Deadline advanced for property tax sales
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The province has reduced the time frame for municipalities that want to move against a property for tax arrears.
As of Jan. 1, municipalities in Ontario can go after a property after two years of arrears instead of three.
As a result of the change, municipalities can complete the tax sale process in three years instead of four.
Norfolk normally engages a prolonged process before proceeding with a tax sale. This process involves several warnings before the property is put on the market.
However, Sue Boughner, Norfolk’s manager of revenue and tax services, told Norfolk council this week there are times when the revenue department needs to act quickly.
Boughner cited as an example a run-down property where the accumulated property taxes after three years will exceed the market value of the real estate.
“When a tax sale cancellation price exceeds the property’s market value a successful tax sale is unlikely,” Boughner said in a report.
“The ability to advertise tax sale properties one year sooner may improve tax sale results.”
Property owners who enter into extension agreements with the county postpone the tax sale process.
Under these agreements, property owners are required, through installment payments, to keep their taxes current while retiring their arrears.
Mayor Charlie Luke has seen some of these payment plans and says they can be quite onerous. Luke said these property owners wouldn’t be in such a tough position if the county turned up the heat sooner.
“Something has to be done before someone lets their arrears go three years,” Luke said.
Boughner says Norfolk has made steady progress on the arrears file since the county made outstanding taxes a priority in 2011. Seven years ago, Norfolk arrears were in the range of $12 million and rising.
Council decided then to devote more resources to collections and arranging payment plans. Council approved a regular schedule of tax sales for properties three years in arrears or more. Total taxes past due at the end of 2017 totalled $8.25 million.
Norfolk’s tax department registered arrears certificates on 33 properties last year. Fourteen properties were advertised for sale in 2017. Of these, eight were redeemed before the deadline, three were sold for taxes, and another three attracted no bids.
When the tax sale process is exhausted and a subject property attracts no bids, the county has the option of assuming title. Municipalities are not obligated to take possession or assume responsibility for properties that have building or fire code issues or issues related to environmental contamination.
Another important change to the Municipal Act involves the disposition of surplus proceeds from a tax sale.
Prior to Jan. 1, Ontario Superior Court would hold the surplus for a year. In the absence of interested parties laying claim to the surplus, municipalities themselves could petition for the cash.
From here forward, the court will hold surplus proceeds for up to 10 years. As well, municipalities are no longer allowed to petition for the surplus. Surplus revenue unclaimed after a decade will be forfeited to the province.
In her report, Boughner said this modification will have no impact on Norfolk’s finances as the county does not budget this money as revenue.
MSonnenberg@postmedia.com