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How to buy a tax sale property in Nova Scotia. 1. Look at the listings. In Nova Scotia tax sales are not carried out by the provincial government, but rather by the various municipalities, cities, counties, and towns throughout the province. Just search by the area. For example “Halifax property tax sales”. 2. Research the listings. You can find details from Property Valuation Services Corporation by searching by AAN number, you can search Viewpoint by PID, you can even use online mapping by address. What you will not be able to do is schedule viewings. Tax sales are not traditional sales. There are no viewings. All tax sale property is sold as is with no guarantee of the condition of the property and/or title. A lot of professionals will recommend legal advice or consultation and a title search. In some jurisdictions a lawyer will be needed to record or register the tax deed if you’re the successful buyer and the property is unredeemed. 3. Understand the terms of the sale. Check out the municipality’s website for conditions of purchase and payment and what forms of payment they accept. Understand that you will need access to funds beforehand. Again tax sales are not traditional sales and as such you usually won’t be able to use traditional financing like a mortgage to buy them. 4. Property tax sales are done through public auctions or Tenders in Nova Scotia. The properties are essentially sold to the highest bidder. No you cannot just pay the taxes and get the property (that is a common question). 5. There are two types of property sold: Redeemable and Non-Redeemable. Redeemable means that the owner or anyone with an interest in the property (like a lien holder, a bank with a mortgage for example) can redeem the property within 6 months. There’s a formal redemption process to follow and you, the purchaser, get your money back that you paid plus interest. If you win a bid on a redeemable property you get a tax certificate not a tax deed. Only after the 6 month redemption period is over can you proceed to get a tax deed. If it’s a non-redeemable property then the sale is immediate, there is no redemption period, and you get your tax deed. 6. Getting the Deed. Tax sales are governed by a few acts in NS. There’s the municipal governance act and the marketable titles act. You can search them and read them, I am not a lawyer and will not discuss the legalities of them in and out. The municipal governance act basically says that the tax deed wipes out all claims of liens with the exception of crown liens (government liens). It also doesn’t change easements or right of ways. They stay. Any mortgage registered stays with the owner and does not stay with the property. Tax deeds are powerful, so much so that some people use tax sales in an attempt to obtain clear title and some others use tax sales as a way to dispose of properties and liabilities they may have with them. Some municipalities will state that they give you a quit claim deed. A quitclaim deed is a legal document that transfers whatever ownership interest a person has in a property to another person, without providing any guarantees about the property's title…even though the municipality’s interest is the tax lien and the tax lien is the first lien on a property. 7. The marketable titles act. Then we have the marketable titles act. It basically says that you only have undisputed ownership after 6 years and that the tax deed is a chain in a chain of titles not a root title. (So you see how confusing some things can get without some professional help sometimes). You will not have marketable title for these 6 years. What does that mean? Can you still flip or sell the property? Yes. That said you do have to disclose you do not have marketable title and without marketable title your buyers are not likely to get title insurance which means that they’re probably not going to get a mortgage for it. This narrows down your pool of buyers to cash buyers (or those who can secure other types of funding such as lines or credit or mortgages towards other properties that they may own). Still, tax bought properties without marketable title are still bought and sold all the time. You can also rent the property (make tenants aware that you do not have marketable title), or you can choose to live in it. Should you be concerned about not having marketable title? Yes and no. It depends on the property, what you intend to do with it, and your level of risk tolerance. Our favourite are abandoned lots and lands. They can be cheap and if they’re abandoned and not maintained usually no one is fighting for them. Personally I buy and hold them. (I collect them, like stamps or coins, but my investment strategy is very longterm and generational). If you’re buying a house, especially one that’s occupied and not abandoned, do your research. A title search and legal advice on any property you intend to buy will tell you where you stand. Don’t step over dollars to save dimes, i.e. don’t cheap out trying to buy cheap property. There are less risks if the property has already been migrated (to the Land Registration System) You can also attempt to get marketable title before the 6 year timeframe is up. For tax deed properties specifically, the 6-year wait is to ensure there are no legal challenges to the tax sale; however, if all other necessary deeds and documents (the "root") are in order, the 40-year rule generally takes precedence for creating a "good and sufficient" title. You can also try and do a quieting of title but it can be an expensive and lengthy legal process. There are of course some other ways, every situation can be unique, but like I stated earlier your best bet is to seek legal counsel. 8. Should I worry about legal challenges There can be challenges to the tax sale but they have to be procedural in nature. The best way to think about it is this; No one can both say, “That’s my property but I don’t have to pay the property tax on it”. (Except the Crown, that’s why liens in favour of the crown stay). Anyone with an interest in the property can challenge the tax sale. This would include the assessed owners and anyone with a lien against it or other interests. Examples are situations like if they were not notified as per the legal process set out in the act (not picking up registered mail, or simply saying they didn’t know are not valid reasons if there’s proof that notification was sent. Property ownership comes with a certain amount of responsibility and owners are expected to live up to that obligation). Another example would be of gross negligence where the wrong property was sold or something so unfathomable like that. You can contact the municipality and inquire if all the proper process was followed (although in most cases they have). Lien holders can’t necessarily challenge the sale just because they had a lien. They were given lots of notice and they can also redeem the property within the redemption period and if they were to choose not to act on that then that’s on them. 9. So why can property tax sales be confusing? To complicate the matters even further a lot of people don’t necessarily have a lot of experience or training in property tax sales and that includes municipal employees, real estate professionals, bankers, brokers, and even some Lawyers. It’s not their fault per se, they’re just ignorant of a process they don’t deal with often and as such trying to get good sound advice can sometimes be difficult, especially if you’re not willing to pay for it. That and people don’t want to talk professionally on something they don’t know about. There can be a lot of misinformation out there. There are, of course, some very good professionals and if you’re going to spend considerable money I recommend you buy their services. Again, do not step over dollars trying to save dimes. 7. Vacant possession. If you win a sale on a house or home, and you end up with a deed, you are not guaranteed vacant possession. You’re first call should be to a property lawyer to seek legal advice if you’re interested in a property that’s occupied. Vacating a property usually requires a court order and it can only be enforced by the sheriff in most jurisdictions (you cannot legally physically remove people on your own). It’s not something to be worried about if you’re a veteran tax sale buyer. Eventually they will have to get out. But if that’s something you’re concerned about then you best seek legal counsel before the sale so you understand the timelines and costs. To summarize: The majority of tax sale properties are abandoned properties and vacant lots with no mortgages or liens on them. There are of course other things to consider like zoning laws and building codes (some properties may not be developable). There may be some environmental factors too (does that old property have a big mess to clean up). For the most part though a lot of the properties have just had their people and families moved on or they have given them up and there is no one left in the chain. The probability of getting a beautiful new house for pennies on the dollar is low. Very low, but sometimes from time to time there are good deals on tax sale properties and that’s why they are very popular. The supply of cheap property is low and the demand is high. Still, most of the standout properties sometimes never make it to sale as people make good on the back taxes before the date of the sale, or they’re redeemed by those with a valid interest in the property. Keep in mind that the goal for governments is to recover the taxes owed, not provide people with a cheap way to buy property, and as such municipalities will work with owners and give them several options and arrangements to stop the sale of their properties. Have fun, and good luck. P.S. Nothing in this article is to be considered replacement for sound legal advice. Tax sale properties can come with risks and it’s your responsibility to research and understand them. #Novascotia #taxsale #realestate