Have you ever flipped through the local paper and seen the advertisement "NOTICE OF 2011 TAX SALE"?
I think everyone has heard stories, especially in the States, about investors swooping in at the last minute and buying these properties at a steal - just paying the owed tax and then flipping it for BIG BUCK$! Easy money!!!
The way it works is this... The Local Government Act requires the City to sell at Tax Sale all properties whose taxes have not been paid for three years.
The City Collector has the right to sell for the Upset Price which equals all outstanding taxes + penalties + interest + 5% tax sale costs + Land Title Office fees. All properties are sold "as is" without warrant or guarantee. In other words, you get it exactly as it is. (May have been a grow-op, may have drainage problems, may have been home to cats, rats and elephants - who knows?!!!).
Each year a public auction is held at 10am on the last Monday in the month of September.
Prospective buyers are encouraged to search the title of the property in advance to determine if there are any charges against the property.
The minimum bid is the Upset Price - what is owed to the city. Often times the city will appoint a bidder to act on its behalf. If no one else bids, it automatically goes to the city at the Upset Price. Win it and I believe they allow you one hour to produce a certified bank cheque for the full amount.
Ah, but the original owner has a "redemption period" of one year after the Tax Sale to pay the taxes and buy back the property. If you had won the bid you would get your money back with interest.
The reality is most of the properties that make the papers won't make it to auction. Guess its surprising how quickly people can come up with money when their $700,000 home is being sold for $12,000!
Lastly, lets say you do win the auction for a home and the owner doesn't pay off the taxes within the year, you must pay the BC Property Transfer tax, payable on the fair market value of the land and all improvements at the time of registration. That is 1% of the first $200,000 of vale and 2% of the balance. In the example of a $700,000 home that would be another $12,000. You know the government has to get their money.
Still, you may be able to get a deal and therefore may want to check out the auction. Visit your local city website for details on properties which may be up for sale.Good Luck!
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