Municipal tax certificate

If a business sale includes land, unpaid property tax can be a buyer’s concern. Ontario’s Municipal Act, 2001 lets taxes be recovered as a debt from any subsequent owner of the assessed land (s. 349(1)), and says taxes are a special lien on the land in priority to every claim, privilege, lien or encumbrance of every person except the Crown (s. 349(3)). A buyer can ask the municipality whether it issues a tax certificate, and request one before closing to see what is owing.

What a certificate shows

• Alberta: the amount of taxes imposed in the year and the amount owing, the total tax arrears, if any, and any tax whose collection is deferred (Municipal Government Act, s. 350).
• Ontario: the treasurer who issues a certificate for a property with deferred taxes must show the deferred amount and accrued interest (Municipal Act, 2001, s. 319(8)).
• Elsewhere, ask the municipality what its certificate shows and how to request one.

Questions to raise

Ask what date the certificate speaks to, and whether taxes billed after that date will be adjusted on closing. See how property tax is adjusted in a sale that includes real estate and the title search, which lists registered charges.