Help! Need advice regarding a crown lien on the tay property.

[worldjohn]

So I won the Tay tax sale parcel #2. This was the 10 acres waterview assessed at 32,000. 
my bid 12,300
second place 11,001
third place 10,000
Intially I thought my bidding was brilliant but not so much anymore.  This parcel was an attempted subdivision of 18 lots that the township put a H (hold ) on.  My plan was to get the H removed by agreeing to build only one dwelling.  So I put my bid in without doing my due diligence.

Later I find out there is an EP2 overlay because they consider it a 'significant woodlot'.  Still I thought I could negotiate to have the road allowance conveyed to me and only build near the road and keep the forest intact.  I talked to the planners and although It seemed it might take some time and dealing with bureaucracy but as long as everyone is reasonable it could work.

So then I do my title and execution searches and low and behold there are crown liens from the CRA totalling over $100,000 I know I should have done my searches before the bid. But I have been using a strategy of asking the treasurer for the statutory declaration which they have to provide according to the newest municipal act. This lists all interested parties in the property based on the title searches they did.  This shortcut worked for me until now.
Here's where it gets complicated.

I called the deputy treasurer and said I'm probably not going to pay the rest and could she be nice and give me my deposit back.  She said she'd look into it. She called me the next day and said she spoke with her lawyer who wrote her back and essentially said that a lien of this nature that is registered after the registration of the tax arreers certificate will go away after the tax deed is registered. The CRA will get the difference between the cancellation price and the price paid and I will get a free and clear title.
Should I believe them???

I tried calling the cra Representative who placed the lien but no response!
Should I walk away and lose $2400 or take a chance and lose 12,300?

Another interesting point is that there were 4 owners of this property.  The crown lien is against "the interests" of one named person. would this mean they only have an interest in 1/4th of the land? could I just give the cra 1/4th of the land?
Good karma to anyone who gives me good advice.

[Pfm1011]

The CRA will get the difference between the cancellation price and the price paid and I will get a free and clear title.

This is definately a Frank question..Im long winded but know nothing......but I take it as  if the difference doesnt make the the whole amount , the lien will not clear and the CRA will want the pound of flesh  

However maybe the town will help and actually get the CRA to lift the lien for the excess but dont hold your breathe

This is the 4 pin piece but unfortunately each piece is listed with all four names. The same people also own
428 ROBINS POINT RD

You have a few days until the deadline so check to see if the CRA may do something but Im betting you are going to have to walk away.  Say goodbye to the 2400 and take it as a lesson ( in the big picture , a rather cheap lesson  and tax  deductible as a expense)   Depending how many times you didnt do title searches..it may actually wash..

but suddenly $100 for a title search isnt that bad. ..

[Jayz]

... ...
I called the deputy treasurer and said I'm probably not going to pay the rest and could she be nice and give me my deposit back.  She said she'd look into it. She called me the next day and said she spoke with her lawyer who wrote her back and essentially said that a lien of this nature that is registered after the registration of the tax arreers certificate will go away after the tax deed is registered. The CRA will get the difference between the cancellation price and the price paid and I will get a free and clear title.
Should I believe them???
... ...

Ask the town / town lawyer to write you a letter saying just that. They will be liable. I don't see any problem if that's what they said.

[Frank]

The CRA will get the difference between the cancellation price and the price paid and I will get a free and clear title.

This is definately a Frank question..Im long winded but know nothing......but I take it as  if the difference doesnt make the the whole amount , the lien will not clear and the CRA will want the pound of flesh 

However maybe the town will help and actually get the CRA to lift the lien for the excess but dont hold your breathe

The only time I have ever seen the crown give on this type of situation is where there are no successful bidders, and the town seizes the property for a surplus sale...usually negotiating a settlement with the crown in advance of that measure.  The crown seeing an opportunity to get a half a pound of flesh has been known to flinch and accept that type of proposition.   I don't know that they will in this situation.  Your best bet is to contact the CRA directly and relay to them what the town has told you, if you can get their concurrance then you are home free, otherwise it may be time for that long walk in the snow...you didn't really need that new pool table for your rec room after all.   PFM is wiser than he will ever admit to...even though he has lower Karma (just had to get that dig in).

[Pfm1011]

...even though he has lower Karma (just had to get that dig in).

just pour a abit more  salt into the wound 

[twinn1]

How bad do you want the property?

Talk to a lawyer.  I don;t think the CRA will disolve the lien.  A lien is a lien regardless of when it was regisitried.  I think you have two options:

1. talk to a lawyer and get their advice.  Try to get everything the town says in writing, hopefully through email.  If they are only willing to verbally tell you but not put it in writing I would be weary. At this point, with $2400 already in the game, whats another $500 for piece of mind.

2. Roll the dice and see what happens, you might have a leg to stand on if the township gave you incorrect information, however, it would be a legal fight that would cost you a lot.

3.  Walk away, with all the restrictions on the property, its a no win for you.  If you take the township to court, forget about them lifting the Hold and any other favours they might do for you.

What I find interesting is that you listed the 2 other bids and there may have been more, all pretty close to each other, is it possible that all of these people bidding did;nt even bother to do a title search?  That would be crazy.  That alone tells me two things:

1. The township is correct and you will get the deed free and clear or
2.  There are a lot of uniformed people getting into this game.

[Frank]

What I find interesting is that you listed the 2 other bids and there may have been more, all pretty close to each other, is it possible that all of these people bidding did;nt even bother to do a title search?  That would be crazy.  That alone tells me two things:

You'd really be surprised....no shocked....at how many people make bids without doing a proper search.  A lot of people think that a tax sale is totally free and clear.  Also, many people don't realize that it is not just the property search, but also an execution against the owner that has to be conducted.

[netpred]

How bad do you want the property?

Talk to a lawyer.  I don;t think the CRA will disolve the lien.  A lien is a lien regardless of when it was regisitried.  I think you have two options:

1. talk to a lawyer and get their advice.  Try to get everything the town says in writing, hopefully through email.  If they are only willing to verbally tell you but not put it in writing I would be weary. At this point, with $2400 already in the game, whats another $500 for piece of mind.

2. Roll the dice and see what happens, you might have a leg to stand on if the township gave you incorrect information, however, it would be a legal fight that would cost you a lot.

3.  Walk away, with all the restrictions on the property, its a no win for you.  If you take the township to court, forget about them lifting the Hold and any other favours they might do for you.

What I find interesting is that you listed the 2 other bids and there may have been more, all pretty close to each other, is it possible that all of these people bidding did;nt even bother to do a title search?  That would be crazy.  That alone tells me two things:

1. The township is correct and you will get the deed free and clear or
2.  There are a lot of uniformed people getting into this game.

In fairness to Worldjohn, it's not like he didn't do any due dilligence. He relied on the Stat Dec but the lien went on after. In this game, even if you search title prior to bidding, the lien can always go on later.

I do believe that most people bid without conducting searches. I bet some even close the deal without searching. In the majority of cases this will not be a problem and everyone will be happy. But if you get burned, boy do you ever get burned. I wish everybody did the searches before bidding because I believe that there would be fewer bidders. So, let Worldjohn's story stand as a lesson to those bidders who do not perform the proper searches. YOU COULD BE THE NEXT ONE BURNED.

[worldjohn]

Thanks for all the advice
36 hours after I left a message with the Canada Revenue agency. I got a call back. and to my surprise they concurred wiht the township lawyer that the lien will be removed within 30 days after the tax sale. I was a little stunned as I have always thought that crown liens stick like glue but She stated that every crown lien is specific to its situation. But it did have something to do with the townhip going on title before the CRA but not every case of like that will result in the crown removing its lien.   not only that but the crown will only claim 1/4th of the amount left over after the cancellation price. Doesnt sound very crown-like.
So I have two sources telling me that crown lien will dissappear. The township wont give it to me in writing and I forgot to ask the CRA rep (but I'll call tommorrow again and ask).
At this point I think I'll go ahead and finish the deal although it still will feel strange buying a property with a crown lien on it. but I guess I got lucky on this one and dodged a bullet.  I guess I'll start doing title and execution searches before I bid from now on.
next issue; getting the township to remove the H from the zoning.  Has anyone else had a property with a EP2 layer(significant woodlot)?

[Dave2]

I don't have any prior experience in this one but most counties have a County Forrester or someone who is on contract to fulfill this duty.  I would contact him; explain your situation and see if he will help you.  Alternatively ask him if he knows someone who has experience in this area with this type of zoning

Dave2

[Prospector]

Thanks for all the advice
36 hours after I left a message with the Canada Revenue agency. I got a call back. and to my surprise they concurred wiht the township lawyer that the lien will be removed within 30 days after the tax sale. I was a little stunned as I have always thought that crown liens stick like glue but She stated that every crown lien is specific to its situation. But it did have something to do with the townhip going on title before the CRA but not every case of like that will result in the crown removing its lien.   not only that but the crown will only claim 1/4th of the amount left over after the cancellation price. Doesnt sound very crown-like.
So I have two sources telling me that crown lien will dissappear. The township wont give it to me in writing and I forgot to ask the CRA rep (but I'll call tommorrow again and ask).
At this point I think I'll go ahead and finish the deal although it still will feel strange buying a property with a crown lien on it. but I guess I got lucky on this one and dodged a bullet.  I guess I'll start doing title and execution searches before I bid from now on.
next issue; getting the township to remove the H from the zoning.  Has anyone else had a property with a EP2 layer(significant woodlot)?

Congrats Worldjohn on what looks to be working out to be a good buy. I have not had to work with the EP-2 woodlot restriction, but you may want to call the local conservation authority as well as the town on that one. I don't know how well organized Tay is, but usually the right hand and left hand have at least some kind of relationship for these things. Remember, emails get passed around, and you never know who will get it next. I might be tempted to walk in to get the rules straightened out, then put together my development plan, then submit. The thing to avoid is an iterative process where things start circulating in circles. Once a spiral starts, its hard to stop.

If there are legacy issues with the property, sit down with the muni and get clarification on them, then make it clear that this was all with the last guy, and you have no interest in his plans. You see the site as a greenfield with zoning issues. Find out the goals of the muni with respect to the zoning. IF they are protecting greenspace, your approach should be different than if they are protecting the last stand of Periwinkle in the county.

Once you know the reasons behind the zoning, you can begin to address them, and either discount or work with the restrictions to get to your goals. Do not think you can walk into the muni and tell them what to do. There is no faster way to kill a project than to tell the planners you know more than they do, or that your goals are better than theirs.

I can discuss some things further in PM from my perspective if you wish. I haven't been in your exact position, but have negotiated similar changes for other reasons. Drop me a line if you want to chat.

[farrouk]

Worldjohn:
Do not proceed until you get a written confirmation that the crown lien will be removed. CRA officers are tax experts but not lawyers. You would hate to have gotten a verbal opinion from a guy that is not familiar with the nuances and have his supervisor rule against you a month later. These guys are sneakier than lawyers and real estate agents combine. (threw that one in for PFM)

[spook]

I had some pictures of this area but walked away wanting to avoid all the visable red tape.  The tender did not mention an EP at all.

If you are going to pursue the property do consult a lawyer and get everything in writing from the CRA and like.

However, I am intrigued by the EP and the hold.  I have lots of questions for you which may help you find the real reason for both being placed on the property. Take a look at some recent and older aerial photos.  Preferably recently taken in the summer.  This will give you an idea.  Digital images are ok and the ones I have looked at, you can see defined outlines of the forest stands as well as progress of development. 

Try to find out the reason for the EP and if it is just one spot on the property or the whole area including outside of the property as well.  Looking at the whole area, development looks like it was stopped in one area.  It has to be listed somewhere.  Walking the property will also give you a good idea of the why's. 

[Dave2]

Worldjohn:

You are only one who can call the CRA one.  Assuming that works out okay my feeling in general is that your downside is relatively low.  You apparently have a good piece of property that has significant park potential so at worst you could donate it and receive a tax credit. 

One thought why not go for half a loaf with the town but make it conditional on them doing the zoning things you want.  ie.  half of the property for residential and half for a public park.  Of course you want a income tax credit for the park portion so you get the property for free.

just a thought.

Dave2