Unpaid Property Taxes on a Deceased Person's Home in Ontario

You are the estate trustee and, while sorting through the mail, you find notices showing the property taxes on the deceased person's home were not paid. Perhaps your parent was ill for a long time, or the bills went to an old address. Now you want to know how serious it is and how quickly you need to act.

This article explains how the municipal tax sale process works, why the one-year window matters, and practical steps to catch up. Interest rates and local procedures differ between municipalities, so you will need to confirm the figures with the municipal tax office and a lawyer.

Why the trustee has to deal with it

An estate trustee winds up the deceased's affairs, pays taxes and debts, collects the assets and distributes the residue to those entitled. Property tax on the home is one of those debts. Beneficiaries only receive what is left after debts are paid, so unpaid taxes reduce the estate.

Delay can make things worse. Ask the tax office for the current figure rather than estimating it. Ask for a written statement showing the amount owing, the years it covers and any fees added.

How a municipal tax sale works

When taxes remain unpaid, the municipality's treasurer may register a tax arrears certificate against the property. That registration starts a one-year period. During it, anyone can cancel the sale by paying the cancellation price. The payer does not have to be the owner.

If the amount is still unpaid after one year and there is no extension agreement, the land must be offered for sale by public auction or tender. A municipality and the owner can make an extension agreement that stops the sale at the end of the one-year period. Once a tax deed or notice of vesting is registered, the land is vested free of most estates and interests, except easements and restrictive covenants that run with the land.

The rules in this area are set by municipal legislation and have been updated over time, so confirm the current wording and the exact cancellation price with the municipality and a lawyer.

Steps to catch up on the arrears

• Call the municipal tax office and ask for a written statement of arrears, interest and fees.
• Ask whether a tax arrears certificate has been registered and, if so, on what date.
• Write the date one year after registration in your calendar and treat it as a hard deadline.
• Check whether the estate has cash available to pay, or whether a family member can advance funds and be repaid by the estate.
• If cash is short, ask the municipality whether it will discuss an extension agreement.
• Keep copies of every notice, payment and conversation.
• Redirect the mail and update the municipality with a contact address for the estate.

Who can sign documents or access estate funds may depend on whether a certificate of appointment has been issued. That is a practical point to confirm with a lawyer if the clock is running.

If the home will be sold

Selling is a common way to pay the taxes. Probate is normally required if the deceased owned real property that does not pass to another person by right of survivorship, and if real property must be sold, a certificate should be obtained before anyone signs an Agreement of Purchase and Sale. Getting the certificate can take time, so start early if a tax sale deadline is approaching.

Estates valued at up to $150,000 can use a Small Estate Certificate, and larger estates use a Certificate of Appointment of Estate Trustee. For certificates applied for on or after January 1, 2020, Estate Administration Tax is $0 per $1,000 on the first $50,000 and $15 per $1,000 on the rest, and the estate pays it. Ontario real estate counts at appraised date-of-death value, minus encumbrances such as mortgages or liens.

How unpaid taxes are handled at closing depends on your situation, so it is worth confirming with a lawyer.

What to do next

• Get the tax statement and registration status this week.
• Mark the one-year date and the date any notice was registered.
• Find out whether the estate has the funds to pay and whether the home will be kept or sold.
• Speak with a lawyer early if the one-year window is close, since a certificate may be needed before a sale.

Frequently asked questions