Utilities???

[sprinter]

Here is a question for the group regarding utilities, especially for you legal experts.  My understanding is that under normal circumstances all utilities get marked (reset) upon ownership change, such that utility amounts owing up to sale date/title registration date apply to previous owners.  Any amounts owing subsequent to sale date/title registration date apply to new owners.  Would this logic apply to a tax sale, particularly for municipality controlled utilities like water/sewer?   If so, does the Act mandate that the municipality is responsible for this reset, much like the requirement for title registration?

[Dave2]

Sprinter:

Can you give us some more specifics.  Most utility costs would apply only to an occupied building.  Are you talking operating or capital?

In general utility charges should be a relatively rare occurrence, except for an occupied or recently vacated building.  Utilities are usually turned off for vacant buildings for safety reasons. 

Of the various types of utilities:

Hydro
Gas
Water/Sewer
Phone
Cable

Only hydro and Water/Sewer are commonly municipaly owned.   

Municipalities are permitted to add them to the tax bill I believe under legislation that was passed by the Liberal government a few years ago (I don't have the specific legal reference), but presumably they would be included in the minium tax sale bid required. ( not certain on legislative details)

Not certain about the legal power of Ontario hydro in this case.

Remaining types of utility claims I assume should be eliminated much like a mortgage claim is by a tax sale and most (ie. non government) liens. 

Dave2

[mickey84]

Municipalities are permitted to add them to the tax bill I believe under legislation that was passed by the Liberal government a few years ago (I don't have the specific legal reference), but presumably they would be included in the minimum tax sale bid required. ( not certain on legislative details)


Dave2 is correct on this - Municipalities have the ability to add utility costs to the property owners tax bill (this power is designated to them through the Municipal Act 2001. And from my experiences on the Municipal side of the tax sale part is that is commonly what is done, including the related interest charges on those utilities.

David

[sprinter]

Hi Dave2

"Can you give us some more specifics.  Most utility costs would apply only to an occupied building.  Are you talking operating or capital?"

My question is about operating side but capital costs might be treated the same way.

[sprinter]

"Dave2 is correct on this - Municipalities have the ability to add utility costs to the property owners tax bill (this power is designated to them through the Municipal Act 2001. And from my experiences on the Municipal side of the tax sale part is that is commonly what is done, including the related interest charges on those utilities."

Hi David,

That's what I suspected, but here is a little twist.  Can the municipality add utility bills (especially operating but capital too) that apply to a period previous to a tax sale to the tax account of the new owner post tax sale?

[Dave2]

Hi David,

That's what I suspected, but here is a little twist.  Can the municipality add utility bills (especially operating but capital too) that apply to a period previous to a tax sale to the tax account of the new owner post tax sale?

My answer is I don't think so but they might do it through error or hopefully to hope you would not object because you did not notice.  I would suggest you object and see what happens.

Probably best to talk to the treasurer and point out the tax sale status of the property.  They should have added it to the minimum bid or alternatively suggest they collect from the surplus amount if the winning bid was above the minimum.

Also an interesting question; the tax sale process takes 3 years.  Does the statute of limitations apply (2 years now in Ontario).

Question also why the utility did not collect from the deposit. 

This is a rare enough event that other then this gentlemen  I suspect none of us here knows the exact legislation.

Finally there is the significance test.  Unless they had to run in new hydro poles
normally these should be small.

Hope this helps

Dave2

[mickey84]

"Question also why the utility did not collect from the deposit."

The answer to this is the new regulations that have come out state that if arrears are owing on utilities they must first be applied to the hydro and then the water and sewer charges (including security deposits). Also, as you stated the amounts are generally small and sometimes it isn't worth the effort to go through when putting them on the tax roll. Especially if the municipality that collects water and sewer does not own the hydro companies doing the collecting (which is the case where I work). However, I am now working with the hydro companies to get the information over to us and then sent down to the local area municipalities to add these amounts to the tax roll.

As for the question regarding the statute of limitations being 2 years...without looking at the actual act I would imagine that there is an exception for this type of thing.

In response to sprinters earlier question, the municipality could take those amounts owing out of the surplus - that would be my suggestion to them!

David

[sprinter]

Dave2, my thought are aligned with your yours and logically it makes sense, but there seems to be nothing concrete that I can find spelling out the process, if any.  Maybe the all wise  could chime in.

mickey84, it's interesting that arrears first have to be applied to hydro and then water/sewer.  I had no idea that was the case.  Plus I thought this would vary from municipality to municipality.  Is this process specifically detailed in the Act?  If so, do you know where? 

Dave2 and mickey84, I thank you for your valuable insight.

[Frank]

Dave2, my thought are aligned with your yours and logically it makes sense, but there seems to be nothing concrete that I can find spelling out the process, if any.  Maybe the all wise  could chime in.

mickey84, it's interesting that arrears first have to be applied to hydro and then water/sewer.  I had no idea that was the case.  Plus I thought this would vary from municipality to municipality.  Is this process specifically detailed in the Act?  If so, do you know where? 

Dave2 and mickey84, I thank you for your valuable insight.

The operative section of the Municipal act is as follows:

"Amount owing added to tax roll

(2)  The treasurer of a local municipality may, and upon the request of its upper-tier municipality, if any, or of a local board whose area of jurisdiction includes any part of the municipality shall, add fees and charges imposed by the municipality, upper-tier municipality or local board, respectively, to the tax roll for the following property in the local municipality and collect them in the same manner as municipal taxes:

1. In the case of fees and charges for the supply of a public utility, the property to which the public utility was supplied.

2. In all other cases, any property for which all of the owners are responsible for paying the fees and charges. 2001, c. 25, s. 398 (2); 2006, c. 32, Sched. A, s. 170 (2)."

Read it closely and you will note that only fees and charges for the supply of a "public utility" are to be added...most Hydro, Cable and/or Bell systems are not public utilities...although there have been some in the past.  The act defines public utilities as follows:

"?public utility? means,

(a) a system that is used to provide any of the following services or things for the public:

(i) water,

(ii) sewage,

(iii) fuel, including natural and artificial gas,

(iv) energy, excluding electricity,

(v) heating and cooling, and

(vi) telephone, and

(b) the service or thing that is provided; (?service public?)"

I believe that all Hydro companies in Ontario are now private corporations and therefore are not 'public utilities', even though in many cases, such as Hamilton the only shareholder happens to be the Municipality.  In Hamilton as an example, the Hydro company also acts as the initial collector for water and sewer charges (huge savings on not having to have two meter readers, two bills, two administrations, etc.....the guy  that put that in place was brilliant, and no doubt ruggedly handsome as well).  Even so, the Hydro company can only refer unpaid water and sewer charges to taxes since that is still truly a 'public utility'.  They do apply your payments to the Hydro portion of the bill first, since that portion would otherwise have to be written off if uncollected.  Most non-public utilities nowadays charge an up-front deposit to protect themselves agains future write-offs.

Someone please correct me if I am wrong.

 

[Dave2]

 In Hamilton as an example, the Hydro company also acts as the initial collector for water and sewer charges (huge savings on not having to have two meter readers, two bills, two administrations, etc.....the guy   that put that in place was brilliant, and no doubt ruggedly handsome as well).  Even so, the Hydro company can only refer unpaid water and sewer charges to taxes since that is still truly a 'public utility'.  They do apply your payments to the Hydro portion of the bill first, since that portion would otherwise have to be written off if uncollected.  Most non-public utilities nowadays charge an up-front deposit to protect themselves agains future write-offs.

Someone please correct me if I am wrong.
   

Us underdogs are smart enough to bow to the top dogs of this forum.  If we don't show proper respect we owe a lot of beers or may even become food for a gator that was rumoured to be roaming Stirling Pond this spring.  (In joke you have to go back to earlier posts)

An excellent post as always. I for one will never doubt your competence. 

Dave2