Chatham Auction

[jreist]

We have been looking for land for the last year and have bid on  a few properties but with no success.  Our need is to find property where we can build a home and have room for gardening for my wife grow and hybridizes Daylilies.

We went down to look at a couple of lots in the Chatham-Kent Tax Sale. The first parcel was i a 1/4 of an acre property in North Buxton. The property is exempt from zoning requirements for it was created before zoning changes otherwise there would not be required frontage.  The problem that I saw was the lot was surrounded by houses with septic systems that seemed to be seeping onto the property.

The second property was a 132' X 132' lot in Dresden a large flat double lot with two large trees that provided cool shade on an extremely hot day.  The lot was bought back in 1902 and 10 by William Henry Green who is long dead and the tax was bing payed by the estate of Margaret Green who is also deceased. 

We came up with an amount of $17000 and either sell it for 55K or if it did not sell build a retirement home on the property, I found some nice modular homes that had a small town look, we would place it in the center of the lot and have it surrounded by perennial gardens.

I look down through the package that we picked up and saw that this was not for sale by tender but by Auction. This meant that we had to make the 2 1/2 hour drive again on the 13th. 

As we drove into town we drove by the house that was for sale and saw a truck with a trailer with a load of appliances and thought the owners had given up and were moving out. I thought this was good being that the land I was interested was up for sale first and bidders would hold onto the money so they can bid on the other property. With an auction you have to figure out what you want to spend and bring it as a certified cheque. However when I got to the Civic Centre I found that the owner had come in and payed his bill and it was cancelled

When we got there we were the only ones there and we sat in the back and I thought that no one was going to show up, that would be to easy. Ten minutes before things were to start people started to come in. There were around a dozen people that were just there to watch, 2 to 3 were like you in me just looking for an opportunity, but there where 3 to 4 contractors.  From their conversation I took that the one was working on a house for resale and that they had come looking to bid on the house that was canceled.

There was no bids on the first property and they went on to the property in Dresden.   The bidding started at $10623 and there were bids in increments between $100 to $500, then someone jumped up to 15 followe by another who bid 17,  I bid $17-1 and I heard an uneasy 17-2 as if she had reached her limit, before I was able to put another bid in it went to 17-5, then all of a sudden the contractors that were sitting in the back took off and started biding like crazy, 3 of them biding back in  forth $1000 increment trying to out do the other, they got to 35 and someone shot up to 48 and it stoped.  What happened even the people that were running the auction had that confused look on their face. 

Dresden is a small town and there is not much in the way of new homes being built, the real Estate guy I call said that Dresden had the lowest  prices in S Ont, actually there is a lot of houses being sold as is or by power of sale. What I felt was that these contractors had come looking for the house which they would of bought and fixed up. With no one being interested in the commercial property and the house cancelled the contractor, with big checks in there pockets jumped in. You can't compete with people with deep pockets.

There were no bids for any of the other properties

[gap]

I was at that sale, too!  My firend and I drove down just for it.  I wanted the Dresden lot too, but my research showed I should only bid about  15 or 16k max for the lot, so I backed out after it passed and then surpassed that.   VERY interesting.   Was that a contractor then, who won the bid? Wasn't that too high?   The subdivision lots in the area are going for 33500, so 15-16 seemed like the max for that lot.

[jreist]

Yes but it was a double sized lot. Actually it was zoned R1-3 so it could be divided into 2 to 3 lots.

[gap]

Touchee!   If that was you, my kudos to ya.... hope it works to subdivide it and you can make some money.   My info was that although zoned that way, it isn't likely to be split (due to community restraints).  Keep in touch...I hope it works for you.   That was an interesting day.

[Frank]

By 'community restraints' - I am assuming you are referring to possible opposition from neighbours. 

Often these types of complaints are listened to by the Council or Committee which hears the application to split the property (they need votes).  However, if the zoning is in place, staff are supporting the application on planning principles, and the split is in keeping with the lot sizing in the area - then an appeal of any negative decision at the local level should yield an approval at the Ontario Municipal Board.  Hire yourself a good planner that knows the local scene and you should be successful.   - been there, done that.

[jreist]

Touchee!   If that was you, my kudos to ya.... hope it works to subdivide it and you can make some money.   My info was that although zoned that way, it isn't likely to be split (due to community restraints).  Keep in touch...I hope it works for you.   That was an interesting day.

Was n't me but I wish it was. You compared it with other lots that in the town that were $33k but you have to realize that it is a double lot. Even if you could not divide it, there are lots of people including myself who love a large lot. I look at new subdivisions that are being built were you can jump from one roof to another and you have to whisper when you are out in the backyard because the neighbours can hear you.

[CMB3366]

I have known of tax sales for some time now but I have always been nervous to dive in.  I think that I am very close to dipping my foot in the water but I am still very cautious.

I have read about the general process of tendering bids etc. but I'd like to get more information on what truly represents good due dilligence as it relates to tax sales.

As I imagine it - you collect whatever information you can from the municipality - probably visit the property to decide if it something you're at all interested in.  After this point it gets fuzzy.  There are two searches you should do -a title search against the property and two a search against the current owners.  I understand that this can be hired out so I don't have to be an expert - but what specifically I am looking to find with these searches.  Or maybe more accurately, what are the red flags that typically indicate that this is going to be a difficult one.

Also, assuming, the searches check out and I make a bid - the minimum bid represents the outstanding taxes as I understand.  Beyond the price bid - what are the additional charges / expenses associated with closing the sale?  I am trying to understand what kinda of additional capital I will need beyond the sucessful minimum bid.

Lastly, do you take on the debt obligations of the current owners?  Or is the propoerty yours free and clear?  Once you've purchased a property do the previous owners have any claim to the land?  Can they redeem and leave you out in the cold?  If they can - what happens with the money you put up to purchase the property?

If anyone can help - I'd greatly appreciate it.  I'd like to step off the ledge but I am still very apprehensive.

[Frank]

Additional charges will usually include: 

- any additional accrued taxes that have been levied since the sale was initially advertised, the minimum bid is only based on taxes and costs outstanding to that point.

- GST if applicable, and it can be applicable in situations where it would not normally be, since this is a forfeiture.  There is a section on this issue which you should read.

- land transfer taxes, again I believe there is a section on this, and it can be easily computed.

- most important, is that any crown liens on the property remain with the property and are not cancelled by way of the sale, these can be significant and you need to do your search to see what these might be.

- any easements, or encroachments on the property whether or not these are registered will also remain, and some of these can be found on title, others might be determined by a visual examination of the property against the survey plan which is also available at the registry office when you do your search (usually, if it is an R plan or subdivision plan).

The previous owners can still redeem right up until the moment that the tax deed is registered in your name.  If they do, you get your money back.

Another reason to do a visual of the property is to determine if it is inhabited, since following the sale and you becoming the owner you will be in a position to have to deal with evicting anyone on the property - again there is a posted section on this issue.