Proper communication with owners is critical before auctioning homes off to recover taxes, courts say

Ninety-nine-point-nine percent of the time, experts say B.C.'s tax sale program works as it should. It's one of the only options local governments have to recover property taxes after they go unpaid for several years. 

The taxes make up the lion's share of revenue for many municipalities — if they're not paid, there's less money for essential services.

But 0.1 per cent of the time, tax sales go wrong.

The story of a woman whose house was auctioned off by the city of Penticton over a small tax debt before anyone realized she was too vulnerable to understand what was happening has brought fresh scrutiny to the provincial municipal sales tax laws.

Lawyers, judges and advocates say tax sales are a necessary tool for municipalities, but clear communication from the city to the homeowner throughout the process is absolutely essential to be fair to homeowners. 

But, some warned, the level of notice currently acceptable under the law can still be too complicated for everyone to understand — leaving some at risk of falling through the cracks.

"There's going to be certain people who are vulnerable in society who, for whatever reason … won't understand the process," said lawyer Reece Harding, who has worked in municipal law for nearly 30 years. 

"It can be a pretty harsh outcome, there's no question about it." 

The Ombudsperson's report this week involved a woman, identified only as "Ms. Wilson," who lost her home and hundreds of thousands of dollars in equity after falling behind on a little more than $10,000 in property taxes in 2015 and 2016.

Wilson could afford to pay the bills, but had "life-long health issues" and needed help making the payments. Her sister had power of attorney, the report said, but she wasn't informed about what was going on.

The city auctioned Wilson's house — then assessed at $420,000 — for $150,000 in 2017. 

Wilson, then 60, was evicted by the police.

In B.C., municipal governments have the "extraordinary power" to collect outstanding property taxes by selling the house at auction two years after the taxes were first due. The minimum bid at auction is only the amount of the unpaid taxes, interest, penalties and some fees — no matter the actual value of the home.

Given the drastic consequences for the owner, the law and the courts have strict communication requirements for governments moving forward with a sale. There's nothing requiring advance notice to a homeowner before the sale, but they need to be notified after the auction.