- The Minister may certify unpaid tax as a debt and register the certificate in the Federal Court, where it has the same effect as a judgment.
- A memorial recorded in the land registry can create a charge or lien on the debtor's property.
- A CRA charge ranks behind any charge, lien or interest perfected before the memorial was recorded.
Owing tax can lead to more than letters and phone calls. If the debt stays unpaid, the Canada Revenue Agency (CRA) can take steps that put a lien on your property, which is likely to come up when you try to sell or refinance.
This article explains in general terms how that process works under the Income Tax Act and why it matters for a sale. The details of clearing a lien depend on your facts, so a lawyer or accountant should confirm them.
How a CRA lien comes to be on your property
Under Income Tax Act s. 223, the Minister may certify unpaid tax as a debt and register the certificate in the Federal Court, where it has the same effect as a judgment. A memorial may then be recorded in a provincial land registry to create a charge or lien on the debtor's property.
This is why a lien may not be obvious to you until a lawyer searches title during a sale or refinance.
Where the CRA charge ranks
A CRA charge created by a memorial ranks behind any charge, lien or interest that was perfected before the memorial was recorded. How this ranking applies to a particular mortgage on your property depends on your situation, so it is worth confirming with a lawyer.
This ranking matters to lenders. A lender asked to advance new funds on a refinance will generally want to know what is registered against the title and in what order.
How it affects a sale or refinance
Where enforcement proceedings under s. 223 are under way, no one may sell or otherwise dispose of property under those proceedings without the Minister's written consent. A memorial recorded in the land registry creates a charge or lien on the debtor's property, and it ranks behind any charge, lien or interest that was perfected before the memorial was recorded.
How the CRA is paid, and how the memorial is removed, are practical questions to settle with the CRA and your lawyer. Often a buyer's lawyer will insist the issue be resolved before closing, so raise it early.
| Step | What it means |
|---|---|
| Certificate | Unpaid tax is certified as a debt and registered in the Federal Court, with the effect of a judgment |
| Memorial | Recorded in a provincial land registry to create a charge or lien |
| Ranking | Behind interests perfected before the memorial was recorded |
| Sale under enforcement | Needs the Minister's written consent |
Getting the lien removed
How a memorial is removed once the tax debt is dealt with depends on your situation, so it is worth confirming the steps with a lawyer. The exact steps for discharging a memorial after payment, and how the CRA is paid from sale proceeds, depend on the facts and should be confirmed with the CRA and a lawyer.
- Find out the full amount the CRA says you owe.
- Ask your lawyer to search title so you know exactly what is registered.
- Ask the CRA how it will deal with the lien when the debt is paid.
- Tell your lawyer and real estate agent about the debt before you list the home.
What to do next
- Collect your CRA notices, statements and any correspondence about the debt.
- Ask a real estate lawyer for a title search to confirm whether a memorial is registered.
- Speak with an accountant or the CRA about repayment options.
- Tell your mortgage lender and your lawyer early if you plan to refinance or sell.
- Do not sign an agreement of purchase and sale for the home until you understand how the lien will be handled.
Frequently asked questions
Can the CRA put a lien on my home?
The Minister may certify unpaid tax as a debt and register it in the Federal Court, where it has the effect of a judgment. A memorial may then be recorded in a provincial land registry to create a charge or lien on the debtor's property.
Does a CRA lien come before my mortgage?
A CRA charge created by a memorial ranks behind any charge, lien or interest that was perfected before the memorial was recorded. Your lawyer can check the order of what is registered on your title.
Can I sell my home with a CRA lien on it?
It depends on the facts. A buyer's lawyer will usually want the lien dealt with before closing, and sales under s. 223 enforcement proceedings need the Minister's written consent. Speak with a lawyer early.
How do I get the lien removed?
The steps depend on your situation, and they should be confirmed with the CRA and a lawyer.
Sources
- Income Tax Act s. 223 (Justice Laws) — Justice Laws (federal)
Links go to official government, court and regulator pages. The law changes — confirm you are reading the current version.
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