A buyer looking for a 55 per cent discount on a vacant municipal lot will have to pay more after local politicians rejected the offer due to legal and financial risks.
During the regular council meeting on Aug. 10, the Municipal District of Opportunity No. 17 reviewed an offer to purchase a tax forfeiture property. The serviced land had been appraised and officially advertised for $22,400, based on a reserve bid price from a previous public auction. However, an interested buyer offered just $10,000, promising to clear and develop the site.
Getting a vacant property developed and back on the tax roll is highly desirable for the local government. However, the administration warned the council that accepting such a low offer comes with unique legal risks.
When a ratepayer falls several years behind on their property taxes, the municipality eventually seizes the property in a process known as tax forfeiture. The municipality takes title to the land, but is legally obligated to try and sell the lot for fair market value. Once the land is sold, the municipality clears the tax debt, covers any administrative fees, and then must return any remaining profit to the previous owner.
In this specific case, the previous landowner owed roughly $1,900 in back taxes. If the municipality accepted the $10,000 offer, the previous owner would receive a cheque for about $8,100. But if the municipality sold the lot for its actual $22,400 value, the previous owner would be legally entitled to more than $20,000.
Director of Finance Ryan Musch explained that if the local government accepts the heavily discounted offer, the previous owner could sue the municipality for the lost money.
“If we sell the land below fair market value, the previous owner can potentially sue us for the difference,” Musch said. “It is in our best interest to sell the lot, recover our lost taxes, and turn it back into a taxable property. But we have to be aware of the legal risks.”
Councillor Robin Guild agreed, noting that the local government needs to protect the previous owner’s remaining financial stake in the land.
“We should not be selling this land for less than market value,” Robin said. “If the previous owner told us they would be happy walking away with $8,000, then sure. But otherwise, we need to stick to the market price.”
Other councillors were simply opposed to the idea of slashing the price by more than half when the lot had already been formally appraised by an independent firm.
“I do not agree with this,” Councillor Darlene Jackson said. “If a property is priced at $24,000, you sell it for $24,000.”
During the debate, council also worried the buyer could purchase the lot for $10,000 and immediately sell the serviced land to someone else for a massive profit. Musch noted that if the municipality ever accepted a lower offer, they could add strict rules to the purchase agreement. These rules would force the buyer to develop the land within a certain timeframe, preventing them from just flipping the real estate.
Ultimately, the council decided the legal and financial risks were too high to accept the discount. Councillors unanimously passed a motion to formally reject the $10,000 offer. They then passed a second motion directing administration to negotiate a higher price with the buyer and to officially contact the previous landowner to get their feedback on the sale.
Armaan Khanna
Local Journalism Initiative Reporter