April 8, 2006
Tax records don't always reflect reality
Can't trust MPAC for location or value of property
One buyer paid taxes for years on land he didn't own
Last month's report by Ontario Ombudsman Andr Marin criticizing the Municipal
Property Assessment Corp. (MPAC) came as no surprise to the many property
owners, builders, real estate lawyers and agents who deal with taxes and
assessments on a daily basis.
Marin's report was prepared in the wake of more than 3,700 complaints
received by the Ombudsman's office about what Premier Dalton McGinty recognized
as the inherent failings of the corporation.
Among the 22 recommendations Marin made were proposals that:
MPAC should rely more on actual sales figures rather than computer programs
to determine property values.
MPAC should provide more information to property owners.
Values set on successful appeals should not be tampered with in the
The onus of proof on appeals should rest with MPAC to prove it is correct
rather than the property owner to prove that MPAC is wrong.
One common criticism of MPAC that I was unable to find in Marin's 94-page
report is the inordinate delay between the final registration of title to the
new owner of a home or condominium and the calculation by MPAC of the assessed
value of the property.
Since tax bills cannot be created and sent out without the underlying
assessment, buyers of new homes often get hit with a huge retroactive tax bill
as much as one or two years after closing. Straightening out whether the builder
or owner is responsible for the bill can be confusing and time-consuming.
In addition, when a property has been resold once or twice before the
assessment is issued, dividing responsibility for the supplementary tax bill
among the builder and the subsequent owners can be a time-consuming nightmare.
During the last four years, the operations of MPAC have given rise to 40
reported court cases. One of them illustrates that a landowner who relies on
inaccurate information supplied by MPAC does so at his or her own risk.
Back in 1998, Albert John Metcalfe bought a parcel of land in the
municipality of South Bruce. Not having ordered a land surveyor's report, he
examined two tax bills for the property and relied on them for an accurate
description of the land he was buying.
For the next several years, Metcalfe paid taxes in good faith on this
parcel of land, believing it to be his. He later learned that the description of
the property on the tax roll (generated by MPAC) was wrong and the purchase was
a nullity even though taxes had been charged on the property with the wrong
description since 1977.
In January 2003, Metcalfe was sued by the real owner of the property for
trespass. At that time, he obtained a survey of the property, which disclosed
the error in the roll number.
The following year, he sued the municipality of South Bruce and MPAC for
his losses as a result of what he claimed were the inaccurate and misleading
representations made by them.
His claim was for $35,000 being the value of the land, $8,000 for legal
fees defending the trespass lawsuit, and $3,600 for the surveyor's costs to
detect and document the error.
Metcalfe claimed that the entire portion of the property on which he was
paying tax does not exist, and no area inside its boundaries belonged to him. He
also argued that the municipality and MPAC owed him a duty of care because he
was paying taxes on the non-existent land in good faith.
In June 2004, the defendants asked the court to toss out Metcalfe's
claim. Justice Michael Tulloch in Superior Court at Walkerton agreed with them,
and struck out the claim, since it failed to disclose a reasonable cause of
The judge's reasoning is worth repeating especially as we enter a
season of increased activity in rural and cottage properties that are often
The plaintiff, at the time of the purchase of the land, is expected to
conduct his due diligence prior to closing, Justice Tulloch wrote.
"Part of the due diligence is a title search as well as obtaining and
reviewing a survey of the parcel of land that was the subject of the
Metcalfe should have ordered a survey at the time of purchase. Even if
there is an error on the mapping produced by MPAC and the assessment records,
Metcalfe should not have relied on these documents, as their purpose is not
intended to replace the use of surveys in accurately depicting the description
of the lands.
For homeowners, some of the lessons to be learned from the Metcalfe case
and the Ombudsman's report are:
You can't necessarily rely on the property location or property value in
If you're buying a new house or condo, prepare to wait up to two years to
get your first tax bill. And be prepared, because it will be a big one typically
covering more than one year's worth of taxes.
Never, ever, close a real estate purchase without examining the description
in the deed of land and comparing it to a properly prepared land surveyors
report and drawing.
Bob Aaron is a Toronto real estate lawyer. He can be reached by email at email@example.com, phone 416-364-9366 or fax 416-364-3818.
Visit the Toronto Star column archives at http://www.aaron.ca/columns for articles on this and other topics or his main webpage at www.aaron.ca.