Unpaid property taxes are an additional expense you may encounter as part of the overall cost of selling your home. If you have an outstanding property tax bill, your lawyer will be able to find out exactly what the pay out figure will be, taking into account any interest and administrative penalties.

Quite often, the taxing authority will add unpaid and outstanding water and sewer charges onto your tax account so that these charges get reconciled when you sell your property. The same is true for any unpaid and outstanding tax reassessment levies placed on the property or fines assessed against you for refusing to comply with such by-law enforcement orders as cleaning up an unsightly yard.

These are all examples of a charge or "tax" against your property. Your lawyer will pay any of these outstanding amounts to the appropriate authority from the proceeds of your sale.

If you have a disagreement with the municipality over what it claims it is owed, there are a number of appeal measures available to you. To avoid complicating matters, you should complete any administrative avenues of recourse before you begin thinking of selling your home.

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Your lawyer will determine how the property taxes for your home are dealt with depending on when they are due and how you have structured your tax payments.

In larger cities, all property taxes for the entire year are normally due at the end of June but you may also pay property taxes on a monthly basis directly from your bank account. Regardless of how you pay your taxes, your lawyer will ensure you only pay that amount in property tax for which you are responsible.

Whenever a house is sold, the seller is responsible for paying property taxes up until the possession date. Obviously, this period covers the days in the year the seller actually owned the house. Conversely, the buyer is responsible for property taxes from the possession date until December 31^st.

With these dates in mind, your lawyer will "adjust" the property taxes unless the seller is on TIPPS. It is a two-step process with two possible scenarios:

1. If the possession date is prior to June 30^th – The buyer pays the property taxes for the entire year, as they owned the house when taxes are due on June 30^th. The seller then "pays the buyer back" the amount the seller is actually responsible for by giving a corresponding credit off the purchase price of the house.

2. If the possession date is after June 30^th – The seller pays the property taxes for the entire year as the seller owns the house when taxes are due on June 30^th. The buyer then "pays the seller back" for the amount the buyer is responsible by adding a corresponding amount onto the purchase price of the house.

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If the seller is making tax payments through blended P.I.T. (principal, interest and tax) payments, property taxes are collected as scheduled under the mortgage over the course of twelve months. The mortgage company then forwards this amount to the municipal authority when they are due.

The amount of property taxes collected by your mortgage company by June 30^th depends on two things:

• the number of mortgage payments you made prior to June 30^th

• the amount of your tax portion under each mortgage payment.

Depending on the possession date, the seller will have paid the taxes for the entire year or will still owe. If the possession date is prior to the date taxes are due, any money collected through P.I.T. payments for property taxes since the date the taxes are due the previous year to the possession date will simply be credited to the seller by his or her financial institution.

When the seller’s lawyer requests a pay out figure on the mortgage as of the possession date, the seller’s financial institution will calculate the amount owing on your mortgage, after all adjustments are taken into account. One such adjustment is the tax account refund the seller is entitled to.

The seller’s financial institution will give this refund by applying the amount in your tax account at the financial institution directly against the mortgage principal, thereby reducing what the seller owes as of the possession date.

The seller is refunded the amount in their financial institution’s tax account, the municipality is paid its property taxes by the purchaser for the year instead, and in return, the seller credits the purchaser the seller’s share of taxes by reducing the purchase price. The seller’s lawyer makes sure this is done properly.

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If the seller is on the TIPPS (Tax Installment Payment Plan System) program with the City of Regina, the tax adjustment is treated differently. When this is the case, the property taxes are not due in full on June 30^th but are rather paid on a monthly basis.

It is important to remember the seller is only responsible for the exact number of days the seller owned the house. Accordingly, the seller will have likely made an over-payment for which a refund is owed.

For example:

Possession date: March 15^th
Seller made TIPPS payment up to: March 31^st
Yearly Property Taxes: $2400
Monthly TIPPS payment: $200
Days in the Year Seller Owns House: 73/365

The seller therefore paid the City of Regina property taxes of 3 months x $200 = $600 (i.e. from January 1^st to March 31^st). The seller is only responsible for 73 days x $2400/365 = $480.

The buyer therefore reimburses the seller for the two weeks of property taxes from March 15^th to March 31^st the seller overpaid through the TIPPS program (i.e. $600 - $480 = $120). The amount owing to the seller of $120 is simply added to the purchase price of the house.

By performing the tax adjustment in this way, it ensures the buyer is responsible for the property taxes from the possession date onward.

As a seller, you cannot transfer the taxes you paid under TIPPS from one property account to another. The buyer simply carries on from where you left off. The lawyers involved in the transaction will perform these tax adjustment calculations on behalf of both the buyer and the seller to ensure each party pays only their fair share of property taxes.

The payment of property taxes is an important aspect of selling your home. There are many ways of paying your property taxes as an owner. How you set your tax payments up will determine how your lawyer will address the payment or refund of any property taxes.

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If the seller has pre-paid for the rental of a water heater past the possession date, the seller has essentially paid to rent an appliance they will no longer be using after the seller moves out. The purchaser will usually agree to refund the seller that portion of the contract that the seller overpaid if your lawyer is provided a copy of the invoice so a proper adjustment can be made.

This item is typically dealt with once the seller arrives at the lawyer’s office to sign the Transfer and other legal documentation and to review the file in full.

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When you sell your home, one of the things you may be tempted to do is cancel your house and fire insurance as of the possession date because that is the day you are moving out. But the safest practice is leaving your insurance policy in place until you actually receive your sale proceeds.

Even though you may have given up possession, you may still officially own the property. The Land Titles Office may not have yet completed the registration process of transferring ownership of the property into the purchaser’s name. This process is complete when the Land Titles Office issues a new Title.

If that matter is still outstanding, ownership of the property is still legally in your name. Even though the purchasers have moved in, you may technically still own the property and as such, it should remain insured.

If you cancel the fire insurance on your home but still technically own it and the purchasers accidentally cause extensive damage in the property before a new Title is created, there could be difficulties obtaining pay out on any insurance coverage despite the fact the purchasers would have bought their own insurance.

If you keep your policy in place, the property will be covered against accidental losses, such as by fire, in effect, by either the seller’s policy or the purchaser’s policy. The insurance companies will determine that issue as between themselves. The purchaser and seller merely move on, knowing that each had their own coverage. For the extra expense it may cause you to extend your insurance policy past the possession date, it is well worth the peace of mind.

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