IN the wake of a vulnerable 60-year-old woman losing her home, Ombudsperson Jay Chalke is calling for significant changes to the way municipalities use tax sales to collect outstanding property taxes.
A report released on Wednesday titled A Bid for Fairness details the case of “Ms. Wilson” whose personal challenges made it difficult for her to pay her $10,000 property tax bill, even though she had the funds. Her failure to pay resulted in her home being sold in a tax sale auction, a statutory process that allows municipalities to collect unpaid taxes by selling properties two years after taxes are first due.
In Ms. Wilson’s case, her house was sold by the City of Penticton for $150,000, at a time when the fair market value of her house was assessed at $420,000. When the sale completed one year later, Ms. Wilson was evicted and lost approximately $270,000 of equity in her home.
“The results of this investigation are disturbing,” said Chalke. “Ms. Wilson was a vulnerable member of the Penticton community and just needed some extra assistance to pay her taxes. The City of Penticton called Ms. Wilson once but did not contact the Public Guardian and Trustee or Interior Health who have the legal mandate to make inquiries as to whether an adult is vulnerable and needs support or assistance. The city’s failure to reach out to one of these helping organizations contributed to a devastating and preventable loss.”
The report also finds that written communication from the city both leading up to and following the sale of Ms. Wilson’s home contained numerous errors including incorrect deadlines and inaccurate references to sections of the Local Government Act and at the same time, failed to include key information that would have informed Ms. Wilson about the consequences of the tax sale process.
“Selling someone’s home to pay a relatively small tax debt is an extraordinary power and I expect when a municipality takes such action it is scrupulously accurate,” said Chalke. “While the City of Penticton may view its own errors as immaterial, I do not agree. The cumulative effect of the city’s multiple mistakes was to make the process unfair for Ms. Wilson.”
The Ombudsperson’s investigation also examines the provincial legislative framework governing tax sales. The report identifies gaps including the absence of a requirement to provide specific notice to a homeowner of a pending tax sale and a concern that the starting bids at tax sale auctions are too low to maximize the likelihood that homes are sold at a fair price. The starting bid for Ms. Wilson’s home was only just over $10,000.
The report makes five recommendations to the Ministry of Municipal Affairs including developing plain language template letters for tax sales; amending the Local Government Act to require municipalities to provide adequate notice to property owners; studying the issue of linking minimum bids to property values rather than taxes owing; and issuing best practice guidelines to municipalities about how to protect vulnerable people whose home is at risk of a tax sale.
The ministry accepted all recommendations made to it.
The report also recommends that Penticton compensate Ms. Wilson in the amount of $140,922.88, representing approximately one-half of her lost equity. The City has rejected this recommendation.
“I am disappointed that the City of Penticton is not taking responsibility for both the multiple errors and omissions it made in its communication with Ms. Wilson and the insufficient action it took to help her get the assistance she needed,” said Chalke. “I am calling on the city to realize the gravity of this situation for this vulnerable member of its community and compensate Ms. Wilson as I have recommended. It’s never too late to do the right thing.”
To view the full report, visit:
Errors and omissions made by the City of Penticton in its communication with Ms. Wilson are highlighted on pages 27-36 of the report.