We have received in the mail a back tax bill that has been sent by a bailiff with respect to property taxes that were the responsibility of the former owner of our house. We were not aware that these taxes were even owing. What should we do?
In the past, your lawyer would have written a tax letter to the city to obtain a tax certificate at a cost to you, which would have indicated that there were tax arrears. However, with the advent of title insurance, any arrears in taxes attributable to the former owner are covered by the insurance policy. Tax arrears although not common do affect some real estate transactions.
Simply have your lawyer provide you with your title insurance policy, contacts and you can make a claim with the appropriate title insurance company (just as you would if you basement flooded a few days after you had purchased the home). Generally, insurance companies are quite forthcoming with payment.
If you want the added assurance that you will not have to go through this process, you can request your lawyer to order a tax certificate prior to the transaction (at a cost to you) and it will set out if there are any arrears.
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