Sale for unpaid taxes

In addition to the Civil Code of Québec, the Cities and Towns Act¹ allows municipalities to recover unpaid municipal taxes through the sale of immovables for non-payment of taxes.² Although this tax collection method is governed by a strict process, the fact remains that it does not require any prior judgement.

Brokers must be cautious when the property for sale is subject to municipal tax arrears, as this could hinder the completion of the transaction.

Under the Cities and Towns Act, a delay of six months following the date of the notice of deposit of the collection roll is sufficient to entitle the city to such recourse.³ Of course, each municipality has its own policies in this regard. Following the filing of a statement by the municipal treasurer, the municipal council may order the clerk to sell such immovables at public auction.⁴

Notice

At the time of the first publication of the notice, the clerk must send a copy thereof to the Bureau de la publicité des droits.⁵ The Land Registrar will then be obliged to notify any interested party whose name appears in the Land Register (owner of the immovable, mortgage creditor, etc.).

Conduct of the public auction

Within 30 days of the order of the municipal council, the clerk shall give public notice of the day, time and place where the public auction will be held.⁶ Such public notice shall be published twice in a newspaper circulated in the territory of the municipality. The sale cannot be held before the expiration of 15 days from the second publication.⁷ The immovable shall be sold to the highest bidder.⁸

Price paid

To make the sale effective, the highest bidder, also known as the successful bidder, must pay the price immediately at the public auction, failing which the immovable will be put back up for sale.⁹ The price must cover at least:

• Unpaid municipal taxes, interest and penalties
• Unpaid school taxes and interest
• The cost of publishing the notice in the newspaper
• The cost of the notice sent by registered mail
• Ownership title search costs
• Registration costs at the Bureau de la publicité des droits
• Cancellation costs at the Bureau de la publicité des droits
• The costs of the Bureau de la publicité des droits for the preparation of the collocation scheme
• Duties and fees to the Minister of Finance representing 3% of the selling price
• Goods and Services Tax  (GST) and Québec Sales Tax (QST), where applicable

 

 

Right of redemption

The highest bidder therefore becomes the owner of the immovable on the day of the auction and may take possession thereof. However, the former owner has the right of redemption during the year following the auction sale.¹⁰ He may then buy back the immovable by paying the successful bidder the sale price plus 10% interest per year. The successful bidder may not object to the former owner exercising his right of redemption.

Deed of sale

At the expiry of the one-year period, the municipal council may grant a deed of sale to the successful bidder.¹¹ However, the former owner may consent to this beforehand. In this case, he will have to intervene in the deed of sale.¹²

Effects of such a sale

This type of sale transfers the right of ownership from the former owner to the highest bidder and has the effect of eliminating any mortgage affecting the immovable.¹³
 

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¹ Cities and Towns Act (CQLR, c. C-19).
² S. 511-530 CQLR, c. C-19
³ S. 511 CQLR, c. C-19
⁴ S. 512 CQLR, c. C-19
⁵ S. 514(2) CQLR, c. C-19
⁶ S. 513(1) CQLR, c. C-19
⁷ S. 514(1) CQLR, c. C-19
⁸ S. 517 CQLR, c. C-19
⁹ S. 519 CQLR, c. C-19
¹⁰ S. 521 CQLR, c. C-19
¹¹ S. 525(1) CQLR, c. C-19
¹² S. 525(2) CQLR, c. C-19
¹³ S. 528 and 529 CQLR, c. C-19