Sale for Non-Payment of Taxes
Municipalities have a legal obligation to collect taxes. Therefore, under the Cities and Towns Act, a municipality can put a property up for sale for tax default. This recourse allows the municipality to recover all taxes under a tax roll:
- Property taxes
- Real estate transfer duties
- All other debts considered to be taxes
It is the taxpayer’s responsibility to ensure that payments made online are received before the sale for non-payment of taxes begins. To avoid having a property put up for sale, payment in full of all sums owing must be made before the sale begins.
Postponement of activities for 2020
COVID-19 – Following the announcement by the Ministre de la Santé et des Services sociaux in April 2020, all property sales by public auction for non-payment of municipal or school taxes are postponed until after the public health emergency.
Six months after the date of the notice of deposit of the tax roll, the treasurer must draw up a report listing the properties for which taxes have not been paid, in whole or in part. After examining the treasurer’s report, the council can order the city clerk to sell the properties at public auction on a specific date.
These are the steps of sale for non-payment of property taxes:
- Notice of start of procedure issued
Within 30 days of the council’s order, the city clerk issues a public notice of the day, time and place where the auction will be held. This notice must contain the designations of the properties that will be sold, with the name of the owner according to the assessment roll, the address of the property to be sold, the cadastre number(s) and the amounts owing at the time of publication.
- Registered letter sent to the owner
Until the day of the sale, the owner whose property will be sold has the right to have their property withdrawn from sale. When the first public notice is issued, the city clerk must send the owner a registered letter stating the full amount owing. The owner must contact the municipality or submit the payment in full for the debt. The payment must be made in cash or by certified cheque or money order (bank transfers are also accepted, no later than the day before the day of the sale).
- First publication in the newspapers
The list of properties in tax default is first published in a Châteauguay newspaper.
- When the first notice is published in the newspaper, the clerk must immediately send a copy of the notice to the land registrar. The registrar then informs all the parties registered in the land register for the property in question (mortgage creditors, holders of legal hypothecs, co-owners of condominium buildings, etc.).
- Second publication in the newspapers
The sale at auction cannot take place until 15 days after the date of the second publication.
- Sale for taxes
The sale for tax default takes place on the date and in the place set for the sale.
- Notice of start of procedure issued
After reading the terms of the sale, the city clerk sells the properties in the order in which they appear on the list. To bid on a lot, the bidder must make an offer of the amount they wish to bid. The amount of the opening bid for the sale is equal to the amount of unpaid taxes, accrued interest and costs related to the sale.
The property is awarded to the highest bidder. The buyer then has ownership of the awarded property and can take possession of it, subject to the redemption that can take place in the following year. The city clerk will then give the bidder a certificate of purchase.
The participant must also present one of the following pieces of identification:
- Driver’s licence
- Health care card
Anyone who wishes to bid on behalf of someone else must present a copy of a supporting document authorizing them to act:
- As the representative of a natural person (power of attorney)
- As the representative of a corporation (power of attorney and other)
The winning bidder (buyer) must immediately pay the purchase price. Payment must be made in full using one of the following methods: cash, certified cheque, bank transfer or money order.
The winning bidder takes the property as is, with no warranties, including for capacity, quality of the soil or building(s), if any, or hidden defects. The winning bidder must retain the services of a notary to prepare a deed of final sale. The city will give the notary a model notarized deed to give to the city clerk. The winning bidder must assume all costs related to obtaining the title for the property acquired through the sale. The winning bidder is responsible for paying the property taxes as of the date of acquisition.
The former owner can buy back the sold property. They have one year to exercise the right of redemption, under certain conditions. Under the Cities and Towns Act, these conditions include paying the buyer the sale price, including the cost of the certificate of purchase, with interest at a rate of 10% per year. The winning bidder cannot oppose the right of redemption.
If, after a year, the former owner has not exercised their right of redemption, the buyer can, at their own expense, have a deed of final sale drawn up by a notary of their choice. The registration of the deed of sale cancels the registration of mortgages against the property that were extinguished by the sale.