I have a questions regarding paying the cancellation price on Tax Arrears Certificate.
What does it mean by another person paying the taxes owed have a lien with priority? What type of individual might that be?
A tax cancellation certificate verifies that tax arrears certificate registered against property has been cancelled and that cancellation price was paid either by:
– The owner (no lien exists) or,
– By another person entitled to receive notice and that individual has a lien with priority over anyone else that received the notice.
This is going to be a person with a registered interest in the property, like the 1) first mortgagee, 2) second mortgagee, 3) rental equipment lienholder, or 4) construction lienholder.
They all get notices that the municipality is about to sell the property because of the tax arrears in addition to the Owner. Naturally, the person most worried is the Owner, but he doesn’t have the money. The next person at risk is the construction lienholder, in our example, so that person might voluntarily pay the tax arrears.
If that happens, then they actually receive some security to the extent of that payment. Assume $10,000 was paid for taxes. The construction lienholder now has priority for repayment of that $10,000, as the municipality once had, even above the interests of the first mortgagee. But, that’s just for the $10,000 paid, not for the balance of their construction lien which remains in fourth position.
Brian Madigan LL.B., Broker