Ontario Tax Sales: How Municipal Property Auctions Work

The municipality can also sign an extension agreement with the owner, the owner's spouse, a mortgage lender, a tenant in occupation or anyone else the treasurer is satisfied has an interest. The agreement cannot reduce the cancellation price, and the time it is in force does not count toward the one-year period (s. 378, checked October 19, 2026). If the price is still unpaid 280 days after registration, the treasurer has 30 days to send a final notice that the land will be advertised for sale unless the cancellation price is paid before the year is up (s. 379 (1)).

If the owner, a mortgage lender or anyone else pays in full before the year ends, the sale does not happen. A person entitled to notice who pays on the owner's behalf, other than the owner or the owner's spouse, gets a lien on the land for the amount paid, and that lien ranks ahead of the other people who received notice (s. 375 (3) and (4), checked October 19, 2026).

Sealed tender or public auction

When the year ends with the cancellation price unpaid and no extension agreement in place, the land must be offered for public sale by public auction or public tender, as the treasurer decides (Municipal Act, 2001, s. 379 (2), checked October 19, 2026). Under the Municipal Tax Sales Rules in O. Reg. 181/03 the treasurer advertises the land once in The Ontario Gazette and once a week for four weeks in a local newspaper, or posts notices in the municipal office and one other prominent place where there is no suitable paper. Bidders get at least seven days after the last advertisement before tenders close or the auction is held (ss. 5 and 13, checked October 19, 2026).

How the minimum bid is set

The minimum bid at an auction, or the minimum tender amount, is the cancellation price (Municipal Act, 2001, s. 379 (2.1)), and the advertisement must state it as of the first day of advertising (O. Reg. 181/03, ss. 5 (4) and 13 (4), checked October 19, 2026). The treasurer does not have to look into the value of the land and has no duty to get the highest or best price (s. 379 (14)).

So the opening number reflects the debt owed and has no link to what the property is worth. In a hypothetical case, a lot carrying $18,000 of arrears, interest and costs opens at about $18,000 whatever its market value. Competing bids set the real price, and on a parcel buyers want, that can land far above the minimum.

Sealed tenders and the 20% deposit

Under O. Reg. 181/03, s. 6 (checked October 19, 2026), a tender must:

• be on the prescribed tender form (Form 7), typed or legibly handwritten in ink;
• come with a deposit of at least 20% of the tender amount, paid by money order, bank draft, or a cheque certified by a bank, trust corporation or credit union;
• arrive in a sealed envelope addressed to the treasurer, marked as a tax sale and identifying the property; and
• cover only one parcel of land.

The treasurer opens the envelopes in public as soon as possible after 3 p.m. local time on the closing date, rejects any tender below the minimum, out of form or carrying conditions the rules do not allow, and keeps only the two highest (ss. 9 (1), (3) and (4)). The highest tenderer then has 14 days from the mailing of the notice to pay the balance, any applicable taxes such as land transfer tax, and the taxes that accumulated since advertising began. A tenderer who misses that deadline forfeits the deposit to the municipality, and the parcel goes to the second tenderer on the same terms (ss. 11 and 12, checked October 19, 2026).

Public auctions

At an auction, the highest bidder is declared the successful purchaser only if they immediately pay the amount bid, any applicable taxes such as land transfer tax, and the accumulated taxes. Cash, a money order, a bank draft or a certified cheque all count as payment (O. Reg. 181/03, ss. 16 and 25, checked October 19, 2026). If the winner cannot pay, the auctioneer reopens the bidding once (s. 17).

Arrange your money before the sale either way. A tender or an auction bid carries no financing condition, so you cannot secure a mortgage after you win.

What you are buying: as is, unseen, and possibly occupied

A tax deed does not oblige the municipality to provide vacant possession (Municipal Act, 2001, s. 379 (10) (a), checked October 19, 2026). It also does not cancel a municipal rate charged on the land before the deed is registered that falls due after it (s. 379 (10) (b)). A municipality can pass a by-law excluding mobile homes on the land from the sale, and the advertisement must then say so (s. 379 (3) and (4)).

Expect no viewing, no seller property information statement and no home inspection. You can look from the road, but do not go onto the land without permission. If someone is living there after you take title, getting them out is your problem, and you should speak to a lawyer before taking any step.

Title risk and what survives the sale

A registered tax deed gives the buyer the land in fee simple, free of all other estates and interests except three: easements and restrictive covenants that run with the land; estates and interests of the Crown in right of Canada or in right of Ontario, with exceptions for land the Crown holds through a dissolved corporation or an owner who died without heirs; and title that abutting owners gained by adverse possession before the deed was registered (Municipal Act, 2001, s. 379 (7), checked October 19, 2026).

In plain terms, a tax deed clears most mortgages and private claims, but not everything. A federal or provincial interest in the land can survive, and so can a right of way a neighbour has the legal right to use.

Mining rights are a separate trap. Where mining rights are liable for taxes under the Mining Act, a tax sale severs them, and only the surface rights pass to the purchaser (s. 384 (1), checked October 19, 2026). Once registered, a tax deed is final and cannot be challenged except for fraud, even for a defective assessment or missed notice, although a person can still sue the municipality for damages (s. 383).

Before you tender, have a real estate lawyer search the title and the parcel register. The fee is small next to the deposit you are about to put down.

The former owner is not left with nothing if the parcel sells high. The proceeds pay the cancellation price first, then everyone else with an interest in the land in order of priority, and the former owner last. The treasurer pays everything above the cancellation price into the Superior Court of Justice, and claimants have 10 years to apply for it (ss. 380 (1), (2) and (5), checked October 19, 2026).

Where Ontario municipalities advertise tax sales

The advertisement in The Ontario Gazette must use the prescribed form, Form 6 for a tender or Form 8 for an auction. If a municipality runs a shorter newspaper notice in weeks two to four, it must post the full form on a website during those weeks. Each short notice must still give the property's address or location, the deadline or auction time, the minimum amount, and a website or contact for more information (O. Reg. 181/03, ss. 5 (3) and (4) and 13 (3) and (4), checked October 19, 2026).

The places to watch are the Ontario Gazette, the tax sale or finance page on the municipality's own website, and the local paper in the area where you want to own. Call the treasurer's office with questions before the closing date.

Toronto runs its tax sales under a separate statute. Part XIV of the City of Toronto Act, 2006 sets out a parallel process with the same registration rule in s. 344 (1) (checked October 19, 2026), so check the City's own notices if you are watching Toronto parcels.

Tax sale vs power of sale in Ontario

A power of sale is a private lender enforcing a mortgage under the Mortgages Act. A tax sale is a municipality enforcing unpaid property tax under the Municipal Act, 2001. Our guide to power of sale in Ontario covers the lender side in detail. For a buyer, the differences look like this:

• Who sells: under a power of sale, the mortgage lender sells; at a tax sale, the municipal treasurer does.
• How you buy: a power of sale property is usually listed and sold with an agreement of purchase and sale; a tax sale parcel is sold by sealed tender or public auction under O. Reg. 181/03.
• Price: a power of sale property usually carries an asking price; at a tax sale the minimum is the cancellation price, and the treasurer has no duty to get the best price.
• Conditions: a power of sale offer can include financing or inspection conditions if the lender accepts them; a tender containing any term or condition not provided for in the rules is rejected (O. Reg. 181/03, s. 9 (3) (c)).
• Title: a tax deed wipes out most registered interests, apart from the exceptions in s. 379 (7); a power of sale conveys the estate and interest the borrower had power to dispose of (Mortgages Act, s. 28, checked October 19, 2026).

Should you buy at an Ontario tax sale?

A tax sale can still make sense if you know the area, can pay in full on short notice, and have a lawyer ready. Read the advertisement for the parcel, ask the treasurer's office what you can, budget for land transfer tax and the other closing costs in Ontario that come with any purchase, and keep a reserve for surveys, cleanup or an occupant.

If you would rather buy with a seller, a viewing and normal conditions, you can browse active Ontario listings on Zealty and compare asking prices, vacant land included, with the minimum bid on a tax sale parcel.

This article is educational and is not legal advice. Tax sale rules are technical, and a deposit can be lost. Speak with an Ontario real estate lawyer before you submit a tender or bid at an Ontario tax sale.