- A municipal treasurer may register a tax arrears certificate if any part of the arrears is still owing on January 1 in the second year after the year the taxes became owing.
- After registration, the owner or anyone else can stop a tax sale by paying the cancellation price within one year.
- A municipality may make an extension agreement that gives more time to pay, and that time is not counted toward the tax-sale periods.
Falling behind on property taxes can feel manageable at first, because nothing dramatic happens right away. In Ontario, though, unpaid taxes can eventually lead to a municipality selling the property, and the steps follow a set timeline.
This article walks through that timeline under the Municipal Act, 2001: when a tax arrears certificate can be registered, how long you have to pay after that, and how an extension agreement can buy more time. Details vary by municipality, so treat this as a general guide.
When a tax arrears certificate can be registered
The tax sale process starts with a document called a tax arrears certificate. Under section 373(1) of the Municipal Act, 2001, a municipal treasurer may register this 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.
In plain words, the municipality does not act the moment a payment is missed. There is a waiting period first. Even a partial balance can be enough, because the rule refers to any part of the arrears still owing.
Different timing applies to property in unorganized territory. If your property is there, check with a lawyer or the municipality or ministry responsible about how the timeline works.
The one-year window to pay the cancellation price
Once the certificate is registered, the owner or anyone else can stop a tax sale by paying the cancellation price within one year of registration. That means a spouse, a mortgage lender or another interested person can also pay.
The cancellation price covers all tax arrears, current taxes, interest, penalties and reasonable municipal costs. It is usually larger than the original overdue amount, so ask the municipality for an up-to-date figure.
If the cancellation price is unpaid when the year ends, the land is offered for sale by public auction or tender.
Extension agreements: more time to pay
Section 378 of the Municipal Act, 2001 allows a municipality to make an extension agreement that gives more time to pay the cancellation price. The municipality may make it 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. A municipality may make an extension agreement, so it is not something you can demand as a right. The terms and costs vary by municipality, so read any proposed agreement closely before signing.
Quick summary of the stages
| Stage | What happens |
|---|---|
| Arrears build up | Taxes remain owing, in whole or in part, on January 1 in the second year after the year they became owing. |
| Certificate registered | The treasurer may register a tax arrears certificate against the property. |
| One-year period | The owner or anyone else can pay the cancellation price to stop a sale. |
| Extension agreement (optional) | The municipality may agree to more time, and that time is not counted toward the tax-sale periods. |
| Sale | If the price is unpaid when the year ends, the land is offered by public auction or tender. |
What to do next
- Contact the municipal tax office and ask for your current arrears and, if a certificate is registered, the cancellation price.
- Find out whether a certificate has been registered and when, so you know when the one-year period ends.
- Ask whether the municipality will consider an extension agreement and what its terms and costs would be.
- Tell your mortgage lender, co-owners or family members who may have an interest, since they can also act to protect the property.
- Speak with a lawyer if you are unsure of your dates, if the property is in unorganized territory, or if a sale is approaching.
Frequently asked questions
Can the municipality sell my home as soon as I miss a property tax payment?
No. A treasurer may register a tax arrears certificate only if any part of the arrears is still owing on January 1 in the second year after the year the taxes became owing. After registration, there is a further one-year period to pay.
Who can pay the cancellation price?
The owner or anyone else can pay it within one year of registration to stop a tax sale. It covers all tax arrears, current taxes, interest, penalties and reasonable municipal costs.
What is an extension agreement?
It is an agreement under section 378 that gives more time to pay the cancellation price. The municipality may make one with the owner, the owner's spouse, a mortgagee, a tenant in occupation or another interested person, and that time is not counted toward the tax-sale periods.
Does this apply everywhere in Ontario?
The rules described here apply to property in a local municipality. Timing differs in unorganized territory, and procedures and costs vary by municipality, so confirm the details for your property with the municipality or a lawyer.
Sources
- Municipal Act, 2001 (e-Laws) — Ontario e-Laws
Links go to official government, court and regulator pages. The law changes — confirm you are reading the current version.
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