London Ontario Tax sale..Why not to buy commercial

[Pfm1011]

London Free Press
Big catches hang over property sale

Fri, September 5, 2008

By DEBORA VAN BRENK


"Buyer beware" is the catchphrase as the city tries to sell 34 possibly contaminated lots in south London that account for about $4.3 million in property tax arrears.

There are several big catches as the city tries to sell the lots by public tender:

- The property tax arrears owing -- accumulated for at least the past six years -- are almost triple the assessed value of the land.

- Bidders aren't allowed close scrutiny of the property until after the sale.

- A man with the same name as the registered owner of the properties says the property is contaminated.


 The land is just west and southwest of the Transportation Ministry offices on Exeter Road.

All told, the 34 parcels for tender -- totalling about 34 acres -- have an assessed value of about $1.5 million. The parcels have values ranging from a low of $4,700 to a high of $641,000.

For each parcel, the debt from unpaid taxes, interest and penalties -- the minimum tender amount -- ranges from $23,500 to $1.2 million.

Part of the parcel is sprinkled with metal and other material that appears to be scrap. Part is covered with goldenrod and other weeds.

Below the surface is another question.

An advertisement placed beside the city's ad announcing the sale says the property was part of a chemical manufacturing operation, that it is contaminated with pesticide, and that there is no subdivision agreement registered on the property, which means an owner would be unable to get a building permit.

It's a clear case of "buyer beware," said John Shirley, who acknowledged placing the ad.

"I'm not making any statement about the property," he added.

Each of the 34 properties is registered to Samuel John Shirley, a search of property records shows.

Part of the property was once home to Shamrock Chemicals Ltd., an agricultural chemical company once owned by John Shirley.

City officials, meanwhile, are barred by privacy legislation from discussing what might be on or under the property.

"We don't own this property, so we have no legal authority to go on the site and investigate it," said Jim Logan, London's top tax collector. "We don't own it, so we can't tell people what we're selling."

In the city's ad listing the land for sale is a paragraph in bold print that says the municipality "makes no representation regarding the title or . . . the potential existence of environmental contamination" or any restrictions imposed by any level of government.

"Obviously, tax sales have many risks associated with it," Logan said. "There can be properties nobody wants to touch. Some properties have a negative value."

The city tried to send the same properties to tender in 2005, Logan said, but there were no valid bids.

The industrial-zoned properties are on Durrow Street and Hamley Road, which are little more than a blocked-off paths; on Shamrock Road, which includes property with a warehouse-type building; and at 595 Exeter Rd., which includes a light-industrial building.

The idea is not just to recover the outstanding taxes, said Deputy Mayor Tom Gosnell, but to return the land to productive use. But even if the site is cleaned, the cost might exceed the value of the property, he acknowledged.

Meanwhile, what is visible on site is a concern to some. "We've had some complaints from neighbours because of the amount of debris," said Orest Katolyk, property standards manager for the city.

Tax sale process

By the time a property is legally eligible for a tax sale, it must be in at least its fourth year of arrears.

The municipality must advertise property/properties as a tax sale.

Valid tenders must equal at least the value of unpaid taxes.

The sale could be cancelled if the property owner pays unpaid taxes.

If property/properties aren't sold at tender, the city starts an eight-step process, including environmental assessments, seeking expressions of interest for someone to market the property, selling it and applying proceeds of the sale to tax arrears. If environmental liabilities make a sale unlikely, the city may decide to take no action.

http://lfpress.ca/newsstand/News/Local/2008/09/05/6668181-sun.html

[farrouk]

The phrase "with a ten foot pole" comes to mind here!!!!!!

[Frank]

The phrase "with a ten foot pole" comes to mind here!!!!!!

Actually, it would be better if you could find even a longer pole.  I took one look at these when they were put up for sale in 2005, and turned off my computer.  They'll have a tough time finding anyone willing to come in and clean up the site, without a huge cash incentive program.  Once the sale is over they will be able to commission a geo-tech inspection of the properties to see how extensive the rehabilitation program might be...following which they will be able to develop a program (presumably with Municipal and/or Provincial moneys available) designed to defray the cost to whomever comes forward to try to make a buck (this person is known as the 'white knight').

Following an unsuccessful sale, the Municipality has one year during which it can cancel the sale, or vest the property in its name.  They won't want to vest until they know the cost, and the act permits the Municipality to enter onto the property (with police escort if necessary) to do an investigation.  I don't know why they didn't do that following the 2005 sale, but presumably they just let the one year lapse, then they had to re-register the properties and wait another year...all the while the tax bill continues to grow in leaps and bounds - making it even more difficult.

[markymark]

City Of North Bay
wants successful purchaser to sign waiver regarding environmental conditions.

[Pawel]

City Of North Bay
wants successful purchaser to sign waiver regarding environmental conditions.

That is very interesting. A new role of red tape to add to the tax sale process..