Casual Legal: Tips for conducting a tax arrears auction

By Michael E. Swanberg
Reynolds Mirth Richards Farmer LLP
Alberta Municipalities Casual Legal Service Provider

Under Part 10, Division 8 of the Municipal Government Act (MGA), municipalities may put parcels of land for which property tax arrears are owing up for auction to recover those arrears.

Every year (and not later than March 31), municipalities must prepare a tax arrears list showing the parcels of land for which there are arrears outstanding for more than one year. This list is sent to the Land Titles Registrar and is posted publicly. The Registrar will register a tax recovery notification on the Certificate of Title for each property listed in the tax arrears list.

Once the tax recovery notification has been registered on title, municipalities must send a notice to the owner of each parcel, any person who has an interest in the parcel as evidenced by a caveat registered on title, and each encumbrancee shown on the certificate of title. The notice must state that, if the tax arrears are not paid by March 31 of the following year, the municipality will offer the parcel for sale at a public auction.

The auction must be advertised in the Alberta Gazette between 40 and 90 days before the auction date, and in a local newspaper between 10 and 20 days before the auction date. The advertisement must specify the date, time and location of the auction, the conditions of sale, and a description of each parcel of land to be offered for sale. It must also state that the municipality may, after the public auction, become the owner of any parcel of land not sold. Copies of the advertisement must be sent to the owner of each parcel, each person who has an interest in the parcel, and any encumbrancees on title at least four weeks before the auction.

When conducting a tax arrears auction, municipalities should keep the following in mind:

• A failure to comply with any of the deadlines or notice requirements set in the MGA for tax auctions can provide a basis for the property owner to challenge the tax recovery process as being invalid;
• The owner has the right to pay the arrears up until when the parcel is declared sold by the auctioneer – if the arrears are paid before then, then the auction cannot proceed;
• The municipality must set a reserve bid which is as close as reasonably possible to market value, and the municipality cannot accept bids that are lower than the reserve bid;
• Any terms and conditions should be read at the start of the auction (including payment terms for the successful bidder). For instance, the municipality should specify that it makes no warranty as to the condition or suitability of the property, all costs associated with transferring title to the bidder are to be paid by the winning bidder, and it is the bidder’s responsibility to obtain vacant possession of the property.

To access Alberta Municipalities Casual Legal Hotline, members can call toll-free to 1-800-661-7673 or send an casuallegal [at] abmunis.ca (email) to the municipal legal experts at Reynolds Mirth Richards and Farmer LLP. For more information on the Casual Legal Service, please send an riskcontrol [at] abmunis.ca (email) or call 310-MUNI (6864) to speak to Alberta Municipalities Risk Management Staff. Any Regular or Associate members can access the Casual Legal Service.

DISCLAIMER: This article is meant to provide information only and is not intended to provide legal advice. You should seek the advice of legal counsel to address your specific set of circumstances. Although every effort has been made to provide current and accurate information, changes to the law may cause the information in this article to be outdated.