The amount of leeway given to property owners who are in tax arrears will change from three to two years, according to a report brought to the Town’s general committee meeting in June.
The report noted that staff was essentially combining the municipality’s property tax billing, collection, and sale policies into one document and updating current practices and legislation, explained Julia McKenzie, director of financial services and treasurer for the Town.
“I apologize, Lee is under the weather today so I’m presenting the report,” she told the general committee on June 29, referring to the author of the report, Lee Eccleston, manager of taxation and revenue at the Town of Huntsville.
“Just one thing to note that I would like to highlight is that section 13.6 has changed from owners currently approaching three years in arrears to two years in arrears to be considered for tax sale,” she said. “And this is a change that was made through the Municipal Act back in 2017.” McKenzie noted that the changes weren’t being prompted by the Town but that it was simply updating its policies to reflect changes at the provincial level.
That means the municipality can now send a final tax notice to property owners who have been in arrears for two rather than three years.
“This notice advises the property owner of the arrears and provides 30 days to pay the taxes or enter into a payment arrangement with the Town,” explained Huntsville deputy treasurer Reva Frame via email correspondence.
Frame reasoned that the change was a good thing: “This will provide earlier notice to the property owners that their taxes are in arrears. It also means that arrears balances will be more manageable for the property owners to catch up on since the taxes owing will have only been building up for 2 years rather than 3 years. The goal of the change in policy is actually to reduce the number of tax sales by alerting the property owners earlier and working with them towards getting their balances caught up through a payment plan/agreement.”
But it also means property owners who find themselves in arrears will have less time to pay off the debt.
“If, once the 30 days from the Final Notice has passed, the property owner has not paid the taxes or entered into a payment arrangement, the Town may commence the Tax Sale proceedings by registering a Tax Arrears Certificate against the property. This provides the property owner a further year to make payment in full. If after the year full payment has not yet been received, the Town will proceed with a Tax Sale,” she added. “A tax sale is the Town’s last resort to ensure that the property taxes are collected.”
The Town hires a tax registration firm to register the sale for tax arrears and sell the property through a tender process.
Once the property is sold, the proceeds are first applied towards the property taxes owed. “Once the property taxes have been recovered, the remaining proceeds are not kept by the Town, they are submitted into the court. At that point, any person having an interest in the land (ex: mortgage company) according to their priority at law, can apply to have their interest paid out of the court. Then, if there are still proceeds left after that, the owner of the lands immediately before the tax sale (i.e., the property owner that was in arrears) can apply for payment back out of the court,” explained Frame.
As of December 31, 2021 there were 160 accounts in arrears for 3 or more years which totalled approx. $1.96 million. Of those 160 accounts, 72 did not have payment plans set up by the end of 2021, according to Frame.
“Although the arrears balance [in dollars] has increased since 2019, it has also been reduced since 2020 and the Town is working with property owners to set up payment plans to reduce this even further,” she stated, adding that there are currently no properties listed for tax sale.
“We cannot provide a listing of the tax arrears registrations (which may lead to tax sales) since that is not public information. If a property under tax arrears registration is approaching the one year mark and the taxes are still unpaid, those properties will be advertised in the local paper and on the Town’s website,” stated Frame via email.
You can find the report here (pdf).
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