Unpaid municipal taxes: Their consequences and how to keep your property
Is your municipal tax bill overdue? That’s definitely not an ideal situation, but rest assured that there are solutions available to you.
We all know the old adage, “In this world, nothing is certain except death and taxes.” And for homeowners, that includes the municipal property tax. A missed payment can happen to anyone, especially in these economically turbulent times when inflation squeezes every aspect of our budgets. But while skipping a cellphone payment won’t have too many adverse consequences, paying a municipal tax bill late is a whole other matter.
Fortunately, there are solutions available if you are going through a financially precarious period and facing unexpected events.
Each municipality manages this type of situation differently, but let’s take Montréal as an example and look at the outcomes of failing to pay a municipal tax bill.
Contesting municipal taxes that are too high: Action to consider cautiously
It is possible to request a reduction of your municipal tax payments, however, you should know success isn’t guaranteed. The request must be made during a specific time window and your home must be evaluated by a certified appraiser, which isn’t free. An article in the Journal de Montréal (French only) reports that only about half of such requests are accepted.
Even in successful cases, the reduction obtained may not be substantial enough to meet your needs.
Unpaid municipal taxes: Year 1
No reason to panic. Remember that municipal property tax is the greatest source of revenue for municipalities. So, they have no interest in taking overly drastic legal measures at this stage.
If your tax bill for the current year is in arrears (either partially or in full), you’ll get two account statements, which will naturally include penalties and interest fees.
It’s not the end of the world, but it’s better to act now. If your financial problems are ongoing and you don’t have enough liquid funds to pay the city what you owe, then getting financing is critical so you stop hemorrhaging money.
Getting a loan to pay your municipal tax bill
You can contact your bank or credit union to get a loan, but it might be easier and more advantageous to use a private lender. Private lenders don’t have the same constraints as conventional financial institutions, so they can offer financing with terms that are better suited to your situation.
At Financière Victoria, our personalized service lets you get financing that sees beyond a financially tight period. Here are the main criteria to qualify:
- The property is a single-family home, a condo, a commercial or income building, or a lot.
- The property is located in a serviced urban area.
- The financing amount is 75% or less of the property value.
Unpaid municipal taxes: Year 2
The following March, the city will send a notice advising you of the legal steps it intends to take to claim the amount due. It will also initiate the process to sell your property.
- 6 months before the sale: A formal notice, titled Tax Sale Notice, is sent by mail and a $45 fee is added to the balance.
- 3 months before the sale: A final warning is sent by mail before the sale of the property is published.
- 2 months before the sale: The property is listed for public sale. A notice of sale is registered with the Registre foncier du Québec, and fees totalling 5% of the capital (maximum of $2,000) are applied. The information is also sent to the mortgage creditors.
The private lender: A practical solution to keep your property in the event of unpaid municipal taxes
Let’s be honest, if you have made it to this point, it’s quite likely you have several other accounts that haven’t been paid for months. Under these circumstances, it’s almost impossible to get financing from a conventional lender. Since their lending criteria often rely heavily on your credit rating, having multiple late payments on your file will make banks reluctant to grant you a loan.
A private lender can throw you a lifeline so you can catch your breath financially and gain the time you need to get back on top of things.
If you’re in this situation, don’t delay. Make an appointment with a Financière Victoria advisor now.