Falling Behind on Property Taxes? Here’s What You Need to Know
Property tax arrears in Whitby and Oshawa are more common than you think, especially for homeowners facing financial challenges. If you’ve received a legal notice or fear a tax lien, you’re not alone. Many Canadians fall behind due to job loss, low income, or other unexpected expenses.
The good news? There are real, actionable solutions. Whether you use a home equity loan, second mortgage, or another form of financing, you can resolve your property tax arrears and avoid a tax sale.
Let’s break it down step by step—what tax arrears mean, how the process works in Ontario, and how to use your home equity to stop things from getting worse.
What Are Property Taxes and Why Are They Charged?
Property taxes are annual fees charged by your local municipality (like the City of Oshawa or Town of Whitby) to all residential and commercial property owners. These taxes help fund essential public services and infrastructure that directly support your community.
Every year, homeowners receive a property tax bill based on the assessed value of their home, as determined by the Municipal Property Assessment Corporation (MPAC) in Ontario.
Why do municipalities charge property taxes?
Municipalities rely on property taxes to:
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✅ Municipal Levy
Main portion of your property tax – covers roads, waste, emergency services✅ Education Levy
Collected by the province and distributed to local public and Catholic schools✅ Regional Levy (if applicable)
Additional funding for regional services (e.g., Durham Region police, transit)✅ Local Improvements
Charges for neighbourhood-specific projects like sidewalks or sewer upgrades✅ Stormwater/Infrastructure Fees
Sometimes itemized separately for infrastructure repair and maintenance
Important to note:
Your mortgage payment does not include property taxes unless you’ve set up a tax escrow or impound account. It’s your responsibility to ensure they are paid on time to avoid penalties, arrears, or legal action.
What Are Property Tax Arrears?
Property tax arrears simply mean overdue property taxes. In Ontario, municipalities like Whitby and Oshawa issue annual tax bills based on property assessments. If payments are missed or only partially paid, the balance is considered “in arrears.”
Important to note:
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Arrears accumulate monthly interest, often compounded.
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Municipalities can charge penalty fees.
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If left unresolved, the municipality can begin tax recovery proceedings, including a tax sale of the home.
A common myth:
“Missing one property tax bill won’t have a major impact.”
In reality, even a few months of unpaid taxes can trigger legal notices and affect your credit profile.
The Consequences of Ignoring Property Tax Arrears
When homeowners in Oshawa or Whitby don’t pay their property taxes, the municipality can—and often will—take legal steps to recover the outstanding balance.
What can happen:
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A Legal Notice of Arrears may be sent by mail or courier
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A Tax Lien can be registered against your property title
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A Power of Sale or Tax Sale can be initiated after two years of non-payment
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Collection efforts may escalate, including home visits or municipal follow-ups
But it doesn’t stop there.
Important to note:
Existing mortgage lenders take property tax arrears very seriously. If your bank or mortgage lender is notified by the municipality that you’ve fallen behind on property taxes, they may step in and pay the arrears themselves to protect their interest in the property.
While this might sound helpful at first, it often comes with serious consequences:
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The lender will add the arrears to a property tax account
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Your monthly mortgage payments can suddenly increase to reflect the new loan amount
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In some cases, the lender may place you into a forced payment plan or call the mortgage loan due
Why do lenders act quickly?
Banks and mortgage lenders do not want to be exposed to unpaid property taxes or Canada Revenue Agency (CRA) debt. Both the municipality and the CRA have priority lien rights, which means they can claim repayment ahead of your mortgage lender in the event of a sale or foreclosure.
In the lender’s eyes, unpaid property taxes or CRA income tax arrears jeopardize their security, and that’s a risk they won’t accept.
If the balance remains unpaid:
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The municipality can advertise the property for public tax sale
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You could lose your home—even if your mortgage payments are otherwise up to date
Key takeaway:
Ignoring property tax arrears won’t make them go away. It can result in your lender taking action, an increase in mortgage payments, or the loss of your home altogether. The further behind you fall, the more aggressive the collection—and the fewer options you’ll have to resolve it affordably.
Tax Sales in Ontario – What You Need to Know
A tax sale is a legal process where the municipality sells your home to recover unpaid property taxes. Under Ontario’s Municipal Act, if taxes are in arrears for more than two years, the municipality can register a tax arrears certificate and begin the sale process.
What happens:
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A Tax Arrears Certificate is issued and registered on title
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You have one year to pay the full arrears (plus interest)
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After that, the property can be sold through a public tender
Common mistake:
Homeowners assume they’ll be notified repeatedly. In truth, you may only get one or two notices before the process escalates. Many homeowners in Whitby and Oshawa find out too late and scramble to find solutions.
Financial Challenges That Lead to Arrears
You’re not alone if you’ve fallen behind. There are several common reasons why homeowners miss property tax payments:
Causes include:
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Low income or fixed pensions
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Loss of employment
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Unexpected medical or family emergencies
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Increased cost of living
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Lack of access to traditional bank financing
Common myth:
“Only irresponsible homeowners fall behind on taxes.”
In truth, many responsible homeowners simply don’t have enough liquid income or credit flexibility to stay current, especially in difficult economic times.
Using a Home Equity Loan or Second Mortgage to Pay Tax Arrears
If you’re a homeowner in Whitby or Oshawa with at least 20% equity, you may qualify for a home equity loan or second mortgage to cover your arrears—even with bad credit.
What’s the difference?
| Feature | Home Equity Loan | Second Mortgage |
|---|---|---|
| Type | Lump-sum, fixed payment | Lump-sum, secondary lien |
| Credit score needed | Moderate | Flexible (even bad credit) |
| Use | Pay off arrears, debts, expenses | Stop tax sale, pay property tax |
| Interest rate | Lower (compared to private) | Slightly higher (risk-based) |
Example:
Jaspreet, a homeowner in Whitby, had $14,000 in tax arrears and a credit score of 590. She had a large amount of equity in her home. After being denied by her bank, she secured a second mortgage through a private lender. The funds were available in 7 business days—just in time to stop the tax sale process.
| Home Value | $975,000 (Whitby) |
|---|---|
| Existing Mortgage | $675,000 |
| Available Equity | $300,000 |
| Tax Arrears Owing | $14,000 |
| Unsecured Debts (Credit Cards, Loans) | $25,000 |
| New Home Equity Loan Amount | $60,000 *(includes closings costs and extra funds) |
| Monthly Payment | $500 (estimated) |
| Term | 12 months |
| Purpose of Loan | Consolidate property tax arrears and unsecured debts |
Steps to Resolve Property Tax Arrears Quickly
You don’t have to wait until a legal notice shows up to take action. Here’s a step-by-step plan that can help Whitby and Oshawa homeowners get ahead of their arrears:
Step 1: Get a copy of your current tax statement
Request it from:
Step 2: Contact your municipality
Ask about:
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Penalties and interest
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Payment options or hardship plans
Step 3: Talk to a mortgage professional
Mortgage professionals help assess your equity and can suggest solutions:
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Second mortgages
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Home equity loans
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Emergency loan options
Step 4: Apply for financing
Be prepared with the following documents:
Checklist – What you’ll need:
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Current mortgage statement
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Property tax statement
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Two pieces of valid ID
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Recent utility bills
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Home insurance proof
Important to note:
Even if you’ve had bad credit or past delinquencies, many private lenders in Ontario are more focused on your equity and property value than your credit score.
Rebuilding After Resolving Arrears
Once you’ve resolved your tax arrears, the next step is to avoid it happening again.
Tips:
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Set up monthly or pre-authorized payments through your city
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Work with a mortgage advisor to improve your credit
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Refinance when interest rates drop or your equity improves
Avoid high-risk lenders promising quick solutions with excessive fees or hidden terms—always ask questions and understand the repayment structure.
Key Takeaways for Homeowners in Whitby and Oshawa
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Property tax arrears can lead to serious consequences like tax liens or tax sales.
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If you’re facing arrears in Whitby or Oshawa, don’t wait—act fast.
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Homeowners with equity (even with bad credit or low income) may qualify for financing.
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Use a home equity loan or second mortgage to protect your home.
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Speak to professionals who understand the local tax process and real estate market.
Conclusion: Don’t Let Property Tax Arrears Threaten Your Home
If you’re dealing with property tax arrears in Whitby or Oshawa, you’re not out of options. Whether you’re facing low income, bad credit, or have fallen behind unexpectedly, there are ways to take control of the situation.
With the right support and a bit of equity, you can stop a tax sale, clear your arrears, and start rebuilding. Speak with a mortgage professional who can guide you through your options and offer a fast, realistic solution tailored to your situation.
Apply – Stop Property Tax Arrears
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