property standards violations

[Laila]

Hello,
I'm new here.  I thought I would try my first purchase locally in Brantford, Ontario.  The City Clerk's office informed me that there are property standards violations on some of the four listed properties.  I have the tender package which only describes the locations of the properties.  I bought the title packages ($8 each), and spoke to several people at the land registry office and various city hall departments.  They informed me that according to a new law, I would need to fill out a "Freedom of Information" (FOI) request to find out what the property standards violations are, and that it would take 30 days for an answer.  This brings me to the day of the sale or possibly later since the person who does this job is going on holidays.  Apparently I could purchase the Zoning Enquiry package for each property ($50 each), which would tell me if a property had violations, but it would not describe what those violations are.  How can I make an informed decision about a property when they make it this hard?  Does anyone have any suggestions on how to find out about property violations?

Thanks
Laila     

[Rob]

Hi Laila,

Great to hear that you are trying to get your first tax sale property.  The title packages are good for some information but never the silver bullet.

I don't have any knowledge of these properties and I'm not bidding on them but it sounds like contaminated land or the owner decided to build a structure without city hall approval.

I would go to the property to see if any unusually structures are in place (windmill, crumbing building, a deck attached to the house).  I would see if any grass or plant life is growing and check if the ground has been dug up).  If it is just a structure, you can easily remove that.. if the land is contamined I'd stay away unless you have some experience (or want to gain experience) cleaning that up.

Good luck

[Laila]

Hello Rob and Thanks,
Sorry for the delay in responding.  You're right, I drove by the property and sure enough there is an addition on the back that is taking in water.  I've since received the requested info from city hall which I managed to get expedited with a few phone calls.  It confirms that violation plus a few more challenges (leaky roof, ceilings, paint, etc.).  I wish I could take a look inside but the windows are boarded up.  Minimum bid is approximately $11,000, and could sell for $110,000 after repairs.  Even so, if there's mold this one may be too much of a risk for a first purchase.  Not to mention, there are 4 other people that have requested info by the sounds of it. 

Thanks Kindly,
Laila

[Frank]

On rare occassions, you will find properties listed for sale for back taxes and they have simply been forgotten by their current owner.  In the majority of cases these properties are severely challenged, the current owners have walked, and that is why they are for sale.

Worst case scenario, is that you buy a house inthe suburbs and you think it looks lovely, you've paid a fair chunk of change for it (probably as high as 70% of what it's normal market value would have been based on a drive-by inspections and a look at the real-estate market for the area).  When you finally open the door, you find out that it was a marijuana (you know) grow house and it will have to be torn down.  what you have really bought is a piece of land with a liability on it.   -  Be very careful.

There is no onus on the Municipality to get the highest and best price for the property.  In the end they only have dibs on the amount of taxes owing and must turn anything extra over to the courts for the old owner/mortgagee to claim.  That is why you don't see the Municipalities providing anything more than basic information - in most cases they know a lot more than they let on but are not allowed to release the information (or don't want to, since if no one bids on the property the Municipality gets to claim it for just the amount of taxes - they are at liberty then to take ownership and market the property properly and get the highest value for it (all for themselves).  In a past life, I put a property up for $400,000 in back taxes (I knew it was clean, but it didn't appear to be), no one bid, and the municipality I worked for took ownership - we sold it two years later for $1.2million (I didn't get a bonus that year - go figure).

Being an older Industrial City - there is lots of contamination in the Brantford area so be wary of anything that has been walked away from there.  Also, don't get scared off on a tax sale just because there are four other people that have requested the info..  There are probably several hundred that are looking at it, and in the end who knows how many bid and how much.

[twinn]

Frank, you are defiantly right on with your analysis, a lot of property, espically commerical type properties are left vacant for a reason.  When bidding on this type of property it is very important to do due dilligance.  Another important factor when considering tax properties is what year they were "abandoned".  This properties may have been sitting in idle for years before the municaplity decides to put them on the auction block, with the current run up in real estate prices, some properties that may have not been profitable to refurbsih a few years ago  might very well be worth the cost today.