Ontario Tax Sale Property Forum
Tax Sale Forum => General => Topic started by: dhill on April 12, 2006, 12:42:56 AM
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Hi,
I have question about these tax sales. What % of these properties really end up not having any mortgages or leans that are associated with them. In other words, how many would be yours free and clear after your winning bid.
Thanks
Don
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Hi D Hill,
Most Liens/mortgages are removed before the property is listed for auction. The only case where a lien may still exist is a city/federal lien. I would say 95%-99% are free and clear of this type of lien.
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Don
Rob is quite correct, only Provincial and/or Federal liens survive a tax sale. That's due to the fact that these are placed there on behalf of the Queen and you can't do anything to take away her rights.
The only other things that survive a sale, are any encroachments, easements, or rights of passage across the property that might have been acquired by others (if a person uses your property over a period of time, there are rules that might come into play which they can use to claim that portion as theirs, and likewise if someone crosses your property for a period of time they will acquire a right to trespass which you cannot remove).
You will not usually be able to determine these until after you have acquired the property (except in the case of a registered easement). For example, in the case of one property I acquired a few years ago, a small portion of the municipal road and drainage ditch are actually on my property. Since they have been there for some 40 years or more, there is an acquired right of trespass which I cannot remove - except if I were to deed that portion over the City, which I won't do since it takes away from my property and further limits the area I can build on due to the set-back requirements.
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I was on another site that promoted Tax Sales and provided Title searches. If leans do not survice the aution, is a Title Search neaded?????
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There is nothing that says that you have to do a title search - if you want to roll the dice, go ahead.
However, I would want to know if there are any registered easements or encroachments on the property which would adversely affect the market value. Oh yeah, lets not forget the Provincial or Federal liens that remain your responsibility if you are successful.
Let's say you buy a property for $50,000. You figure that it had a market value of $70,000 and therefore you did pretty good. Guess again, the property had a Provincial lien of $50,000. The net result is that you just lost $30,000 (your highest bid should have been $20,000 had you known about the lien, and even then you would only break even). Now let's pretend that you took the time to do a search between being recognized as the high bidder and paying up the balance. You find out about the lien and you decide to do the right thing and walk from the deal - you still lose cause you forfeit your $10,000 (minimum 20% deposit).
Bottom line ...... do your homework.
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Hi everyone,
Thanks for your help.. You were very informative.
Cheers
Don
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Hello,
In one of the bottom paragraphs on every auction notification it says the purchaser is responsible for all liens, taxes owing, outstanding mortgages, title, etc. Lets assume we have the title checked and verified. How do we find out if the house has a huge mortgage still on it that we will then be responsible for? Ex. Refinancing, etc. I have never been to a tax sale and I was wondering if this info is made available before you put in your bid or you just take your chances. I see a posting about mortgages and liens are taken off by the time it goes for public auction - then why do they have that clause in the posting? Can anyone explain?
Thank you
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They might have federal liens and provincial liens which you would be responsible for. These are different then mortgage liens or business liens that the property might have before the tax sale.
Did the title search bring up any liens on the property you are looking at purchasing?
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Well I haven't had a legal title search done, I'm just going on info I get from Geowarehouse showing liens on property. I really don't know what kind of liens they are. I am looking at a couple of properties, just out of curiousity, to perhaps take a step into the game. These 2 properties are not showing up with any liens. It seems like a title search would be the least of your expenses though if you are stuck with a refinanced mortgage of which you had no knowledge. I guess I just don't know the process and it seems quite difficult to find information about it. (Unless you buy into one of these courses). I need to know what my risks are before going into this kind of an investment.
Thanks for your response
realbuyer
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I was looking in Prince Edward County and I notice that 2 properties have Notice is given that the lands may be subject to a charge in favour of the Federal Business Development Bank. is this considered a crown lean ? Do they usually list this information on the post or is this just something that PEC did?
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That is a crown corporation so those liens will not be removed from the Tax Sale. The city does not have to post that information, but it is nice that Prince Edward County did that.
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Only governement liens survive a tax sale, however, there are a lot of branchs to the government and it is always best to do a lien search to know what you are up against. Is important to remeber that the Crown has a lot of various departments and any of them could have a lien against the property. Also, if you are succussful bidding on a property with a non government lien, be prepared to prove your ownership to the lien holders, they may not be aware of the tax sale and might believe that since they have a lien, the property is theirs.