When a tender is submitted for the purchase of a tax sale property, there must be absolute compliance with the Municipal Tax Sales Rules and the Municipal Act. If your tender is not compliant, the municipality treasurer will be required to reject your tender.
While there are many reasons a tender might be rejected, the following are a few real life examples of rejected tenders and the reasons they were rejected by the municipality.
A tender with no name is in violation of Rule 6(1)(A) of the Municipal Tax Sales Rules which requires the tender to be submitted on Form 7, typewritten or legibly handwritten in ink. When no name is present, the information required on Form 7 is not there and therefore the tender had to be rejected.
A tender for $50,001.00 was submitted with a $10,000.00 deposit. This is in violation of Rule 6(1)(b) of the Municipal Tax Sales Rule which requires that a tender be accompanied by a deposit of at least 20% of the tender amount. Here the tender was rejected because it was for .20 cents less than the required amount of $10,000.20 even though in this case it was in fact the highest tender received by the Municipality.
A municipality received a tender by mail in an unsealed envelope and was required to reject the tender because it violated Rule 6(1)(c) of the Municipal Tax Sales Rules requiring that a tender be in Form 7 and submitted in a sealed envelope.
A municipality recently had to reject a tender because it did not meet the Minimum Tender Amount as required in Rule 9(3)(a) which states that every tender must be rejected that is not equal to or greater than the minimum tender amount as shown in the advertisement.
You Might be Asking yourself how you can avoid having your tender rejected, but every TSH property information description contains instructions for submitting a tender, a checklist for submitting a valid tender and a tender envelope. Of course you should always review the rules for submitting your tender and carefully double-check your deposit, your Form 7 and your tender envelope before submitting to avoid losing a fantastic investment opportunity due to a technicality.
When you submit a tender, or a written document that says how much you are offering to pay for the purchase of a tax sale property, it must be accompanied by a deposit that is no less than 20% of the tender amount. The "20% Deposit Rule" requires a Municipality to reject your tender if your deposit is even one cent less than 20% of the tender amount and therefore you must resist the temptation to round down your deposit amount by a dollar or even a penny. Courts have upheld this rule despite its harsh consequences for intended purchasers.
The Municipal Tax Sales rules require that a tender offer by a purchaser must be legibly handwritten using ink or typewritten. The Municipality Treasurer will reject your tender offer if they find the handwriting to be illegible or if you used a pencil to complete your tender form. Therefore it is important that you are familiar with the tax sales rules to avoid losing out on a potential winning investment. If you feel that you are not entirely familiar with the Municipal Tax Rules, you should enlist the help of an experienced professional such as those at TSH.
The rules governing tax sales are so particular that if you are bidding on multiple properties, they even require each tender be mailed separately in its own envelope. Two tender forms "Form 7s" must be completed along with two deposit checks in two separate envelopes. Failing to follow this "Rule of One" will result in your tender being rejected by the Municipality.
If I submit a tender and then change my mind, what happens?
There are two possible situations here. First, you decide that you don’t want to buy the property before the deadline for receiving tenders has passed. Second, you decide that you don’t want to buy the property after the deadline for receiving tenders has passed.
Every tax sale by public tender has a deadline for receiving tenders. That deadline is shown on taxsaleshub.ca.
In order to have your tender withdrawn you must make a written request to the treasurer of the municipality to withdraw your tender, and your written request must be received by the treasurer before the deadline for receiving tenders. If the treasurer receives your written request by that time, your tender will be withdrawn and your deposit will be returned to you. If your written request is not received by that time, your tender cannot be withdrawn.
If you send your written request by any method other than delivering yourself, we recommend that you follow up with a phone call to make sure that the treasurer has received your request.
You cannot withdraw your tender after the deadline for receiving tenders has passed.
If you do not have one of the two highest tenders, your deposit will be returned to you. Most municipalities send these deposits by mail a day or two after the tender opening.
If you have the highest tender, you will be notified by mail that you have 14 days to complete the purchase, and if you do not complete the purchase within that time, you will lose your deposit.
If you have the second highest tender, the municipality will keep your deposit for 14 days, or until the highest tenderer pays the balance of the amount owing. If the highest tenderer pays the full amount owing within 14 days, your deposit will then be sent back to you. If the highest tenderer does not pay the balance of the amount owing within 14 days, the treasurer will notify you in writing that you have 14 days in which to pay the balance of the amount owing. If you do not pay this amount within 14 days, the municipality is required by law to keep your deposit, even if you have decided you don’t want to buy the property.
So, if you want to withdraw your tender, make sure that the treasurer of the municipality receives your written request to withdraw your tender before the deadline for receiving tenders has passed. Otherwise, you could lose your deposit.
The Municipal Tax Sales Rules provide for the unlikely event that two people submit a tender for the exact same amount of money. The rules require that when a tender is received, the treasurer marks the time and date of its receipt on the envelope and then maintains it, without opening it, in a safe place until such a time as the tender deadline has passed and each tender is opened. The rules also state that in the event two tenders are received for the same amount, the one that was received first will be deemed the higher. Therefore the Treasurer’s time stamp on the envelope will determine the successful purchaser.
Crown interests on property may include Business Development Bank of Canada mortgages liens for arrears of income tax or HST remittances among many others.
Title Search Report provides information about a piece of land. It will include information about the owner, if there are any mortgages, easements or restrictive covenants or any other interests affecting it.
Since the tax sale is a public event, others will likely be submitting tenders. The person with the highest tender will be permitted to purchase the property. Your deposit should be at least 20% of the full amount.
