Tax Arrears and Property in Ontario — What Happens Next

Property taxes in Ontario are levied by municipalities and are secured against the property itself, not just against the owner personally. When property taxes go unpaid for an extended period, the municipality has the legal right to sell the property to recover what's owed through a process called a tax sale. The rules and timelines vary by municipality, but in general, unpaid taxes must be overdue for more than two years before a municipality can register a tax arrears certificate and begin the tax sale process.

Tax arrears accumulate in a variety of situations: landlords who have stopped maintaining a property, estates where no one is managing the finances, owners who are away or ill, or simply situations where expenses outpaced income and property taxes were the bill that kept getting deferred. Whatever the reason, the result is the same — a growing debt secured against the property, and a clock running down toward a municipal tax sale.

A municipal tax sale typically results in the property being sold for the minimum amount required to cover the outstanding taxes, penalties, and costs, with no consideration for market value or the owner's equity. It is one of the least desirable outcomes for a property owner.

Selling the property privately before a tax sale occurs almost always produces a better outcome. The sale proceeds pay out the arrears, any remaining mortgage balance, and all transaction costs, and what's left belongs to you. Key Realty buys properties with tax arrears across Ontario. The arrears are resolved through the sale process, and you walk away cleanly.