Property Tax Arrears and Tax Sales in Ontario: Time Limits and Options

Falling behind on municipal property taxes can feel like a slow-moving problem, but the process has fixed steps and time limits. Knowing them helps you act while you still have options.

This article explains when a municipality can start the tax-sale process, what you must pay to stop it and what an extension agreement can do. Details vary by municipality, so confirm specifics with your own treasurer's office.

When the process can start

A municipal treasurer may register a tax arrears certificate against a property in a local municipality if any part of the tax arrears is still owing on January 1 in the second year after the year the taxes became owing.

For example, the clock is measured from the year the taxes became owing, not from the day you missed a payment. Property in unorganized territory can follow different timing, so that situation is worth checking separately.

In plain words, a tax arrears certificate is a formal record that the municipality registers against your property to show that taxes are overdue. Registering it does not mean your home has already been sold. It starts a period during which the cancellation price can still be paid to stop a sale.

• Which tax years are unpaid, and how much is owing for each one.
• Whether the January 1 date in the second year after the taxes became owing has passed.
• Whether the property is in a local municipality or in unorganized territory, since timing can differ.
• Whether the municipality has already registered a certificate, and if so, on what date.

The one-year window after registration

After a tax arrears certificate is registered, the owner or anyone else can stop a tax sale by paying the cancellation price within one year of registration.

The cancellation price covers all tax arrears, current taxes, interest, penalties and reasonable municipal costs. If it is unpaid when the year ends, the land is offered for sale by public auction or tender.

Because the cancellation price includes interest, penalties and municipal costs, it can be higher than the original unpaid tax bill. It also includes current taxes, so the figure you need is the one the municipality gives you, not an estimate from your own records. Ask for it in writing and ask the tax office how current that figure is.

Extension agreements

A municipality may make an extension agreement giving more time to pay the cancellation price. It may do so with the owner, the owner's spouse, a mortgagee, a tenant in occupation or another interested person.

While the agreement is in force, that time is not counted toward the tax-sale periods. Whether a municipality will offer one, and on what terms, varies, so ask the tax office directly and get any agreement in writing.

• Who has to sign the agreement, and whether every interested person is included.
• What dates and payment amounts the agreement sets out.
• What happens if a payment is missed.
• Whether you will receive a signed copy for your records.

Who else can step in

• Because the owner or anyone else can pay the cancellation price, a family member can pay it on your behalf.
• A mortgagee, which is a mortgage lender, can be a party to an extension agreement with the municipality.
• A tenant in occupation or another interested person can also be a party to an extension agreement.

If you have a mortgage, contact your lender early. How a lender handles unpaid taxes depends on your mortgage terms.

If several people have an interest in the property, such as co-owners or a spouse, it helps to agree early on who will contact the municipality and who will pay. The cancellation price can be paid by the owner or anyone else. How this works between co-owners depends on your situation, so it is worth confirming with a lawyer.

What to do next

• Ask your municipality's tax office for a statement of what is owing.
• Find out whether a tax arrears certificate has been registered and on what date.
• Ask for the current cancellation price in writing.
• Mark the date one year after registration on your calendar.
• Ask whether an extension agreement is available and read it carefully.
• Tell your mortgage lender and speak with a lawyer if the deadline is close.

Keep copies of every notice, receipt and email you exchange with the municipality. If you are unsure whether a certificate has been registered, or the deadline is close, how this applies depends on your situation, so it is worth confirming with a lawyer.

Frequently asked questions