Purchasing a property at a tax sale allows you to invest in real estate at a lower price. Tax sales are known for great deals, allowing investors to win bids with much less than a property’s assessed value.
Imagine you bid through a public tender or auction, and your bid is the winner. Knowing how to redeem a property after a tax sale is crucial and differs from municipality to municipality. Here is what you can expect if you bid, win, and need to redeem a tax sale house in Canada.
You’re Declared the Winning Bid
You must bid the highest amount to be declared the winner of tax sales. As a tax sale can be heated, it’s easy for a bid amount to be driven up quickly, far past the minimum. If you cannot follow the rules to redeem a property immediately after a tax sale is concluded, you give up your winning bid. The opportunity is passed on to the next highest bidder.
You Are Required to Make a Payment
Full payment is due on sale. Some jurisdictions accept a deposit equal to taxes, interest, and payment, with further payments due within a specified number of days. In most jurisdictions, however, payment is due immediately. Rules vary by jurisdiction, but payment is typically made by cash, certified cheque, or money order.
What Happens If A Property Is Not Redeemed?
Sometimes, there is no winning bid for a tax sale house. At that time, a notice of non-redemption is filed with the land title office. Upon receipt, the tax sale property is typically put up again at the next tax sale. Though rare, this may give you a second way to bid on a favorable property and win it again. This is if you do not have the funds to pay for it the first time.
How Long Does It Take to Close a Tax Sale?
In some areas, making payments, signing all the documents, and registering them with the municipality can take a few hours. In other regions, it can take a few days, but typically, it requires only that much. It’s in the municipality’s interest to make the process easy and close a sale quickly.
There Is No Returning the Property
Once the papers of sale are registered, only if you discover unknown costs or facts about the house can you return it. In a tax sale, you always buy it as-is. Whatever the condition of the house, the winning bidder takes it. If there are environmental or other hazards on the land, they become your problem and liability. Have money set aside to cover unexpected costs.
What Is a Non-Redeemable Tax Sale Property?
A non-redeemable tax property means you are given a Certificate of Sale after purchasing the tax-sale home. You are then given a tax deed to transfer the title to your name. The previous owner has no right or means of getting the property back after this process is concluded.
What Is a Redeemable Tax Sale Property?
A redeemable tax property follows the same process. However, the previous owner is typically given a grace period to redeem the property and return ownership to them. If this occurs, your Certificate of Sale is canceled, and you, as the tax sale purchaser, have your funds returned in addition to interest.
Pause Moving Ahead Until Full Ownership
You may have plans to repair, renovate, and recover your purchase investment. If the previous owner redeems the asset, your investment can be lost. After the tax sale, the house is all yours; however, you can move forward with any plans.
You might need a clear title for the tax sale property’s status. Any crown interests stay on the title and are yours to keep. Mortgages and other interests on the title are cleared after the sale. There are no bank claims or previous lenders to deal with. You already know what you’re handling if you did a title search before bidding.
Potentially Evicting the Previous Owner
After redeeming a tax sale house, you may also have to contend with a previous owner refusing to leave. This necessitates contacting a lawyer to find out what legal avenues you can pursue to remove them. This does not necessarily take long or require effort. It’s key to ensure eviction happens legally.
