PFM's Legal Case - They don't always redeem - Why do not approach the owner

[Dave2]

I don't know how many times we warn don't approach the owner.  Extracts from the legal case show why.  Human behaviour is not always logical.  

Quoting from the legal case: (This was a valuable piece of property.  They do come up)

The farm has been targeted for sale by the Township of Front of Yonge in order to recover $13,833.34 in tax arrears and costs.  It has an assessed value of approximately $188,000 and has been free and clear of any mortgages since 1996.

Love to be a fly on the wall after the husband found out? I wonder what happened to his blood pressure.

Facts
[7]               In November 2001, the township first sent the Cunninghams a notice of arrears (which then totalled $4,879.06) and advised that their property would become liable for tax sale proceedings as of January 1, 2002.  On March 14, 2002, the municipal treasurer caused a Tax Arrears Certificate to be registered against the property, and on March 18, notice of registration of that certificate was sent to the respondents by registered mail.  On January 8, 2003, final notices were sent to the respondents by registered mail.  On April 28, 2003, the municipal treasurer wrote to the Cunninghams advising that commencing May 10, 2003, the property would be advertised for sale for four consecutive weeks.

[8]               Mr. Cunningham did not receive any of these notices.  Mrs. Cunningham did, however.  She looked after the family finances at the time.  She withheld the notices and information about the tax arrears and pending tax sale from her husband because of a misguided but understandable human concern over the effect the information might have on his high blood pressure and poor health, and also to shield herself from his knowledge of her personal overspending.

      Mr. Cunningham learned that his farm was for sale from a neighbour, who showed him a sales ad in a newspaper on May 26, 2003.

Tax sale was held June 4.  As I mentioned in earlier post If first bidder had moved fast they would now be the owner.  Instead they got greedy and ended up owning a lot of legal costs.

On June 18 ? the day after the Cunninghams were advised of the township?s position ? their son Chris discovered the eight notices of tax sale that Mrs. Cunningham had received and hidden from her husband in the kitchen cupboard.  The next day, June 19, 2003, the Application for relief was commenced

Bottom line is also do not get discouraged by redemptions  some good ones do not redeem.
I was personally involved in another one I know of that the owner was in a bitter divorce and was bound and determined that the other party to the divorce would get nothing.  I put in a bid but got stompted on by Bigfoot.  

[DF1]

Of course, we don't know if the neibour was interested in the land, or was concerned for his neibour's welfare. Still, the point remains, don't talk to the owner.

[atorrin]

What is meant when you call a property a "redeemer"?

[Dave2]

What is meant when you call a property a "redeemer"?

Fundamentally a property that has enough value that it is worthwhile to redeem.  Quoting from my original post:

 The farm has been targeted for sale by the Township of Front of Yonge in order to recover $13,833.34 in tax arrears and costs.  It has an assessed value of approximately $188,000 and has been free and clear of any mortgages since 1996.

Assessed value is often below market value particularly for rural properties; thus in this case for an $15,000 investment one could potentially have a property with a $200,000 plus value.  For obvious reasons normally something this valuable with no apparent (Eg environmental or crown claim) problems will not go to tax sale.  Setting a proper bid price on one of these is a real art.

Because we expect it to redeem most of the regulars on the board wait until late in the game before we get serious if our initial investigation reveals something potentially of real value.  

Interesting enough if someone is gutsy I think some of the best opportunities may lie in the higher end commercial rental side.  In that case the tenants commonly pay the for the owner's taxes in a rental surcharge often called "TMI" which is shortform for "(property) Taxes Maintenance and Insurance".  I have encountered cases where the owner used this as a loan.  

I have purchased commercial properties through a realtor where the owner was doing that although it backfired with us because you can imagine what we did in terms of offering price once we saw this.  In this case we could fully protect ourselves with a very full environmental survey and legal investigation.  We actually talked with the CAO of the municipality to delay any tax sale because the money was coming.  

I haven't yet been willing to do this on the tax sale side yet because of the 'as is" purchase but I have been tempted.  For example there was a recent tax sale in Latchford that might have had this potential but the unknown problems are building condition and environmental. You can check the government claims side though.  

I have been tempted to approach some members of this board to see if they would be interested to form a hit squad to go after these big ones.  On the non commercial side the problem which you face if you have the fortune to get a really good one is you get tempted to keep it.  As a result the renovations are more expensive because you do it right not do it cheap.
The low acquistion cost makes it worth while overall.

[atorrin]

Ok, thank you. Put my first bid in ever on a tax sale property... it was called a "redeemer" by someone else on this board so just wasn't sure what that meant. I waited til the end and called and the property was still up for tender. Now I just wait and see