Tax Sale Glossary

Arrears

Unpaid property taxes that are past due. Properties typically go to tax sale after 2-3 years of accumulated arrears. The total arrears amount forms the basis of the cancellation price.

As-Is Condition

Properties at tax sales are sold in their current condition with no warranties or representations. The buyer assumes all risks regarding the property's physical condition, environmental status, and legal encumbrances.

Auction (Public Auction)

A live, competitive bidding event where buyers openly compete for properties. The auctioneer calls for bids starting at the upset price, and the highest bidder wins. Common in Alberta, BC, and Nova Scotia.

Bank Draft

A guaranteed payment instrument issued by a bank, commonly required for tax sale deposits and final payments. Unlike a personal cheque, a bank draft is guaranteed funds and cannot bounce.

Bid Deposit

A portion of the bid amount submitted with a tender to demonstrate good faith. In Ontario, this is typically 20% of the bid amount. Deposits of unsuccessful bidders are returned; the winning bidder's deposit is applied to the purchase price.

Cancellation Price

The total amount of unpaid taxes, penalties, interest, and municipal costs required to stop (cancel) a tax sale. This is the minimum bid in most jurisdictions. The cancellation price is calculated up to the date of the sale.

Certified Cheque

A personal cheque that has been certified by the bank as guaranteed funds. Often accepted alongside bank drafts for tax sale payments. The bank sets aside the funds to ensure the cheque won't bounce.

Crown Land

Land owned by the federal or provincial government. Crown land cannot be sold at tax sales. Crown interests (such as easements or rights of way) on private land typically survive a tax sale and transfer to the new owner.

Covenant (Restrictive Covenant)

A legally binding restriction registered on title that limits how a property can be used or developed. For example, a covenant may prohibit commercial use or require a minimum building setback. These typically survive tax sales.

Deed (Tax Deed)

The legal document transferring ownership of a property from the municipality to the tax sale purchaser. A tax deed is issued after the redemption period expires (if applicable) and all payments are made.

Deposit

Portion of bid required upfront (e.g., 20% for Ontario tenders). The deposit must typically be submitted with the sealed bid in the form of a certified cheque or bank draft made payable to the municipality.

Due Diligence

The comprehensive research and investigation performed before bidding on a tax sale property. Includes title search, physical inspection, zoning verification, environmental assessment, and financial analysis. Critical to avoiding costly mistakes.

Delinquent Taxes

Property taxes that have not been paid by the due date. After a certain period (typically 2-3 years), properties with delinquent taxes become eligible for tax sale proceedings.

Easement

A legal right for a third party to use a portion of a property for a specific purpose, such as a utility company running power lines or a neighbour having a shared driveway access. Easements are registered on title and typically survive tax sales.

Encumbrance

Any claim, lien, charge, or liability attached to a property that may affect its value or transferability. Examples include mortgages, liens, easements, and restrictive covenants. Tax sales extinguish most (but not all) encumbrances.

Environmental Lien

A charge registered against a property by a government authority due to environmental contamination. Environmental liens typically survive tax sales, meaning the new owner inherits the cleanup obligation. This is one of the most serious risks in tax sale investing.

Fee Simple

The most complete form of property ownership, giving the owner full rights to use, sell, or transfer the property. Tax sale purchases typically result in fee simple ownership after the redemption period expires.

Foreclosure

A legal process by which a lender takes ownership of a property when the borrower defaults on their mortgage. Different from a tax sale, which is initiated by the municipality for unpaid property taxes. Both result in distressed property sales.

Gazette (Provincial)

The official government publication in each province where tax sale advertisements must be legally published. In Ontario it is the Ontario Gazette (ontariogazette.ca); in New Brunswick, the Royal Gazette; in Quebec, the Gazette officielle du Québec. Monitoring the gazette is the primary way to discover upcoming tax sales.

GST (Goods and Services Tax)

Canada's federal value-added tax of 5%, which may apply to tax sale property purchases depending on property type and use. GST typically applies if the property is a new build, substantially renovated, or a commercial property. Residential resale properties are generally exempt. In HST provinces (ON, NS, NB, PEI, NL), GST is bundled into HST.

Hazard Land / Environmental Protection Zone

A zoning designation indicating that a property is located in a flood plain, on a steep slope, or in an otherwise environmentally sensitive area that restricts development. Properties zoned as Hazard Land or EP (Environmental Protection) often cannot be built upon and may have very limited value. These frequently appear in tax sales at low cancellation prices — always verify zoning first.

Holding Costs

The ongoing expenses incurred while waiting for the redemption period to expire before taking title. Includes property taxes, vacancy insurance, winterizing/security costs, and sometimes utilities. In Ontario with a 1-year redemption period, holding costs should be factored into your maximum bid calculation.

HST (Harmonized Sales Tax)

A combined federal and provincial sales tax applicable in Ontario (13%), Nova Scotia (15%), New Brunswick (15%), PEI (15%), and Newfoundland (15%). HST may apply to tax sale property purchases for new builds, substantially renovated properties, and commercial properties. The buyer is responsible for determining HST applicability and remitting to the CRA.

Interest (Redemption Rate)

In Ontario, if the original owner redeems the property during the 1-year redemption period, the successful bidder gets back their bid amount plus 10% annual interest on that amount. This effectively acts as a guaranteed 10% annualized return on your capital — sometimes called the 'redemption interest benefit.'

ISC (Information Services Corporation)

Saskatchewan's land title and corporate registry authority. Investors researching Saskatchewan tax sale properties use ISC's SPIN2 system to access property title information, registered encumbrances, and ownership history before bidding.

Intestate Estate

A property where the owner has died without a will. Properties owned by intestate estates are common in tax sales, as the estate may have no clear administrator paying property taxes. Purchasing an intestate estate property is legally straightforward — the tax sale process eliminates the ownership issue — but title insurance is especially advisable.

Judgment Lien

A lien registered against a property as a result of a court judgment ordering the property owner to pay a debt. Judgment liens are typically extinguished (cleared) by a tax sale, unlike Crown liens or environmental orders. Always confirm with a title search and your lawyer before assuming a judgment lien is cleared.

Land Transfer Tax

A provincial tax payable by the buyer when purchasing real estate. Calculated as a percentage of the purchase price (your bid amount). In Ontario, first-time homebuyers may receive a rebate. Must be factored into your total cost calculation.

Lien

A legal claim against a property as security for a debt or obligation. Common types include mortgage liens, construction liens, and judgment liens. Most liens are extinguished by a tax sale, but Crown liens and environmental liens typically survive.

Lot (Legal Description)

The formal legal description of a property's boundaries as registered in the land registry. Always verify the lot description matches the physical property you intend to purchase before bidding.

MPAC (Municipal Property Assessment Corporation)

Ontario's independent organization responsible for assessing the value of all properties in the province for property tax purposes. MPAC assessments provide a useful baseline for estimating a property's market value, though they may not reflect current market conditions.

Municipality

A local government body (city, town, township, or village) that administers tax sales within its jurisdiction. The municipality sets the cancellation price, advertises properties, receives bids, and issues tax deeds.

Mortgage (Surviving)

In most Canadian provinces, mortgages registered on a property are extinguished (cancelled) when a tax deed is issued. However, this is not universal—always verify with a lawyer whether any mortgages survive the tax sale in your specific jurisdiction.

Notice of Sale

The formal public advertisement a municipality must place before conducting a tax sale. In Ontario, properties must be advertised in the Ontario Gazette and a local newspaper. The notice specifies the tender deadline, the cancellation price, and the property's legal description. This is the investor's signal to begin due diligence.

Non-Resident Buyer

A buyer who is not a Canadian resident. Non-residents can generally buy properties at Canadian tax sales, but may face additional requirements: CRA withholding tax on purchase (Section 116 Certificate), potential foreign buyer restrictions (PEI's Lands Protection Act limits non-residents to 5 acres; BC's Foreign Buyers Tax applies in certain areas), and additional FINTRAC anti-money laundering reporting obligations.

Notice of Intention to Sell

A preliminary notice sent by a municipality to the registered property owner, their mortgagees, and other interested parties before initiating a formal tax sale. This notice requires the owner to pay the outstanding arrears within a specified period (typically 35 days in Ontario) or face a formal tax sale process.

Ontario Gazette

The official gazette of the Province of Ontario, published weekly, where all Ontario municipal tax sale advertisements are legally required to appear. Available at ontariogazette.ca. Searching 'sale of land for tax arrears' weekly is the most reliable way to track new Ontario tax sale opportunities.

Occupied Property

A tax sale property that is currently being lived in or used by someone (the former owner, a tenant, or a squatter). Buying an occupied tax sale property creates additional legal obligations: tenants have rights under provincial Residential Tenancies legislation and cannot be removed without a formal hearing. Squatters/trespassers must be removed through a separate legal process. Both add significant time and cost.

Parcel Register

An official document from the land registry that shows the complete ownership history and all registered interests (liens, easements, mortgages) on a property. Essential for due diligence before bidding on any tax sale property.

Public Tender

A sealed bid process where buyers submit their bids in sealed envelopes by a specified deadline. Bids are opened publicly, and the highest bid above the cancellation price wins. Used primarily in Ontario. Also called a 'sealed tender.'

PIN (Property Identification Number)

A unique 9-digit number assigned to each property in Ontario's land registry system. Used to search for a property's title history and registered interests. Always use the PIN (not just the address) when conducting a title search.

Quiet Title

A legal action (or process) that confirms a property owner's title against all adverse claims. After a tax sale, the tax deed generally conveys clear title, but in unusual cases (pre-existing errors, competing interests) a quiet title action may be needed to resolve disputes. Title insurance effectively replaces the need for a formal quiet title action in most cases.

Quebec Civil Law (Droit civil)

Quebec property law is governed by civil law (Civil Code of Québec), not common law as in the other nine provinces. This affects how tax sales are administered (ventes pour défaut de paiement), how title is transferred, and the role of notaries (not lawyers) in real estate transactions. Investors buying in Quebec must work with a Quebec notary rather than a common law real estate lawyer.

Right of Way

A legal right to pass through or use another person's property for a specific purpose, such as a road, utility corridor, or pedestrian path. Rights of way are registered on title and typically survive tax sales.

Sealed Bid

A bid submitted in a sealed envelope that is not revealed until all bids are opened simultaneously at the bid opening. This prevents bidders from seeing competitors' bids and adjusting accordingly. Used in Ontario's public tender process.

Setback

The minimum required distance between a building and a property line, road, or other feature as specified by zoning bylaws. Setbacks can significantly affect what can be built on a property. Always verify setbacks before bidding on vacant land.

Land that is too small or irregularly shaped to be developed on its own. Surplus lots often appear in tax sales at very low prices, but may have limited value unless combined with an adjacent property. Always verify if a lot is buildable before bidding.

Survey (Property Survey)

A professional measurement of a property's boundaries, dimensions, and physical features, conducted by an Ontario Land Surveyor (OLS) or equivalent in other provinces. A current survey confirms that the physical property matches its legal description and reveals any encroachments. Particularly important for rural or recreational tax sale properties where boundaries may be unclear.

Section 116 Certificate (Withholding Certificate)

A certificate issued by the CRA to non-resident sellers (or buyers in certain transactions) confirming that the required withholding tax on the sale of Canadian real estate has been paid or is not required. When buying from a non-resident vendor, the buyer is responsible for withholding and remitting 25-50% of the purchase price to CRA unless a Section 116 Certificate is obtained.

Tax Arrears Certificate

A document registered on title by a municipality (in Ontario) when property taxes are unpaid for 2+ years. Registration of this certificate begins the formal tax sale process and gives the owner one final year to pay before the property is advertised for sale.

Tax Deed

The legal document issued to the purchaser after a successful tax sale and the expiry of any redemption period. A tax deed transfers ownership and extinguishes most (but not all) prior encumbrances on the property.

Tax Sale

The legal process by which a municipality sells a property to recover unpaid property taxes. Also called 'sale of land for tax arrears.' The process varies by province but generally involves advertising the property and holding a public tender or auction.

Title Search

A review of the public land registry records to determine the legal ownership of a property and identify any registered interests, liens, or encumbrances. An essential step in due diligence before bidding on any tax sale property.

Tax Lien

In some US states, a tax lien certificate is a separate tradeable investment instrument. Canada does not have this formal system — instead, municipalities proceed directly to tax sale. The term 'tax lien' is sometimes used informally in Canada to describe the municipality's registered claim (Tax Arrears Certificate) against a delinquent property, or to describe surviving CRA income-tax liens which do not get extinguished by a tax sale.

Title Insurance

Insurance protecting a property owner against losses from title defects discovered after purchase — unknown liens, survey errors, fraud, or zoning violations. Owner's title insurance is strongly recommended for tax sale properties due to the 'as-is' nature of the sale. Major Canadian providers include FCT, Stewart Title, and Chicago Title. Costs $200–$600 for most residential properties.

Vacant Land

An undeveloped property with no buildings or structures. Vacant land regularly appears in tax sales and can be attractive to investors — especially if zoned for residential or commercial use. Key considerations: verify servicing (water, sewer, hydro), development restrictions, minimum lot size for subdivision, and any environmental or conservation overlay designations.

Vacancy Insurance

Specialized property insurance for unoccupied buildings. Standard homeowner insurance policies exclude coverage for properties that have been vacant longer than 30-60 days. After winning a tax sale, you must obtain vacancy insurance to protect the property during the redemption period. Typically costs $500–$2,000/year depending on property size and location.

Vente pour défaut de paiement (Quebec)

The Quebec equivalent of a tax sale — literally 'sale for default of payment.' Governed by the Act Respecting Municipal Taxation and the Civil Code of Québec. Key distinction: Quebec's civil law retrait conventionnel gives the former owner 1 year to repurchase (functionally identical to a redemption period). All documents are in French.

Work Order (Property Standards Order)

A municipal order requiring the current owner to complete specific repairs or bring a property into compliance with property standards bylaws. Work orders are registered on title and transfer to the new owner at tax sale. If the work order has not been complied with, the new owner must complete the required work or face fines and further enforcement. Always check for open work orders with the municipality's property standards department before bidding.

Writ of Possession

A court order authorizing the Sheriff to remove occupants from a property. If a tax sale property is occupied by a squatter or a tenant who refuses to leave voluntarily, the new owner must obtain a court order (often beginning with a Notice to Vacate, then Small Claims or Superior Court application) and may ultimately need a Writ of Possession executed by the Sheriff.

Zoning

Municipal regulations that govern how land can be used and what can be built on it. Common zoning categories include Residential (R), Commercial (C), Industrial (M), and Environmental Protection (EP). Always verify zoning before bidding — EP or Hazard Land zoning can make a property nearly worthless.

Zoning Bylaw

A municipal law that regulates land use, building setbacks, lot coverage, height restrictions, and permitted uses within specific zones. Zoning bylaws are enforced by the municipality and can significantly affect what you can do with a tax sale property.