Facts About Tax Sales

FACTS ABOUT TAX SALES

Based on some recent questions, we thought it might be helpful to share some information regarding the tax sale process as it is very different from a City Land Sale.

Tax Sales are an annual public auction of privately owned properties that have not paid taxes for at least three years. The City does not own any of the properties in the tax sale, and is required through Provincial legislation to be the auctioneer on behalf of the private property owner. After a property has been sold through tax sale, the City is required to use that money to pay off all delinquent Provincial and Local taxes outlined in your property bill. Any money remaining after the taxes have been paid can be applied for by the owner of the property or any higher level government with a lien on the property.

Bidding on a property at a tax sale has its risks and rewards. If the owner of a property sold at a tax sale redeems the property (which means they pay off all outstanding debt and interest within one year of the tax sale) then the purchaser of the property at the tax sale does not get to keep the property, but they do receive any interest that was made on the purchase price. The Province of BC sets this interest rate which has ranged between 5% and 9% over the last 10 years. This interest is not paid by the City of Dawson Creek; the property owner redeeming the property must pay this as part of the outstanding debt.

The City is only the auctioneer for the properties sold at a tax sale.  The City does not own them, therefore we cannot provide access to them and the properties are sold site unseen. Also, as experienced by a recent purchaser, many of these properties have liens on them.  Once the property is purchased, any liens become the responsibility of the new owner to remove.  The City does provide a title search for each property at the tax sale which shows any liens on the property; however, because we do not own the properties, we do not know the value of the various liens. We recommend to anybody that is considering purchasing a property at a tax sale that has a lien on it, to first determine the value of any liens prior to bidding.

To clear up some of the uncertainty around liens on properties sold at a tax sale, the City asked for some legal advice.  We were told that the purchaser of a tax sale property is not responsible for the entire lien amount and that the lien cannot be transferred to other properties owned by the purchaser. The lien is a mechanism used to force the hand of the owner to pay outstanding debt by creating a barrier to sell or mortgage the property.  Also, a judge can court order the sale of a property with a lien on it to pay the outstanding debt. If you plan to purchase a property at a tax sale with a lien on it, we recommend you get legal advice prior to doing so. Also, as a reminder, it is the purchaser’s sole responsibility to make sure that due diligence is performed before placing a bid on a tax sale property. Interested bidders should verify any and all information to determine the nature and scope of all risk related to any tax sale property.

For more information regarding the Tax Sale Process, or for contact information for questions regarding tax sales, please visit the Municipal Property Tax Sale web page on the Province of BC website, the Taxes web page on the City’s website, or email tax_dept@dawsoncreek.ca .