested Parties and Public Trustee
The above work takes a great deal of time, and a great deal of specialized expertise. The fees that Realtax charges to its clients are reasonable, and are competitive with the fees charged by other organizations for similar work. These fees are added on to the tax roll, and are therefore included in the minimum tender/bid amount if the property goes to tax sale.
More info about Realtax and OTS will follow in the coming days.
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At this rate, it won't be long before Jeff becomes an advanced member. Could even beat out PFM. 8)
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Thanks Frank, but I've got a long way to go. :)
But this does bring up another issue that I'd like to address. That is, it's been suggested that I've been active on this forum. Actually, I haven't been, until today. No one from OTS or Realtax has ever posted anything on this forum prior to 12 December 2010, so you don't have to wonder if we were posting comments under an alias. We weren't. And in all of our postings we'll be up front about who we are; we'll be clear about that so people will know what bias or interest we may have.
Some of my teammates (those amazing people that I work with) and I have been reading this forum for many years. It's and excellent forum. And we often discussed the pros and cons of submitting posts. But until now, we felt that it was better to have all of our communications flowing through our email account and our newsletters. But in the past week or so, it looked like I might be able to win either a popularity contest or an unpopularity contest on this forum. So my teammates and I thought I join in the conversation.
Hey, it's nice to be on board!
Jeff Oberman, President
OTS and Realtax
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OK, enough of the love in. ;D
I do appreciate your candor Jeff. I have several other issues that have bothered me a bit about the way you do business. In no particular order:
Your fee structure is obviously your own business and I would be careful if I was in your shoes in giving out free info to new competitors about how your business operates. But, I can tell you why many municipalities use Real Tax but not OTS. Cost! The Real Tax fee is actually quite reasonable, especially when one considers what private law firms might charge municipalities.
In addition, you are a big player in this business. Much more influential than you think. Most treasurers follow everything that you say on your website, in emails, bulletins and at seminars. Please make sure that you are correct and not stating opinion. I am not sold on the HST issue at all and my information is that CCRA's opinion may not be accurate. I do not expect the tax man to voluntarily give up money if they can come up with any argument, however misguided, to justify the tax grab. Sometimes you have to pick a fight to get the right decision. So now every municipality charges HST because you tell them to. I understand that you are acting in good faith, but there is now a cost to me when I buy from municipalities that use Real Tax. Another example, I know that you talk in your seminars about the practice of double bidding. I think that it is ethically reprehensible to make a tender with no intent to follow through on it if the other bid is second. Will you advise a municipality what to do if the owner attempts to redeem after the first deposit has been forfeited? I don't think that this is the sort of advice that you should be giving but who do you think is the first person the treasurer will call if this happens? This is a discretionary matter for the treasurer. Otherwise, you would essentially make province-wide policy and border on unauthorized practice of law. My point is that you have tremendous influence in the tax sale industry. Please be careful when and how you use it and consider all of the potential ramifications.
I also have issues with double-ending. A lawyer who works for a municipality and who has conducted searches on properties would never sell the same searches (perhaps subsearched to update) to the public (at least the hypothetical competent and ethical lawyer). Do you not see a potential conflict with this type of model? What will you do if something unexpectedly pops up? For example, if a Crown lien comes on after service of the final notice or even after the sale, but before registration of the tax deed. You are, in my view, clearly caught in a conflict. I know that you can say that this is only a possibility, but if it does happen, then it becomes a reality. Have you considered your position in that event?
Of course my biggest beef with you is that you make it far too easy for amateurs to play this game. But I cannot find any fault with that. This is the very nature of your business and fair play. I can only wish that your companies did not exist but they do. OTS and Real Tax are simply a reality for me. So thanks for engaging in this forum and providing your views.
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I do appreciate your candor Jeff. I have several other issues that have bothered me a bit about the way you do business. In no particular order:
Of course my biggest beef with you is that you make it far too easy for amateurs to play this game. But I cannot find any fault with that. This is the very nature of your business and fair play. I can only wish that your companies did not exist but they do. OTS and Real Tax are simply a reality for me. So thanks for engaging in this forum and providing your views.
Netpred:
For your information Real Tax is not the only player in the business of advising municipalities. On the other hand;
There is a saying if you can't beat them; join them. Why don't you go into the business yourself. That way what you lose on the apples you pick up on the oranges: A couple of interesting domain names for sale. E.g.
http://www.taxsaleproperties.ca/http://www.taxsaleproperties.com
Of course you would miss all the fun of working with your favourite conservation authority ;D
While I lose some to amateurs its the pro's like this guy 8) I am much more worried about. What really scares me about competition if he or one of the smarter people on this board (I don't include myself in that group) ever allowed Jeff to get the truth out publically, watch out.
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Of course my biggest beef with you is that you make it far too easy for amateurs to play this game. But I cannot find any fault with that. This is the very nature of your business and fair play. I can only wish that your companies did not exist but they do. OTS and Real Tax are simply a reality for me. So thanks for engaging in this forum and providing your views
My beef as well. However it is not the fault of ots. It is the fault of computers and the internet...sign of the times. If there was no ots another similar company would be there and who knows, they might not have the integrity of ots. Every company needs to look at their bottom line and how to improve it. I think ots is here for the long term and will want to keep us loyal.
What really bugs me, many properties go for market value or more. Ots advertises the good deals on paper. Too bad there isn't a part of this forum that deals with properties that sold too high or they had problems. Tax sales that go bad. We hear of a few from distress calls. Some posters here paid more than market value for a property that they could not legal inspect and they seemed thrilled ???
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Of course you would miss all the fun of working with your favourite conservation authority ;D
Dave:
Guess what? I have found another conservation authority that loves me also as much as what's his name. They really do get upset when you challenge them (and win)! Now of course this new authority has no match for you know who (I am sure that you have not forgotten - some memories you take to the grave). :P
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What really bugs me, many properties go for market value or more. Ots advertises the good deals on paper. Too bad there isn't a part of this forum that deals with properties that sold too high or they had problems. Tax sales that go bad. We hear of a few from distress calls. Some posters here paid more than market value for a property that they could not legal inspect and they seemed thrilled ???
As Frank noted earlier when you beef about OTS you also have to consider the alternative. Anyone who has encountered what I will call "interesting dealings" with a small rural municipality knows what I am talking about. As far as I am concerned they are part of the landscape and we have to deal with it.
What is interesting is that no one including the pro's like Frank and PFM have questioned them about the one situation where I would be worried about them? We have the opportunity now so my question for a coffee (Timmies I cannot afford the more expensive alternatives) is what is it? (I will also allow OTS Jeff to guess it as well if he wishes)
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What is interesting is that no one including the pro's like Frank and PFM have questioned them about the one situation where I would be worried about them? We have the opportunity now so my question for a coffee (Timmies I cannot afford the more expensive alternatives) is what is it? (I will also allow OTS Jeff to guess it as well if he wishes)
Ok Dave...you owe me ---I'll take a cappuccino at Starbucks. That question has been on my mind for some time, I'll pm you about it, and you can admit that you owe me. 8)
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I am not sold on the HST issue at all and my information is that CCRA's opinion may not be accurate. I do not expect the tax man to voluntarily give up money if they can come up with any argument, however misguided, to justify the tax grab. Sometimes you have to pick a fight to get the right decision. So now every municipality charges HST because you tell them to.
I certainly have to agree with the position taken by Realtax/OTS with respect to H.S.T. I also think, based upon your postings, that the position of CRA would be that you are in the business of buying and selling tax sale property. Anyone buying property with the sole purpose of reselling it at a profit could face a very punitive position by CRA when (not if) you are audited. I appreciate how emotional we are about HST but, at the risk of becoming even more unpopular, I believe that Realtax/OTS, is actually helping you with their position with respect to HST. They are not forcing you, or anyone, to pay HST. Whenever I am the successful bidder we immediately send our bank draft for the amount that the municipality's form says is owing, less the HST which they have included in the total. I also include an indemnification form which sets out the HST registration number for whichever entity, or entities, I have chosen to take title to that property. I also like to include a letter of direction setting out the address for service of the registrant that will be taking title. By doing this it keeps Realtax/OTS out of any issues with CRA, and the potential HST in your pocket. If you later sell the property to another registrant, such as a builder or developer, then you cannot charge HST. If you sell the property to a non registrant then Realtax/OTS is not involved - your lawyer, the purchaser's lawyer, and CRA can argue over whether or not HST should be charged. It is a pleasure to deal with Realtax when completing a purchase.
If anyone needs a blank copy of an HST indemnification letter they should be able to get one from their solicitor, although often the municipality can supply one. If that fails you can always PM me and I will try to attach one to an e-mail.
Oh, and about "double bidding", it does not work for three reasons. Firstly, it makes you bid more than you would otherwise, due to the false confidence created by your low ball. Secondly, there are way too many tenders for you to guess what will be number 1, let alone be able to call both the first and second positions. And thirdly, and most importantly, you cannot afford to add another 14 days to the redemption cycle - you need to get your money in immediately.
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I certainly have to agree with the position taken by Realtax/OTS with respect to H.S.T. I also think, based upon your postings, that the position of CRA would be that you are in the business of buying and selling tax sale property.
Just because we talk big here certainly does not mean that we are in the business of buying and selling property. Perhaps some here have not bought any or maybe one - their "dream" property. Obviously the situation is different for an HST registrant or a person carrying on the business of selling tax properties.
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Just because we talk big here certainly does not mean that we are in the business of buying and selling property. Perhaps some here have not bought any or maybe one - their "dream" property. Obviously the situation is different for an HST registrant or a person carrying on the business of selling tax properties.
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My accountant's position for what its worth was that more then 2 and you are deemed to be in the business of buying and selling land. Remember that's not all bad because it also qualifies you for writeoffs and you can writeoff your input tax credit as well.
BTW on another matter I acknowledge publically that I do owe Frank a very good coffee. I want to handle whatever we are talking about with care and so I want to do a little more private messaging including possibly to OTS Jeff in advance before we come live.
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BTW on another matter I acknowledge publically that I do owe Frank a very good coffee. I want to handle whatever we are talking about with care and so I want to do a little more private messaging including possibly to OTS Jeff in advance before we come live.
Yeah...I win....do I know how to call them, or what.
Make a double Dave 8) 8)
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Yeah...I win....do I know how to call them, or what.
Make a double Dave 8) 8)
Gee I didn't know Gators liked Coffee. Guess I will have to wait until spring as Roco is hibernating?
For Newbees a picture of Frank with his pet Gator Rocco. Guess what will happen to me if I fail to pay the coffee
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Here's a bit of a long post. It addresses a number of issues that have been raised and comments that have been made.
>>>Anyone who has encountered what I will call "interesting dealings" with a small rural municipality knows what I am talking about
>>>What is interesting is that no one including the pro's like Frank and PFM have questioned them about the one situation where I would be worried about them? (I will also allow OTS Jeff to guess it as well if he wishes)
I'm afraid you've got me on this one. I haven't got a clue.
>>>If there was no ots another similar company would be there and who knows, they might not have the integrity of ots
Thank you very much. OTS employs professional people with professional backgrounds and expertise. OTS has been around since 2005, and Realtax has been around since 1996, and both companies will be around for a long time to come. We have, and will continue to, conduct ourselves with the highest standards of ethics and integrity.
>>>I would be careful if I was in your shoes in giving out free info to new competitors about how your business operates
I don't think I've given out too much information on this forum. What I've given out is the bare bones of doing tax registrations and tax sales. The services that Realtax provides to its clients goes far beyond these bare bones.
>>>Most treasurers follow everything that you say on your website, in emails, bulletins and at seminars. Please make sure that you are correct and not stating opinion.
I sincerely do my best to separate my opinions from fact. I hope that I've always been successful in this.
>>>I am not sold on the HST issue at all and my information is that CCRA's opinion may not be accurate.
I was hoping that CRA would conclude that tax sales are not taxable. Sadly, that's no the conclusion they came to. But it is my duty to let the municipalities that Realtax does business with know about CRA's interpretation.
If some person, or some municipality wished to challenge CRA on this issue, who knows, maybe they would be successful. But a trip to tax court would likely be quite expensive. I would guess that the legal fees would easily be in the tens of thousands of dollars, maybe more. And there's no guarantee of who would win. And keep in mind, CRA has very deep pockets. And they have very deep reasons for not wanting to see their interpretation overturned.
>>I know that you talk in your seminars about the practice of double bidding.
That issue has been raised more than once at seminars that I was teaching. My response to it is to let municipalities know what the ramifications of this situation are. I try to stick to the legalities; that's what a treasurer needs to know, regardless of the ethics of submitting more than one tender. To do other wise would be ethically wrong on my part. It could lead a municipality into a lawsuit that could have been avoided by sticking to the wording of the pertinent legislation and/or Regulation.
>>>Will you advise a municipality what to do if the owner attempts to redeem after the first deposit has been forfeited?
If the municipality is a Realtax client, yes we certainly will advise them. We advise our clients every step of the way.
>>>A lawyer who works for a municipality and who has conducted searches on properties would never sell the same searches (perhaps subsearched to update) to the public
And neither would we. If a property is being advertised for tax sale today, then Realtax would have done a title search more than a year ago. If someone ordered a search from OntarioTaxSales.ca today, OTS would conduct a search. It would not use the search that Realtax used over a year ago. If someone else ordered a search from OTS tomorrow, OTS would again conduct a search. OTS only uses up-to-date searches.
>>>For example, if a Crown lien comes on after service of the final notice or even after the sale, but before registration of the tax deed
That Crown lien would show up on the search that OTS did, and we would report it to the person who bought that search. But, we would have no way of knowing about the Crown lien if it were registered anytime after the OTS search was done.
Jeff Oberman, President
OntarioTaxSales.ca
Realtax
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Thank you Jeff, and welcome to the forum. I for one appreciate your informed responses, and as a newbie, am soaking up a lot of information... the more the better! I see why others view it as a problem with the ease of getting involved with tax sales for newcomers such as I, but that is simply how it now is.
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Here's a bit of a long post. It addresses a number of issues that have been raised and comments that have been made.
>>>Anyone who has encountered what I will call "interesting dealings" with a small rural municipality knows what I am talking about
If there was no ots another similar company would be there and who knows, they might not have the integrity of OTS, maybe more.Quote = OTS Jeff>>>
Jeff:
My first comment was directed at the downside of not having a larger service provider like yourselves around. At least you and your staff are fair and certainly professional in
in all the dealings that I have been personally exposed to. I have strong suspicions that this may not have been always been the case in very occasional other tax sale situations that I have been involved in; when you or your staff was not involved, but the circumstances were not worth a major fight.
One question I do ask is; If myself or a member of this board wishes at any time to hire your organization for a consulting assignment that would not put you in a conflict of interest with your other clients is that possible?
Finally I will leave everyone with a radical thought that I believe the members of this board might be better off if more bidders used Jeffs services (or the equivalent). (Not all of us including myself have the knowledge or resources of Frank or PFM). Why because I think it would reduce the stupidity we have all seen.
Using an analogy in My home country of Northumberland if I want to buy a building lot from a real estate agent; the standard phrase the real estate agents use is "Buyer to do his own due diligence."
On another issue someone PMed me and asked the context my accountant was using when he said more then two sales HST applies because you are in the business of buying or selling land. Was that annually or forever? Technically he was refering forever but I recognize over a longer say 10 period someone can get 3 sales pretty easy by selling their house twice and buying a cottage. I am not a tax expert but but also the circumstances are importantant. With the amount of land I have bought, I pay HST period.
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What is interesting is that no one including the pro's like Frank and PFM have questioned them about the one situation where I would be worried about them? We have the opportunity now so my question for a coffee (Timmies I cannot afford the more expensive alternatives) is what is it? (I will also allow OTS Jeff to guess it as well if he wishes)
Well Dave, you got me too. I can't imagine that I have left any stone unturned. The only thing that I have not raised is the possibility of someone affiliated with OTS or Real Tax`bidding on tax sale properties. The reason that I have not raised this is because it would be an absolute defamation to suggest it without any evidence. I may not like OTS and Real Tax, but I have no doubt that they would never engage in this sort of underhanded self-dealing behaviour. From all accounts Jeff is the sort of person who I would like to take to dinner and have a fine conversation with - especially since he was willing to come here and address all of our issues and concerns (although I continue to have issues and concerns). So, I can't possibly imagine what I might have missed. Tell me, the suspense is killing me.
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Here's a bit of a long post. It addresses a number of issues that have been raised and comments that have been made.
>>>Anyone who has encountered what I will call "interesting dealings" with a small rural municipality knows what I am talking about
>>>What is interesting is that no one including the pro's like Frank and PFM have questioned them about the one situation where I would be worried about them? (I will also allow OTS Jeff to guess it as well if he wishes)
I'm afraid you've got me on this one. I haven't got a clue.
>>>If there was no ots another similar company would be there and who knows, they might not have the integrity of ots
Thank you very much. OTS employs professional people with professional backgrounds and expertise. OTS has been around since 2005, and Realtax has been around since 1996, and both companies will be around for a long time to come. We have, and will continue to, conduct ourselves with the highest standards of ethics and integrity.
>>>I would be careful if I was in your shoes in giving out free info to new competitors about how your business operates
I don't think I've given out too much information on this forum. What I've given out is the bare bones of doing tax registrations and tax sales. The services that Realtax provides to its clients goes far beyond these bare bones.
>>>Most treasurers follow everything that you say on your website, in emails, bulletins and at seminars. Please make sure that you are correct and not stating opinion.
I sincerely do my best to separate my opinions from fact. I hope that I've always been successful in this.
>>>I am not sold on the HST issue at all and my information is that CCRA's opinion may not be accurate.
I was hoping that CRA would conclude that tax sales are not taxable. Sadly, that's no the conclusion they came to. But it is my duty to let the municipalities that Realtax does business with know about CRA's interpretation.
If some person, or some municipality wished to challenge CRA on this issue, who knows, maybe they would be successful. But a trip to tax court would likely be quite expensive. I would guess that the legal fees would easily be in the tens of thousands of dollars, maybe more. And there's no guarantee of who would win. And keep in mind, CRA has very deep pockets. And they have very deep reasons for not wanting to see their interpretation overturned.
>>I know that you talk in your seminars about the practice of double bidding.
That issue has been raised more than once at seminars that I was teaching. My response to it is to let municipalities know what the ramifications of this situation are. I try to stick to the legalities; that's what a treasurer needs to know, regardless of the ethics of submitting more than one tender. To do other wise would be ethically wrong on my part. It could lead a municipality into a lawsuit that could have been avoided by sticking to the wording of the pertinent legislation and/or Regulation.
>>>Will you advise a municipality what to do if the owner attempts to redeem after the first deposit has been forfeited?
If the municipality is a Realtax client, yes we certainly will advise them. We advise our clients every step of the way.
>>>A lawyer who works for a municipality and who has conducted searches on properties would never sell the same searches (perhaps subsearched to update) to the public
And neither would we. If a property is being advertised for tax sale today, then Realtax would have done a title search more than a year ago. If someone ordered a search from OntarioTaxSales.ca today, OTS would conduct a search. It would not use the search that Realtax used over a year ago. If someone else ordered a search from OTS tomorrow, OTS would again conduct a search. OTS only uses up-to-date searches.
>>>For example, if a Crown lien comes on after service of the final notice or even after the sale, but before registration of the tax deed
That Crown lien would show up on the search that OTS did, and we would report it to the person who bought that search. But, we would have no way of knowing about the Crown lien if it were registered anytime after the OTS search was done.
Jeff Oberman, President
OntarioTaxSales.ca
Realtax
Thanks for the response Jeff:
Just a couple of questions for clarification.
First, when OTS searches properties for members, does it use different title searchers than Real Tax used earlier for the municipality? If not, are you not simply subsearching from the last search? Is there not a conflict? Or are OTS and Real Tax completely arms length with different title searchers and lawyers?
Second, Real Tax is a leader in this field and has advised client municipalities on the HST based on a CCRA opinion. Implicit in your response is an acknowledgement that the CCRA's opinion may be wrong. I acknowledge that it might also be correct. But the Tax Court (if it actually went that far) is the entity that should decide this issue. So, now all municipalities charge HST because of a CCRA opinion. Yes, court has an expense (although I have a competent and ethical lawyer who will do this for under 10k) but I think that Real Tax should be certain of the advice that is provided to municipalities. Is it even a stretch to suggest that as part of the service that Real Tax provides, is a requirement to obtain the correct decision (from the court if necessary) rather than only an opinion?
Third. I still see a potential conflict in selling searches to both sides of a transaction. What does Real Tax tell a municipality to do if OTS searches for a member of OTS that shows a Crown lien registered after the sale but before registration? OTS has armed the purchaser with information that suggests not to close. Does Real tax tell the municipality to not close? Or is the municipality advised of their right to forfeiture of the deposit? Have you even considered whether such a lien is even valid considering it is subsequent in registration to the municipality's interests? You must be very careful not to provide legal advice on such matters - only lawyers can. If you have a lawyer provide this advice, the lawyer must comply with the LSUC's rules of conduct that deal with conflict situations.
I guess my big point is simple - are OTS and Real Tax two completely separate arms length companies that are staffed entirely by different employees, title searchers and lawyers?
You may think that I am a pain in the butt, but these are, in my view, serious issues that I hope that you have addressed when setting up the companies. If you are running two separate companies with each servicing opposing sides of a transaction, I hope that are you keeping everything separate - including management of each. Or, do you actively manage both?
ps - even though I used spell check, I later found some errors for correcting. Likely to find more when I read this again. Sorry.
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What exactly are the issues with running two companies and staffing both with the same specialists?
I understand the services these companies offer but where is the flaw?
Why not manage both companies? how is that in anyway a conflict at all?
please explain a little more, im very curious as to the suggestions that have recently been made.
enlighten me...
Jtown.
In most cases there is nothing wrong with companies cross-staffing. However, when one (Real Tax) provides services and advice to a seller, while another (OTS) provides services and advice to the purchaser on the same transaction, ... well you figure it out.
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So, I can't possibly imagine what I might have missed. Tell me, the suspense is killing me.
Netpred:
Frank being the first gets the best prize because that's the way it is in life. I guess I will have to drive over to his home stomping grounds and deliver it. Knowing his home town from an earlier phase in life; though rather then a coffee joint like Starbucks I might suggest something like "Hutch(e?)s on the beach" in season as one that is more in that region's neighbourhood style. We might even be able to pick up some accessories for PFM's boat. ;D although that has its own set of risks as my voice pitch would be probably several octaves higher after my wife got through with me.
The condition I will add for you or anyone else on this board (including OTS Jeff) as second or later place is I will be happy to mention or confirm it whatever; but ONLY in person. In your case we are overdue for a face-to-face anyways to compare notes as you are obviously smarter then me in some aspects of this crazy business. I will PM you with a suggestion.
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Netpred...I found my earlier posting on the subject. This is my good deed for the day...save your money. However, if you do decide to proceed, I hope you win.
Firstly, I requested an answer from Revenue Canada and got a long winded dissertation, the meat of which is as follows:
'It is the Agency's position that a supply, by way of a sale, occurs at the time of an action sale pursuant to the definitions of supply and sale in subsection 123(1).
It is also the Agency's position that under subsection 183(10), a sale by a municipality of a previous owner's property is a deemed seizure, or repossession, and the municipality is the deemed supplier.
As a result, pursuant to subsection 183(1) the municipality is deemed to have purchased the property, and the previous owner is deemed to have sold the property for nil consideration at the time of the auction sale.
Accordingly, as the action sale is a supply for GST purposes, and as the municipality is the deemed supplier, the sale by the municipality will be taxable unless the supply is exempt under the provisions of Schedule V of the ETA.
On May 14, 2004 the ETA was amended and municipalities are now entitled to a 100% rebate of GST and the federal portion of HST. As part of the amendments, changes were made to exclude municipalities from the general exemption for supplies of real property made by public service bodies.
As a result, supplies of real property by a municipality that were formerly exempt under section 25 of Part VI of Schedule V are now taxable.
However, supplies of real property made by municipalities for residential use (e.g., a home) may still be exempt under sections 2 to 8.1 of Part I of Schedule V."
A bit long winded, but in a nutshell it means that in most circumstances tax sale properties are now subject to GST - even though they might otherwise not be, you should consider that when you make your bid.
The problem is that many municipalities have not caught on yet and are not collecting it as an extra on closing, nor are they making any mention of it in their ads. My position is that if they didn't say that it would be extra, then they are really saying that it is included in the price, and therefore if Revenue Canada does an audit they will be forced to pay up.
There is also a ruling regarding a quebec situation (on the Rev. Canada web-site) which also indicates that there is GST involved. Go to
http://www.cra-arc.gc.ca/E/pub/gl/p-198/p-198-e.html....I've copied the text below, in case you can't open it:
GST POLICY STATEMENTS Please note that the following Policy Statement, although correct at the time of issue, may not have been updated to reflect any subsequent legislative changes.
P-198 UNPAID MUNICIPAL TAXES AND REDEMPTION BY THE PREVIOUS OWNER
Date of Issue
January 11, 1996
Subject
Sale by a municipality of the property of a taxpayer who is in default on the municipal taxes payment in the province of Qu?bec, and redemption of the property by the taxpayer at a later date.
Legislative Reference(s)
Sections 165, 183, 193, 232, 257, 261 and the definitions of "supply" and "sale" in subsection 123(1) of the Excise Tax Act (ETA)
The Qu?bec Municipal Code, the Cities and Towns Act (Qu?bec) and the Qu?bec Civil Code
National Coding System File Number(s)
11585-35; 11950-1; 11890-1; 11783/2 subsection 123(1)
Effective Date
January 1, 1991
Text
Issue and Decision:
The issues discussed in this policy statement are:
1) the application of the GST to sales of property for unpaid municipal taxes by municipalities located in Qu?bec
2) the application of section 183 of the ETA to such sales by municipalities, and
3) the application of the GST in circumstances where there is a redemption of the property by the previous owner subsequent to that sale.
A sale of property for unpaid municipal taxes is a recourse available to municipalities throughout the country in order to recover the unpaid municipal taxes.
In the province of Qu?bec, such a power is given to a municipality by virtue of the Qu?bec Municipal Code, the Cities and Towns Act (Qu?bec), or for a large city such as Montr?al or Qu?bec by virtue of its charter. These laws in Qu?bec also allow the taxpayer to regain ownership of the property within a specified time period following the sale of the property.
Generally a municipality will sell the property at an auction sale, and the buyer (hereinafter referred to as the auction purchaser) will acquire clear title to the property at the time of the auction sale. However, in Qu?bec the auction purchaser does not obtain clear title to the property but obtains a precarious one, due to the fact that the taxpayer (hereinafter referred to as previous owner) has the right to redeem the property after the auction sale.
Where the previous owner exercises the right to redeem the property within the prescribed time period (i.e. one year), under Qu?bec municipal legislation, the redemption has the effect of restoring ownership of the property to the previous owner as of the date of the auction sale.
In some provinces (e.g. Ontario), it is noted that the previous owner may not be able to regain ownership of the property as the municipal laws generally do not provide the right to redeem the property within a prescribed time period.
Thus as stated above, because there in Qu?bec is a possibility that the previous owner will redeem the property within a prescribed time period following the auction sale and because of the effect of the redemption, the issue is whether in that province the auction sale can be considered a supply for GST purposes.
Furthermore when the property is redeemed, the issue is whether a supply occurs for GST purposes.
It is the Department's position that a supply by way of sale occurs at the time of the auction sale pursuant to the definitions of supply and sale in subsection 123(1) of the Excise Tax Act.
It is also the Department's position that under subsection 183(10), the sale by the municipality of the previous owner's property is a deemed seizure or repossession and that the municipality is the deemed supplier. As a result, pursuant to subsection 183(1) the municipality is deemed to have purchased the property and the previous owner is deemed to have sold the property for nil consideration at the time of the auction sale.
Accordingly, as the auction sale is a supply for GST purposes and as the municipality is the deemed supplier, the sale by the municipality will be taxable unless the supply is exempt under the provisions of Schedule V of the ETA. Note that most supplies of real property made by a public service body such as a municipality are exempt under section 25 of Part VI of Schedule 5 of the ETA unless they are excluded from the exemption provisions by paragraphs 25(a) to (h).
Moreover, since the auction sale by the municipality is deemed to be a seizure or repossession under section 183 and because of paragraphs 183(1)(c) and (d), the previous owner may be entitled to claim an input tax credit under section 193 or a rebate under section 257 for the previously non-creditable or non-rebatable tax paid in respect of the property if the deemed supply between the previous owner (the supply that is deemed to have been made for nil consideration under paragraph 183(1)(a)) and the municipality is taxable or if it is exempt under section 9 of Part I, or section 25 of Part VI, of Schedule V.
Finally, it is the Department's position that the redemption by the previous owner of the property sold for unpaid municipal taxes is also a supply by way of sale by the auction purchaser to the previous owner pursuant to subsection 123(1) of the ETA. Accordingly, the supply of the property by the auction purchaser may also be subject to the GST.
Since the auction purchaser is making a supply by way of a sale, for GST purposes, to the previous owner, the auction purchaser may also be entitled to claim an input tax credit under section 193 or a rebate under section 257 for the previously non-creditable or non-rebatable tax paid in respect of the property if the supply is taxable.
Top of PageSAMPLE RULINGS
EXAMPLE 1
Statement of Facts
In Qu?bec, Mr. A the owner of a parcel of vacant land has defaulted on his municipal taxes payments for the last 5 years. The municipality, after numerous warnings to Mr. A, has decided to sell the property for unpaid taxes and, starts the necessary procedures. Mr. A does not correct the default and the municipality sells the property at an auction on June 1, 1993. The auction purchaser, Mr. B, acquires the property for personal purposes (i.e. otherwise than in the course of a business or in an adventure or concern in the nature of trade), for consideration equal to $ 50,000 plus GST of $ 3,500.
Under the Qu?bec Municipal Code, Mr. A has a right to redeem the property within the year following the day of the auction sale, by paying to the purchaser Mr. B the price paid on the land by Mr. B at auction with interest. On February 1, 1994, Mr. A redeems the property by paying Mr. B $ 53,500 (consideration plus the related GST) plus interest.
Rulings Requested
1) Confirmation that the auction sale of the land by the municipality is a supply for GST purposes even if the previous owner, Mr. A, has a right to redeem the land in the next year.
2) Confirmation of whether the provisions of section 183 of the ETA apply when the municipality sells Mr. A's property and if so, whether Mr. A may claim an ITC or a rebate pursuant to subsections 193(1) or 257(1) of the ETA respectively.
3) Finally, confirmation of whether the auction purchaser, Mr. B, is making a supply of the property to the previous owner, Mr. A, when the latter redeems the property.
Rulings Given
The sale by the municipality of Mr. A's land is a supply by way of a sale for GST purposes which is taxable as it is excluded by paragraph 25(c) of Part VI of Schedule V from the exemption provisions. Therefore, Mr. B will have to pay GST equal to $ 3,500 on the purchase of the land, for a total price of $ 53,500.
Furthermore, pursuant to subsection 183(10) of the ETA, the sale of Mr. A's land by the municipality is deemed to be a seizure and the municipality is deemed to be the supplier of Mr. A's land to Mr. B. Thus pursuant to subsection 183(1), the municipality is deemed to have purchased from Mr. A and Mr. A is deemed to have sold to the municipality the land for nil consideration. As a result, because of the provisions of paragraphs 183(1)(c) and (d), Mr. A will be able to claim an input tax credit under subsection 193(1) or a rebate under subsection 257(1) for the non-creditable or non-rebatable tax paid in respect of the property.
When Mr. A redeems the land on February 1, 1994, a supply by way of a sale by Mr. B to Mr. A occurs for GST purposes. Mr. B is considered to be selling the land back to Mr. A for $ 53,500 plus interest. However, the sale by Mr. B will be exempt under section 9 of Part I of Schedule V and as a result, Mr. A will not pay GST when he redeems the land.
Because the sale by Mr. B to Mr. A is exempt, Mr. B will not be able to claim an input tax credit under subsection 193(1) or a rebate under subsection 257(1) for the non-creditable or the non-rebatable tax paid in respect of the property. However, because the Qu?bec Municipal Code can be interpreted as requiring Mr. A, when redeeming, to reimburse Mr. B the price paid for the property at auction (including the GST), Mr. B's tax cost will be nil.
This ruling is subject to the general limitations and qualifications set out in GST Memoranda Series (1.4). We are bound by this ruling provided that none of the above issues is currently under audit, objection or appeal, that there are no relevant changes in the future to the Excise Tax Act and that you have fully described all necessary facts and transactions for which you requested a ruling.
Top of PageEXAMPLE 2
Statement of Facts
In Qu?bec, Co. A a GST registrant and owner of a parcel of vacant land has defaulted on its municipal tax payments for the last 5 years. The municipality after numerous warnings to Co. A, has decided to sell the property for unpaid taxes and starts the necessary procedures. Co. A does not correct the default and the municipality sells the property at an auction on July 13, 1993. The auction purchaser, Mr. B who is a registrant, acquires the property for resale in the course of his business, for consideration equal to $ 100,000 plus GST of $ 7,000.
Under the Qu?bec Municipal Code, Co. A has a right to redeem the property within the year following the day of the auction sale, by paying to the purchaser, Mr. B, the price paid by Mr. B for the land at the auction with interest. On April 15, 1994, Co. A redeems the property.
Rulings Requested
1) Confirmation that the auction sale of the land by the municipality is a supply for GST purposes even if the previous owner, Co. A, has a right to redeem the land in the next year.
2) Confirmation of whether the provisions of section 183 of the ETA apply when the municipality sells Co. A's property and if so, whether Co. A may claim an ITC or a rebate pursuant to subsections 193(3) or 257(1) of the ETA respectively.
3) Finally, confirmation of whether the auction purchaser, Mr. B, is making a supply of the property to the previous owner, Co. A, when the latter redeems the property.
Rulings Given
The sale by the municipality of Co. A's land is a supply by way of a sale for GST purposes and such a sale will be taxable as it is excluded from the exemption provisions by paragraph 25(c) of Part VI of Schedule V. Therefore, Mr. B will have to pay GST equal to $ 7,000 on the purchase of the land.
Pursuant to subsection 183(10), the sale of Co. A's land by the municipality is deemed to be a seizure and the municipality is deemed to be the supplier of Co. A's land to Mr. B. Accordingly, pursuant to subsection 183(1) the municipality is deemed to have purchased from Co. A and Co. A is deemed to have sold to the municipality the land for nil consideration. Thus, because the sale between Co. A and the municipality is taxable and because of paragraph 183(1)(c), Co. A will be able to claim an input tax credit under subsection 193(1) for the non-creditable tax paid in respect of the property.
When Co. A redeems the land on April 15, 1994, a supply by way of a sale by Mr. B to Co. A also occurs for GST purposes.
Mr. B is considered to be selling the land back to Co. A for $ 100,000 plus interest. The supply by Mr. B to Co. A will be taxable as it is excluded from the exemption provisions by paragraph 9(b) of Part I of Schedule V.
Mr. B, a registrant, will also be able to claim an input tax credit under subsection 193(1) for any tax paid in respect of the property for which he was not able to claim an input tax credit.
This ruling is subject to the general limitations and qualifications set out in GST Memoranda Series (1.4). We are bound by this ruling provided that none of the above issues is currently under audit, objection or appeal, that there are no relevant changes in the future to the Excise Tax Act and that you have fully described all necessary facts and transactions for which you requested a ruling.
http://www.cra-arc.gc.ca/E/pub/gl/p-198/p-198-e.htm
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Maybe I can't read, but I don't see any contradiction.
The book that you have cited says that Municipalities conducting a tax sale have been deemed to have seized the property...and taken ownership at $0. The resale of it, or if the Municipality opts to use the property for its own use is subject to HST as part of the municipalities commercial activities. Unless the purchaser has an exemption certificate, or the property is used residential, then it is taxable, ---- according to this senior partner of PriceWaterhouse Coopers LLB. 8)
heres a link to something i found, though im not sure if it is of any use at all as its just another contradiction.
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>>>The only thing that I have not raised is the possibility of someone affiliated with OTS or Real Tax`bidding on tax sale properties.
For the record, I have never bought a tax sale property, nor have I ever submitted a tender or bid on a tax sale property. Nor have I ever in any way participated in the purchase, or attempt to purchase, a tax sale property; not through a third party, or through a numbered company, or in any other way. Also, my companies' employment contracts all contain a clause that forbids the employee from buying a tax sale property, or in participating in an attempt to buy a tax sale property, anywhere in Ontario.
>>>First, when OTS searches properties for members, does it use different title searchers than Real Tax used earlier for the municipality? If not, are you not simply subsearching from the last search? Is there not a conflict? Or are OTS and Real Tax completely arms length with different title searchers and lawyers?
OTS has it's own title searcher, Dave. He has been searching titles for more than 20 years. Dave is also a Survey Technologist. He worked in the Parcel Mapping department at the Municipal Property Assessment Corporation as a Drafter/Geographic Information Systems Specialist for 16 years. Dave is also a graduate of the Municipal Tax Administration Program from Seneca College.
Dave does not do any title searching for Realtax. Realtax also has it's own title searchers. Between them, the Realtax title searchers have more than 100 years of experience in title searching. When the OTS title searcher is on vacation, one of the Realtax title searchers fills in for him.
Also, please be aware that not every municipality that uses OTS is a Realtax client. OTS is available to every municipality in Ontario, regardless of who is handling their tax sales.
Neither Realtax nor OTS has a lawyer on staff. We do utilize the services of a lawyer when we need to. Our lawyer is well-versed in tax sales and has done a great deal of research on tax sale-related matters.
As I previously stated, when someone orders a search from OTS, we conduct a new search for that person. So no, we are not subsearching from the last search.
And no, there is not conflict. A title search states facts. The Title Search Summaries that we prepare also state facts. The facts are the same, regardless of who the facts are being supplied to.
And for the record, Realtax Inc. and OTS are separate corporations, and they carry separate insurance policies. Realtax has been in business since 1996, and OTS since 2005. There has never been a claim on the insurance of either company.
>>> I think that Real Tax should be certain of the advice that is provided to municipalities. Is it even a stretch to suggest that as part of the service that Real Tax provides, is a requirement to obtain the correct decision (from the court if necessary) rather than only an opinion?
The advice that we provide to municipalities on this matter is, "We have obtained an Interpretation from CRA and here's what it says...". And no, there is no requirement for Realtax to go to court to obtain a "correct decision".
>>>What does Real Tax tell a municipality to do if OTS searches for a member of OTS that shows a Crown lien registered after the sale but before registration?
Realtax has assisted municipalities with over 1,500 tax sales, and we have never seen this happen. Also, OTS has never had a member request that a title search be done after the sale.
In the event that this did happen, we would advise the municipality what their options are. That is, either proceed with the tax sale, or cancel the tax sale. It would be up to the Treasurer of the municipality to decide what to do.
A few years ago Realtax encountered a vaguely similar situation. After a municipality began tax sale procedures, the region expropriated a large portion of the land in question. In that case, the municipality cancelled the tax sale.
>>>If myself or a member of this board wishes at any time to hire your organization for a consulting assignment that would not put you in a conflict of interest with your other clients is that possible?
We've never been hired for a consulting assignment. That doesn't mean that we wouldn't consider it, but first I would have to know the nature of the assignment. If it put us in a conflict position, we would decline the assignment.
>>>I for one appreciate your informed responses, and as a newbie, am soaking up a lot of information...
Pardon me for possibly blowing my own horn, but if you want to learn a tremendous amount about tax sales, there is an extremely helpful resource available to you, free of charge. Just go to OntarioTaxSales.ca, and click on HOW TO BUY TAX SALE PROPERTIES. If you read through all of it, you'll know more about tax sales than the vast majority of people in Ontario.
Best regards,
Jeff Oberman, President
OntarioTaxSales.ca
Realtax Inc.
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>>>If myself or a member of this board wishes at any time to hire your organization for a consulting assignment that would not put you in a conflict of interest with your other clients is that possible?
We've never been hired for a consulting assignment. That doesn't mean that we wouldn't consider it, but first I would have to know the nature of the assignment. If it put us in a conflict position, we would decline the assignment.
Best regards,
Jeff Oberman, President
OntarioTaxSales.ca
Realtax Inc.
Jeff:
I was the source of the question about the consulting assignment. I have highlighted a section of of my original question in red to stress it was not my intent to put you in a conflict of interest.
The reason for the consulting assignment question was based on my own personal experiences and the concerns of others because I think we have to start looking at tax sales in a different light. Every one on here is hoping for the big score. But like gambling while it does happen I think it is rarer then people realize. (There are also some very smart people both on and off this board who beat me more often then I like)
I have likened it to Placer gold mining with a lot of sand and muck and the occasional gold nugget. Because of the competion; I want to try a different approach to in effect see if I can make some money off of the much. That is where you might come in but obviously I going to go private on the details.
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Thanks Jeff, I already have been there and read all that you have...between this site and yours I have learned to avoid some pitfalls, and gained an appreciation for the wide range of different issues to consider before even bidding.
>>>I for one appreciate your informed responses, and as a newbie, am soaking up a lot of information...
Pardon me for possibly blowing my own horn, but if you want to learn a tremendous amount about tax sales, there is an extremely helpful resource available to you, free of charge. Just go to OntarioTaxSales.ca, and click on HOW TO BUY TAX SALE PROPERTIES. If you read through all of it, you'll know more about tax sales than the vast majority of people in Ontario.
Best regards,
Jeff Oberman, President
OntarioTaxSales.ca
Realtax Inc.