Quick Answer
A tax sale is a government-conducted public sale of a property whose owner has failed to pay municipal property taxes for 2–3 years. The municipality sells the property at auction or sealed tender to recover the debt. The buyer receives legal title (a tax deed), free from most private liens, but must pay at least the 'cancellation price' covering all outstanding taxes and costs. The former owner has a redemption period (0–2 years by province) to buy the property back.
- Official Term
- Sale of Land for Tax Arrears (Canada)
- Also Known As
- Municipal Tax Sale, Tax Deed Sale, Tax Arrears Sale
- Triggered By
- Unpaid municipal property taxes, typically 2–3 years in arrears
- Sale Format
- Sealed tender (most of Canada) or public auction (Alberta, Saskatchewan, Manitoba, New Brunswick, Quebec)
- Legal Authority
- Provincial legislation (e.g., Ontario Municipal Act s.379, Alberta Municipal Government Act s.418)
- What Buyer Receives
- Tax deed (fee simple title), free from most private mortgages and liens — but NOT Crown interests or environmental orders
- Redemption Period
- 0 to 24 months depending on province — during which the former owner can reclaim the property
How a Tax Sale Works — Step by Step
- Tax Arrears Accumulate — A property owner stops paying municipal property taxes. After 1–2 years of non-payment, the municipality issues a formal notice of tax arrears.
- Redemption Notice — The municipality sends the owner a registered notice giving them a final period (6–12 months, varies by province) to pay all arrears or face sale of the property.
- Public Advertisement — If arrears remain unpaid, the property is advertised in local newspapers and on government websites. The advertisement includes the legal description, address, minimum bid (cancellation price), and tender/auction date.
- Tender or Auction — In sealed-tender provinces (Ontario, BC, Nova Scotia, PEI, Newfoundland), bidders submit their offer in a sealed envelope. In auction provinces (Alberta, Saskatchewan, Manitoba, New Brunswick, Quebec), the sale is conducted publicly with competitive bidding.
- Sale Award — The highest qualified bidder wins. In Ontario, if only one bid matches the cancellation price exactly, the municipality may refuse and conduct a public tender. The winning bid must meet or exceed the cancellation price.
- Redemption Period — After the sale, the former owner typically has a redemption period (0–2 years) to repay the buyer's bid amount plus interest. If redeemed, the buyer gets their money back but not the property.
- Tax Deed Transfer — Once the redemption period expires without redemption, the municipality registers a tax deed transferring title to the successful bidder. The buyer now has fee simple ownership.
What Is the Cancellation Price?
The cancellation price is the minimum bid required to purchase a tax sale property. It represents the total amount owed to the municipality:
- All unpaid property taxes (can span multiple years)
- Accumulated interest and penalties
- Municipal costs for administering the sale (advertising, legal fees)
No bid below the cancellation price can be accepted. If no bidder meets the cancellation price, the municipality retains ownership of the property.
What Title Do You Receive?
Winning a tax sale gives you a tax deed — a form of the property's title registered against the land. A tax deed:
- Extinguishes most private mortgages and liens registered before the sale
- Clears construction liens in most provinces
- Does NOT come with any warranty — the property is sold 'as is, where is'
However, certain interests survive a tax sale and become your responsibility as the new owner:
- Crown interests — Federal or provincial government liens, including CRA tax debts and provincial environmental orders
- Easements and rights of way — Utility easements, access rights, and registered rights of way remain on title
- Restrictive covenants — Building restrictions and zoning agreements typically survive
A thorough title search before bidding is not optional — it's essential.
Tax Sale vs. Foreclosure vs. Power of Sale
| Feature | Tax Sale | Foreclosure / Power of Sale |
|---|---|---|
| Debt Type | Municipal property taxes | Mortgage (private lender) |
| Initiated By | Municipality | Bank or mortgage lender |
| Minimum Bid | Cancellation price (all arrears) | Outstanding mortgage balance |
| Title Quality | Clears most private liens | Mortgage liens above cleared; others may survive |
| Interior Access | No | Sometimes, through court order |
| Competition | Often lower — less publicized | Often higher — MLS exposure |
For a full comparison, see our guide: Tax Sale vs Foreclosure vs Power of Sale
Find Active Tax Sale Properties
TaxSalesPortal aggregates active tax sale listings from municipal websites across all 10 Canadian provinces, enriched with MPAC property assessments and historical sale data.