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Supplementary Tax bill

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  • Sep 2nd, 2014 1:10 pm
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Deal Fanatic
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May 29, 2003
7384 posts
3678 upvotes
GTA

Supplementary Tax bill

Hi all,

We bought a house in Stouffville earlier on this year. The house was built and took possession by the last owner in 2012.

We just got a supplementary tax bill for part of 2012, 2013, and part of 2014 (up until we close), which is addressed to our name on our tax account. We called the city and was told that the lawyer can take care of it. We have contacted our lawyer, pending for a response since it's the long weekend but still a bit paranoid. It's over $5k. Is this a normal thing? Will we be held accountable for this amount owing when the tax bill was clearly supposed to be paid by the original owner?

Thanks for any insight.
10 replies
Deal Addict
Oct 14, 2004
1474 posts
438 upvotes
Toronto
The lawyer should help you out if you were not living in the residence at the time. It's only fair that you only pay your share...not sure what happens if they cannot contact the other party though...but in my case, there was no issue. The old owner coughed up without issue.
Deal Expert
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Jul 30, 2007
33206 posts
21116 upvotes
Toronto
You are still responsible for the supplementary tax bill. Sorry to say.

Your lawyer should have done the typical diligent search during the closing process, he/she would have realized that the taxes are not assessed and during this time, the taxes paid to-date was only for raw land.

If your lawyer has found out of this, then your lawyer would have requested an estimated adjustment of assessed taxes to be withheld in trust until this is resolved down the road. Right now, you should go after your lawyer and request compensation from the orig. owner and/or sue your own lawyer for this $. Also file an grievance with the Law Society as well so they will know what's going on for any future correspondence.
Sr. Member
Jun 5, 2011
860 posts
175 upvotes
LONDON
lawyers don't do any searching now. Hopefully you bought title insurance :)

they just sell you a title insurance policy and in-case something like this comes up, the policy foots the bill. The reasoning is that it would cost you thousands in lawyers fees if they manually completed the searches, but because MOST homes have no issues what-so-ever, they are better off just making you pay a one time fee to insure yourself against potential issues related to title. check the link below...


http://www.fsco.gov.on.ca/en/insurance/ ... titins.pdf

What Does Title Insurance Cover?
For a onetime fee, called a premium, a title insurance policy may provide protection from such losses as:

Unknown title defects (title issues that prevent you from having clear ownership of the property);

Existing liens against the property’s title (e.g. the previous owner had unpaid debts from utilities, mortgages, property taxes or condominium charges secured against the property);

Encroachment issues (e.g. a structure on your property needs to be removed because it is on your neighbour’s property);

Title fraud;

Errors in surveys and public records; and
Deal Expert
User avatar
Jul 30, 2007
33206 posts
21116 upvotes
Toronto
for you point of lien on the property. The City never registered a lien for UNPAID taxes. This is different as related to unassessed property which is now assessed.
Deal Fanatic
Mar 15, 2005
6010 posts
1851 upvotes
cy wrote: Hi all,

We bought a house in Stouffville earlier on this year. The house was built and took possession by the last owner in 2012.

We just got a supplementary tax bill for part of 2012, 2013, and part of 2014 (up until we close), which is addressed to our name on our tax account. We called the city and was told that the lawyer can take care of it. We have contacted our lawyer, pending for a response since it's the long weekend but still a bit paranoid. It's over $5k. Is this a normal thing? Will we be held accountable for this amount owing when the tax bill was clearly supposed to be paid by the original owner?

Thanks for any insight.
Part of the job your lawyer does is calculate the outstanding taxes on the home and arrange it such that the previous owners should pay the taxes right up until he date of closing.

Wait, is this an unpaid lien the city is coming after you for? Sounds like your lawyer didn't look up the title properly...
Member
Jul 4, 2012
211 posts
49 upvotes
CAMBRIDGE
The previous owners were paying taxes based on an estimated property value assessment. Now the final assessment has come through and the difference in taxes is due. Same thing happened to me, we bought a house that was a little over a year old from the people that had it built. Gave the bill to our lawyer and all was dealt with via the title insurance.
Deal Expert
User avatar
Jul 30, 2007
33206 posts
21116 upvotes
Toronto
House is newly built in 2012 and that's why no assessment by MPAC until just now. Timing sucks. City is now sending Supplementary tax bill, meaning it's been assessed from the moved in (occupancy date) til 2014 end of tax year.

Even if the lawyer is to do a search earlier this year, the City will not register lien on this supplementary taxes amount due. It would simply show the property is unassessed.
Deal Fanatic
User avatar
May 29, 2003
7384 posts
3678 upvotes
GTA
Thanks for all the advices. Got in touch with the lawyer this morning and was told that they are looking into it. Part of it is getting in touch with the other side of the lawyer and he told me that title insurance would cover such readjustments if needed (which we bought).

Just for discussion - Would this be a very sweet deal for the previous owners to be able to avoid a tax bill like this and let the title insurance to pay for it? Will the insurance company go after them?
Sr. Member
Jun 5, 2011
860 posts
175 upvotes
LONDON
title insurance will more than likely pay it off to quickly deal with the issue.

they would more than likely follow up with the previous owner and seek payment + an ADMIN fee :) . No skin off your back either way :)
Deal Addict
Nov 24, 2013
2546 posts
1902 upvotes
GTA
Kinda similar issue. Had a overdue water/garbage bill that previous owner had not payed. City said to contact my lawyer. I did so. The previous owner paid the bill.

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