Find Out if There is a CRA Property Lien on Your Home Before Your Bank Does

Canada Revenue Agency (CRA) has a very powerful collection tool.  If CRA believes you owe them money they can register a lien against your home (or other property) without even a hearing or discussion.  This enforcement remedy has become a very common tool for CRA because they know it is hugely problematic for the taxpayer. In many cases CRA will register the lien first and then tell you later. They have no obligation to notify you.

While CRA often may not notify you – they will attempt to notify your mortgage company (they find this on the public record).  When your mortgage comes up for renewal your bank may be spooked and refuse to renew – leaving you to scramble to get a new mortgage which is impossible without dealing with the CRA lien.

Some homeowners who become aware of a lien will try to ‘do the right thing’ and approach their bank to refinance their mortgage to pay the lien. This too can have very negative consequences because, to some banks, owing back taxes is equivalent to having bad credit, and even if you have home equity your bank can decide they may not want to deal with you anymore.

So how can you find out if there is a CRA property lien on your property? Here are some dos and don’ts:

Don’ts

·        Asking CRA is never the best plan because if they have not filed a property lien, you will flag the fact that you own a home and a property lien may be soon so follow.

·        Avoid asking mortgage brokers – they will most certainly pitch you on refinancing your home to pay off CRA and the problem is that most mortgage brokers do not specialize in helping people who have tax problems. Many will claim they can help but the end result may be a bigger problem.

Dos

·        Go to the land registry office – they can tell you if there is a lien on your home.  There may be a nominal fee.

·        Your real estate lawyer can also perform a search in the POLARIS land registry database to see if a lien has been registered.

If you find there is a lien registered see a tax problems professional.  You need to obtain a full understanding of the tax problem and the possible solutions.

Doing nothing is usually the worst possible approach.  Every dollar you pay down on your mortgage principle and every dollar that your home increases in value will go to CRA.  You need to both minimize and crystalize the amount that CRA is entitled to – ensuring you can get a fair resolution that will not impact your mortgage renewal or ability to sell your home. 

Whether there is a CRA lien registered on your property or not – if you have a tax problem, you will need to come up with a solution to fix it. If no CRA lien is registered, time is of the essence because you weaken your ability to negotiate once CRA has secured their interest on your home. You will also have more financing options if you do want to use your home equity to pay off the CRA lien. If there is a CRA lien on your property – there are still options and they need to be considered long before your mortgage comes up for renewal to avoid negatively impacting your relationship with your bank.

For more information about CRA property liens or to find out if a CRA property lien has been registered on your home call 1-888-868-1400 or visit www.taxsolutionscanada.com.