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Writ of Seizure & Sale
A property lien is a legal claim that has been filed against a particular real estate tract. The entity holding the lien is entitled to a specific dollar amount once the property is sold. The purpose of this sort of lien is to ensure that a debt is paid. The property is the collateral against the amount of the debt.
There are different types of property liens available to creditors in Canada.
A Writ of Seizure and Sale is an order that a court issues permitting the petitioner to take ownership of a particular property and then to sell it after taking possession. This sort of order is common when a borrower has gone into default on an obligation, and the purpose of the writ is to let the creditor take possession — with the assistance of officers from law enforcement if necessary.
A creditor can’t run out and get a writ of seizure and sale against you just because you miss a payment or two. This is what happens when you have failed to pay attention to all of the creditor’s other attempts at getting you to pay and have gone into default instead. Once a creditor seizes your property, he can sell it at a rock-bottom price to get at least some of his money back.
CRA lien on property
If the Canada Revenue Agency (CRA) attaches a lien to your property, that means that you haven’t been paying your income taxes, and the government has gone to significant lengths to get you to pay another way, but you have ignored their notices. The CRA views a writ of seizure and sale as an enforcement action, and if you own properties and haven’t been making any effort to pay your back taxes, the CRA will use the tool to motivate you to take care of your tax debt.
Sometimes property owners are surprised to find that the CRA has attached a lien to their property; in some instances, the owners never know until they arrange to sell the property, and the title search reveals the existence of the lien. If you have been getting letters and calls from the CRA but you have ignored them, and then some time goes by when you don’t hear anything, they may have gone ahead and attached the lien. CRA policy dictates that the agency advises you via letter when they have registered a certificate in federal court identifying the relevant property and indicating that they plan to register a lien. However, this letter is just a warning, and the CRA does not always follow through and register the lien. If your correct address is not on file with the CRA, though, they may file the lien without your knowing. Performing a title search before you start to sell the property is wise to make sure that no liens are registered against the property.
Just because the CRA files a certificate does not mean they go ahead and file the lien. They might be using the certificate to lock down an interest so that the debtors pay off their tax debt before they liquidate their interest in the property in question. At other times, the purpose of the certificate is just to make sure the property owner knows that the CRA is serious and will then open up a dialogue with the agency to get the taxes paid. Sometimes, though, the CRA has every intention of pursuing the seizure and sale of the property.
If the CRA files a lien against your primary residence, they generally will not file a writ of seizure and sale, because CRA policy forbids that action when it would lead to the property owner becoming homeless. However, if the property is a rental property or a vacation home, then the CRA is more likely to pursue the seizure and sale aggressively if the owner does not initiate a payment plan after learning of the certificate.
It’s important to understand that even if the CRA attaches a lien to a property, you still retain title to the property. It just means that you can’t sell or refinance that property until you have paid your tax debt in full, or you have a written agreement in place to send the proceeds from that transaction to the CRA so that your tax debt is paid in full.
If the CRA registers the certificate in federal court and your tax balance still remains as an obligation, the CRA will also register a Writ of Fi Fa. This would command a local sheriff to seize your property and sell it, giving the CRA its debt and then delivering any remaining proceeds to you. This is one of the most serious enforcement steps out there, though, and as stated earlier, this would only occur against an income property or a vacation home, not your primary residence, and you would have to ignore a great deal of correspondence from the CRA for this to take place.
After you find that a certificate has been registered against your property and a lien is in place, you can still access equity in the property to make payment arrangements with the CRA. As long as you are willing to establish a contract indicating that the CRA will receive the first proceeds from any transaction, you generally can do what you want with the property. The CRA is only interested in getting the tax debt paid.
If you decide to sell the property, here is how the proceeds would be distributed: to your mortgage lender, to any secured lenders (as in a second mortgage), the CRA, any other creditors with liens, and the property owner. This means that it is quite possible for you to end up with no proceeds from the sale of your home, particularly if your tax liability is significant and you have a number of other creditors lined up with registrations. If you can’t satisfy your CRA obligation with the sale of the property, then your balance goes down by what the CRA received — but you still owe the CRA the rest, and now you don’t have a house. Given the fact that even filing bankruptcy can’t satisfy a lien, you want to make sure that you take care of this — ideally before you get that first letter, but if not, as soon afterward as possible.
Property Liens - Maintenance Enforcement in AB
When two people who have children file for divorce, the final orders generally involve maintenance orders. These are administered by the Maintenance Enforcement Program (MEP), which is charged with making sure that the non-custodial parent remains current with payments. When the payor, or the person paying the maintenance, falls behind, the MEP has a number of options available at its disposal to make sure that the payments are made on time.
If you owe your ex-spouse maintenance payments, the MEP often seeks orders to have those payments come out of your paycheck before you receive it. This is not a pre-tax benefit but simply facilitates the other spouse receiving the payments to which the court has decided that she is entitled. Some people are self-employed, so the MEP does not have an employer with whom to lodge the orders for garnishing, and in other cases, the parent who owes the maintenance payments changes jobs but does notify the MEP about his new employer so that they can start garnishing wages once again.
In those cases, the MEP can use other means to collect arrears. One of these is a registration of the maintenance orders at the Personal Property Registry (PPR) against the name of the payor. These registrations have the force of a writ of enforcement. The PPR supports enforcing money judgments and other proceedings involving civil enforcement. The information within the PPR system is public, which means that if your maintenance payments fall behind to the point where the MEP takes out a lien against your property, that information becomes publicly available.
The MEP has authorization thanks to the Maintenance Enforcement Act to register spousal or child support orders with the PPR at any point in time. MEP generally initiates registration if a payor’s account falls into arrears. Once the writ has been registered, it will generally stay there for the full life of the obligation to provide security for future payments. Even if the payor comes current with his account, the writ generally remains in place.
One obstacle that payors may find if they want to sell a property is that the MEP-registered writ may keep them from being able to transfer a clear title to that property. The MEP may also register charges against goods with serial numbers that a payor might own, such as an automobile. This can make it hard to finance or sell a vehicle without having satisfied the issue with the MEP first. Even in cases where the arrearage has fallen to zero.
Real property and vehicles are not the only items that the MEP can seize as a part of registering their maintenance orders with the PPR. If you have any other personal property in Alberta, MEP has the right to gain seizure and sale orders if you fall far enough behind with your maintenance payments. Once the sale takes place, your creditor agencies divide the proceeds. Maintenance payment creditors generally take priority over the majority of other creditors.
Once the MEP initiates the process of registering writs against your property, you do have recourse. Your provincial authorities can provide you with specific information about the best way for you to resolve your situation. The best choice, of course, is not to fall that far behind on your maintenance payment. If you have lost your job or have had some other financial reversal that will make the payments impossible, at least for a short time, getting in touch with a representative of MEP can go a long way toward avoiding the registration process. The more proactive you are in this process, the more likely you are to avoid registration.
So if you lose your job or go through a situation in which your income will be severely reduced, one of the first things you should do is reach out to the MEP and talk about your options. MEP has a great deal of latitude when it comes to establishing rights to your property if you fall far enough behind on your payments. However, they also have the flexibility to work with you if you show that you are willing to pay what you can while you get back on your feet. For more information, contact your family law attorney or a provincial representative within MEP to get more information about your specific situation.
WRIT OF ENFORCMENT & CROWN LAND
This installment in our article is about the different types of property liens covers crown charges and writs of enforcement.
What is a crown charge?
Any law that is currently in force in Canada that creates a charge, lien or other interest of the Crown creates a Crown charge.
Crown land, also known as a demesne or royal domain, belongs to the monarch (referred to as “the Crown”) and is the equivalent of an estate with entailment granted by the monarchy and cannot be separated from it. In Canada, part of the Commonwealth, the term “Crown land” is used when referring to publicly owned land. Amansad Financial’s lending partners do not serve any land that is publicly owned.
What is a writ of enforcement?
If you owe money to a creditor, that credit can use a writ of enforcement as part of his activity to get his money back.
Here’s how it works. The creditor goes to court to get a Judgement or Order ordering him damages. Then, he goes to the Court of Queen’s Bench to file the writ of enforcement. Once this is registered on the title of the property, it can stay there throughout the entire enforcement period to ensure that the creditor gets his payments. It doesn’t have to stay there, but it can.
So if you’ve fallen behind on your maintenance payments or other debts, you need to check with the regulatory body in your province to see if you have had any liens against your property. If you have, it’s time to get in touch with those creditors to resolve those liens as soon as possible, as they can make mortgage renewals and other types of credit more problematic.
Need help figuring out liens against your property? Give our lien specialists at Amansad Financial a call today to find out your next step. We can connect you with a network of lending specialists that can give you the financing you need to clear up that lien — even though that could turn into a junior mortgage on your property, that’s preferable to having a lien attached to your property through the courts. Lenders are generally more flexible than other creditors, especially if you keep to a payment schedule reliably. We can take a look at your situation and recommend the best path forward for you and your family.