Ontario Tax Sale Property Forum
Tax Sale Forum => General => Topic started by: Dave2 on October 09, 2011, 01:09:41 PM
-
Just when you think you might have something sold, something always comes up.
Very simple situation. A (a non government) lien was placed on a property 50 years ago that I purchased through a tax sale. The property has been through tax sale and from what everything I know about this business the lien is void because of the tax sale.
Because it is still on title buyer's lawyer refuses to recommend sale. >:(
Quick question, how does one get it off title (fair to assume lien holder is deceased because of long time passing.) Also as a second question should the municipality have wiped it off title.
This of course came up late Friday afternoon as everyone headed away for long weekend.
-
Normally the only one who can remove a lien is the one who placed it there. The simplest thing is to have your lawyer just call the lien holder and ask to have it removed - this usually works just fine for situations such as this. I believe that the municipality and the registrar acted correctly in this case, and if the lien no longer has any force and effect then you will have no problem. No one is out to slander your title. After a tax sale you should always get a search after your deed is registered and start addressing any issues that will cause a problem at closing. For crown corporation liens such as Farm Credit, or the Seaway Authority, you just have to do the search and see what gets cleared. I recently had a Seaway Authority lien wiped out to their surprise, but at another time, or in another Registry office I may not have been so lucky. On a recent purchase I got stuck with a CRA lien against a one half interest - this is going to be fun going head to head with the CRA but at least by searching title subsequent to the tax sale registration I knew exactly what remained, and who to contact. The best time to have your lawyer negotiate liens is after you win, but before you pay the final 80%. There have been instances where the municipalities have extended the 14 day period to allow clearance but you certainly cannot count on it, plus you would need written permission from the second high tender holder. I have also had several instances where I got my 20% deposit back when a lien could not be cleared, but today municipalities, especially those using RealTax, are not inclined to be so flexible. Bottom line, always use a lawyer to close your tax sale purchase, then use the same lawyer to execute your sale, and always pay for title insurance on your purchase in case he/she misses something. Dave, it sounds like you are learning first hand why you cannot pay market price for a tax sale property. These title problems are a lot more common than you think, especially the ones where a husband and wife own the property, but CRA has a lien against just one of the owners. To my knowledge there is no case law to help you out, and the current act does not define "interest of the crown", so until someone (not me) wants to spend their money clarifying it in court, then buying at tax sale is only for those who can afford to lose. What if it costs you more to remove that 50 year old lien than the property is worth?
-
One further thought. If this so called lien was as you say then it would have been cleared when the property went into the new land registry system a few years ago. Something does not make sence here. Maybe you are dealing with a restrictive covenant that runs with the land and survives a tax sale. Was the "lien" in the body of the title report, or the qualifications section at the top? If it was at the top, then your sherriffs search should confirm that it is cleared, and that is all that is required to satisfy the requisition from the purchaser's solicitor. I have trouble buying into that dead person stuff since dead people don't renew their liens to keep them from disappearing.
-
Normally the only one who can remove a lien is the one who placed it there. The simplest thing is to have your lawyer just call the lien holder and ask to have it removed - this usually works just fine for situations such as this. I believe that the municipality and the registrar acted correctly in this case, and if the lien no longer has any force and effect then you will have no problem. execute your sale, and always pay for title insurance on your purchase in case he/she misses something. Dave, it sounds like you are learning first hand why you cannot pay market price for a tax sale property. These title problems are a lot more common than you think,
G2020:
This is a regular commercial lien similar to a mortgage by a non crown entity. As such after a tax sale it should be null and void as like a regular mortgage and not like a claim by the crown or a crown corporation.
The problem is that to the best of my knowledge the entity that created the lien is no longer in existance (created 50 years ago and commercial entity that created it is defunct.) and as a result there is no way that it can be removed in the normal sense.
FYI I paid way less then market so the issue is not one of price; but of clean up.
Is there an easy way to remove it when the lien holder no longer exists? If necessary I may have to indemnify puchaser but that has its own set of issues.
Alternatively we may need a catchy description to convince purchasers to ignore it. Like those rocks that are available on the current Collingwood tax sale. Something like "Classic georgian bay, compact properties already subdivided (the water forrms a natural severance.),steps to swimming ;D
-
Dave:
Is it an execution or is it registered on title? Executions have a shelf life and expire anyways unless renewed so my guess is that it is registered on title. It is true that these encumbrances, like mortgages, will not survive a tax sale. However, they are not automatically deleted. Your lawyer will have to prepare an application to amend the register. This is not a big deal and the instrument should be deleted unless it is a Crown interest.
-
I agree with netpred. It does help if you do it early. The other remedy of course is what is known as a friendly v&p where you make a submission to a judge under the Vendor and Purchaser's Act and then register the decision on title, and get the sale closed. The friendly V&P is usually reserved to resolve more complex tax sale requisitions such as one I did myself many years ago to answer a requisition where the mortgage lender was not included in the list of people notified regarding the tax sale - everyone agreed the deed was good but the purchaser's solicitor wanted something on title so that there would be no future issue when houses being built upon the lots closed. Technically a decision under the Vendor and Purchaser's Act is only binding upon that particular vendor and purchaser, but it tends to be good enough, especially since tax deeds are now all in Land Titles.
-
g2020:
The problem with V & P's is that they lead to bad law. There is no question that a mortgagee is entitled to notice under the Municipal Act. However, to facilitate a closing, a Judge on a V & P is likely to agree with whatever is necessary to close the deal. I am pretty sure that the mortgagee in your appliction was not party to the V & P or if they were, they did not attend.
So, the moral of the story is that you can get a judge to just about to agree to anything on a "friendly" V & P, but don't ever try to rely on these cases in the future.
What I find of particular interest is that the purchaser's lawyer went behind the tax sale to verify that the procedures in the Municipal Act were complied with. Many lawyers will not do this. It would be important under the Registry System for a lawyer to act with such dilligence. Now, if a deed is accepted for registration (and with e-reg, what deed is not?) the purchaser will invariably be content with his or her title. In g2020's case you have an example of a competent lawyer. This is the type of lawyer that you want to act on your behalf. The trouble is that most people are not willing to pay for this level of service and also that many lawyers are not providing the level of service that the public deserves. Treasure any lawyer that you find who pays that much attention to detail.
-
I agree with netpred. It does help if you do it early. The other remedy of course is what is known as a friendly v&p where you make a submission to a judge under the Vendor and Purchaser's Act and then register the decision on title, and get the sale closed. The friendly V&P is usually reserved to resolve more complex tax sale requisitions such as one I did myself many years ago to answer a requisition where the mortgage lender was not included in the list of people notified regarding the tax sale - everyone agreed the deed was good but the purchaser's solicitor wanted something on title so that there would be no future issue when houses being built upon the lots closed. Technically a decision under the Vendor and Purchaser's Act is only binding upon that particular vendor and purchaser, but it tends to be good enough, especially since tax deeds are now all in Land Titles.
I agree that use of the Vendor and Purchaser act is one option and would probably work in this case; two problems.
a) the cost, my lawyer estimates about $2,000.00
b) The time which probably means that I would lose this deal while we sort out the legal issues.
My lawyer is also working with the registrar to see if it should have been placed on title at all when it was converted to land titles. In this case there maybe thousands of deeds affected locally if this legal concern holds.
-
When was the property purchased? It is my understanding in the Municipal Act that it is the townships resposibility to provide you with clear title except of course if it is a Crown interest. I can't remember exactly the quote but the route I would take if the sale was not that long ago is to go after the township to clear it. If it has been several years they problbly will not though.
-
When was the property purchased? It is my understanding in the Municipal Act that it is the townships resposibility to provide you with clear title except of course if it is a Crown interest. I can't remember exactly the quote but the route I would take if the sale was not that long ago is to go after the township to clear it. If it has been several years they problbly will not though.
This is actually not accurate. The municipality has an obligation to register the tax deed. It will not take steps to delete any instruments that are registered on title nor does it have an obligation to do so. You must do this yourself. That is the nature and essence of Dave's post and this thread. The Municipal Act provides that a tax deed is only subject to a few encumbrances. The Act does not delete other instruments. That is for you to do. So the moral of the story is that if there are any instruments such as a mortgage registered on title to a property that you purchased on a tax sale, you should have your lawyer prepare an application to amend the register in a timely manner in order to have the instrument deleted from title. Otherwise, it may not be valid, but it will still appear on title, and in the Land Titles system, this is very problematic when selling.
-
I looked up the quote I was thinking about in the Act today and I think there needs to be a little discussion on this. I know how I read this but I am not a lawyer and I have been known to be wrong before so here is the quote and please give feedback as to what people think.
"Conduct of sale
(5) The treasurer, in accordance with the prescribed rules, shall conduct a public sale and determine whether there is a successful purchaser and,
(a) if there is a successful purchaser, shall prepare and register a tax deed in the name of the successful purchaser or in such name as the successful purchaser may direct; or
(b) if there is no successful purchaser, may prepare and register, in the name of the municipality, a notice of vesting. 2001, c. 25, s. 379 (5).
Statement
(6) At the time of registering a tax deed or notice of vesting, the treasurer shall make and register a statement in accordance with the prescribed rules. 2009, c. 33, Sched. 21, s. 6 (34).
Effect of conveyance
(7) A tax deed, when registered, vests in the person named in it an estate in fee simple in the land, together with all rights, privileges and appurtenances and free from all estates and interests, except,
(a) easements and restrictive covenants that run with the land;
(b) any estates and interests of the Crown in right of Canada or in right of Ontario other than an estate or interest acquired by the Crown in right of Ontario because of an escheat or forfeiture under the Business Corporations Act or the Corporations Act;
(c) any interest or title acquired by adverse possession by abutting landowners before the registration of the tax deed. 2001, c. 25, s. 379 (7); 2006, c. 32, Sched. A, s. 156 (3)."
-
I looked up the quote I was thinking about in the Act today and I think there needs to be a little discussion on this. I know how I read this but I am not a lawyer and I have been known to be wrong before so here is the quote and please give feedback as to what people think.
"Conduct of sale
(5) The treasurer, in accordance with the prescribed rules, shall conduct a public sale and determine whether there is a successful purchaser and,
(a) if there is a successful purchaser, shall prepare and register a tax deed in the name of the successful purchaser or in such name as the successful purchaser may direct; or
(b) if there is no successful purchaser, may prepare and register, in the name of the municipality, a notice of vesting. 2001, c. 25, s. 379 (5).
Statement
(6) At the time of registering a tax deed or notice of vesting, the treasurer shall make and register a statement in accordance with the prescribed rules. 2009, c. 33, Sched. 21, s. 6 (34).
Effect of conveyance
(7) A tax deed, when registered, vests in the person named in it an estate in fee simple in the land, together with all rights, privileges and appurtenances and free from all estates and interests, except,
(a) easements and restrictive covenants that run with the land;
(b) any estates and interests of the Crown in right of Canada or in right of Ontario other than an estate or interest acquired by the Crown in right of Ontario because of an escheat or forfeiture under the Business Corporations Act or the Corporations Act;
(c) any interest or title acquired by adverse possession by abutting landowners before the registration of the tax deed. 2001, c. 25, s. 379 (7); 2006, c. 32, Sched. A, s. 156 (3)."
There is nothing in the statute that requires a municipality to clear up title issues. Absolutely nothing!!!
The effect of the conveyance is that you get, subject to the listed encumbrances, clear title. Again, the municipality is under no obligation to clear up title issues. You will get a tax deed that is subject only to the listed encumbrances. However, the municipality has no obligation to clear up any other encumbrances registered on title. No municipality does this. The encumbrances may not affect the property but they are still registered. So if there is an encumbrance registered on title and you want it deleted, do it yourself. It is not a big deal. It might cost a couple of hundred bucks.
-
There is nothing in the statute that requires a municipality to clear up title issues. Absolutely nothing!!!
Without getting into the details there is correspondence going on with local land register to effect why when the new land titles act was implemented was this carried over. i.e. is this a problem of (sloppy) land titles registration.
Once I have some answers will give an update. In interim may suggest if you are lucky and actually buy a property through tax sale; you may wish to confirm that all old liens etc. actually are stripped off.
Dave2
-
There is nothing in the statute that requires a municipality to clear up title issues. Absolutely nothing!!!
Without getting into the details there is correspondence going on with local land register to effect why when the new land titles act was implemented was this carried over. i.e. is this a problem of (sloppy) land titles registration.
Once I have some answers will give an update. In interim may suggest if you are lucky and actually buy a property through tax sale; you may wish to confirm that all old liens etc. actually are stripped off.
Dave2
It looks like the local land register agrees with my lawyer and will remove the problem from title. I will confirm this once all is done.
-
It looks like the local land register agrees with my lawyer and will remove the problem from title
Congrats Dave. Another one done.
-
It looks like the local land register agrees with my lawyer and will remove the problem from title
Congrats Dave. Another one done.
One of the big advantages always with a tax sale is you do have clean title except for a few spelled out exceptions. I also had a sherrifs certicate that everything was all clear, so fundamentally my
case was strong.
My fault was not ensuring title was cleaned up because I assumed with land titles conversion that happened between buy and sell that that process would clean up old garbage.
Wrong and l not make that mistake again as it screws up the sell process.
Contrast this situation with that in the United States where as a result of some recent court decisions, we have a first class mess in land titles. I just ain't buying foreclosure or tax deed sales in the US until they can prove to me I have clear title. title insurance doesn't cut it, the insurer does not have enough capital to cover a small percentage of the defaults. This URL sums it up.
http://mandelman.ml-implode.com/2011/10/from-bevilacqua-to-fontenot-it%E2%80%99s-coast-to-coast-confusion/