Tax sales are a special type of real estate sale in Canada. In this article you will find out what it is all about and how you as a buyer can make the best of the situation. The steps are very similar to buying a seized property anywhere and are therefore useful if you want to buy a property through a discounted route in any jurisdiction.
For a buyer, a tax sale or redemption is an opportunity to obtain a property at a discount, although not without risks. The goal of a tax sale is to collect property tax arrears that have been outstanding for at least two years. The municipality manages the sale, which takes place by auction or public tender.
If you want to avoid a tax sale or repossession of your home, here’s what you need to do to make it happen.
Take a close look at local listings
Search your local tax sale or auction listings to see what property is for sale, the minimum bid amount, and any other details or descriptions the municipality may have added. Knowing this information will help you better manage the process Tax sales.
Look at the house from the street
This is the scope of a home inspection on a taxable home. A property can be viewed from a public area. However, you are not allowed to perform a home inspection if the current owner does not allow it, and you are not allowed to trespass.
Don’t rely on Google Maps
View the tax sale or redemption of the property in person. Don’t rely on Google Maps for information about the area. Maps feature outdated renderings, meaning they may appear completely different at the time of capture.
Recognize that you are buying a home as is
You are purchasing a home at a tax sale or foreclosure with no guarantee of condition or vacancy. There is a risk here and there is no guarantee. Once it’s yours, it’s yours. It is essential to obtain as much information as possible about the property, the house and the surrounding area before bidding.
Conduct a title search
A title search will show if there are any title issues, claims or restrictions. Of course, you will want to know whether the Crown’s interest or title in the property could transfer the land to you. This could dramatically increase operating costs.
Explore the area
If you’re considering reselling or taking possession of a taxable home later, check out the area or neighborhood. See how much the property is worth and what other properties are selling for. Find out if there is a demand for housing there or if the market is quiet.
Submit a tax sale offer
Whether at an auction or public tender, the only way to place a bid is cash, certified check or other payment method accepted by the community. Sometimes this requires filling out registration documents, for example for public tenders.
Auction experience
A tax sale or redemption auction is fast and high pressure, and people overbid. When bidding at an auction, you should show up with money in hand. You should start with low bids and respond to other bids as the price increases.
If the bids exceed your budget, do not overbid. Instead, take a step back and keep your money for another property later or next in the auction.
Experience in public tenders
A public tender is less stressful; However, it requires strategy. This is an offer made by post, meaning you will only receive one bid. This means you may want to maximize your offer as much as possible. A public tender also requires certain forms and registration documents to be completed.
Finally, this type of tax sale or repossession often requires sending a deposit in the mail in addition to everything else. Your local authority will let you know how much is required. Typically it is 20% of your offer amount.
Make sure your offer is not rejected
Avoid having your offer rejected by following these important steps based on other people’s mistakes.
- Make sure the offer amount is at least the minimum amount.
- The offer should be typed or handwritten.
- Make sure the deposit is made in a form acceptable to the community.
- The sealed envelope should say that it is a tax sale.
- Address the envelope to the treasurer.
- An envelope should contain at most one offer.
You are not limited to offering just one property. However, if you submit multiple offers, each offer will require a separate offer with completed forms and an envelope.
Pay the closing costs
Unlike a traditional property purchase, a tax delinquent property has very few, if any, closing costs. You must pay all applicable taxes, including arrears. You are also responsible for all costs associated with the transfer of ownership.
Consult a lawyer if you win
Once you’ve won, contact an attorney if you need to arrange an eviction or if there are any complications with the apartment. An attorney can help you navigate this legal terrain and ensure you protect your investment.
Your sale may be canceled
Most tax sales fail. The previous owner repossessed the property within the grace period and returned it to him. Depending on how your community conducts a tax sale, this may occur at any time before the transfer of ownership is complete. Be prepared for this to happen to you.
