Due diligence

[aricamukri]

How do you get information on outstanding mortgage, charges, liens, taxes, and other encumbrances.  I have left voice mail messages with Enforcement officer but have not heard back

[candi839]

I'm actually looking for the same info if anyone has it available.

[Frank]

The taxes owing on a tax sale property are actually the predominant charge included in the minimum bid.  Other costs of conducting the registration and eventual sale are also included in that figure. 

When you are bidding on a tax sale you must do a search of the property at the local registry office to find out what else is registered on title.  You should also do a sherrif's office search of the individual owner(s) of the property. 

Generally, mortgages and other liens on a property lose their priority and disappear as a consequence of the sale itself.   The only exceptions to this  are any liens placed on the property by Federal or Provincial agencies - these can go on at any time, and you can get stuck if they (for example) happen to be registered the day of the sale, after you have already done your search. 

Once the sale is concluded, and assuming that it produced a bid that exceeded the minimum, then the Municipality is required to submit any excess proceeds (amounts over the minimum bid) into court.  Any interested parties (mortgagies, lien holders, or even the owner) can then go to court within one year and request these funds...and the judge will determine who gets what.  After the one year is up, the municipality is at liberty to go back to court and request that the judge award the excess proceeds to the municipality - a real winfall for the town, and it happens all the time.

There can be other liens on the property in the form of encroachments, and acquired rights of trespass, etc.  by neighbouring properties which don't show up on title.  You must examine the property closely to determine if any of these exist.

[candi839]

How much, on average, would someone be willing to bid on a property?  Would a bid of 70% of the estimated "appraised" value be acceptable?

[Frank]

The amount you wish to bid on a property that is up for tax sale is completely at your discretion.  There is no rule of thumb - so to speak. 

You need to assess what the property is truly worth, difficult in the case of a tax sale property since you cannot legally enter onto it and examine it for defects. 

As well, you need to determine what other bidders might come in with since this is an open competition.  If you think you are going to get it for the amount of the cancellation price (ie. taxes owing) - you may be successful if there are no other bidders, which I have seen.  Alternatively, I have seen situations (not many) where people actually bid more than the market value of the property (they may have some ulterior motive for doing this and needed to make sure that they were successful).

The bottom line is that there are costs involved in participating in a bid, and no one is going to re-imburse you if you are not successful.  If you want a property badly enough then make sure your bid is sufficient to get it.  If you are just out on a flyer and want to waste your money on a chance that no one else comes forward - then by all means take a chance.

[Ben]

Frank

In a previous posting you said:

When you are bidding on a tax sale you must do a search of the property at the local registry office to find out what else is registered on title.  You should also do a sherrif's office search of the individual owner(s) of the property.  

My question is how do you actually execute that search, what is the process involved? where do you go to start the search?

Thanks

[Raz]

Ben,

I just went to the land registry office to do a title search for some properties for a Sherrif's Sale in my area.  It was the first time I had tried to perform a title search and probably the last.  The information I was able to collect was pretty unclear so I'll probably use a real estate lawyer in the future to be sure the info is correct, I would hate to make a mistake that could likely cost thousands of dollars to fix.

I'd definitely like to hear other peoples experiences with registry searches though, I may be missing something.

Thanks,

Raz

[Frank]

If you've never done a search you would be well advised to hire a lawyer or a free-lance searcher (they are usually resident in the registry offices, and are much cheaper than a lawyer).  I would suggest that if you have a friend that knows how to do one, then bring them along and learn by doing.  Legal documentation can be quite complicated and it helps if you know what it is that you are looking at. 

Sherrif's offices are usually located in or near the registry office buildings and your search there is on the registered name of the owner of the property,  that search will tell you if an ex-wife or business associate/customer has placed a lien on the person and all of his assets to satisfy some debt.  The liens that should really concern you are the ones from the Federal or Provincial government and their agencies which could survive a tax sale.  I once saw a fellow bid on a property and find out afterwords that there was a lien that - together with his bid price - made him a real loser.  He walked away from the excercise and lost his 20% deposit - he should have done the search before he bid.

Frank