Every three months, the Province of New Brunswick conducts tax sales. The auctions are hosted in numerous locations, and are intended to recoup unpaid taxes, penalties and expenses for properties for which the owner has not paid their property tax.

A tax sale is a fascinating thing. If a person fails to pay their taxes on time, they will be given some warning and then the property will go to a tax sale. The “upset price” is the starting bid at the sale, which is made up of those unpaid taxes, penalties and the costs of conducting the sale.

The auction is conducted and, assuming there are bids, the highest bidder has to immediately pay the full price of their successful bid at the nearest Service New Brunswick office, then the property is theirs–sort of. The property is at that point subject to a 30-day “redemption period” during which the original owner has a final chance to buy the property back, by paying the price of the successful bidder, as well as an additional 15%. If that happens, the property goes back to the original owner, and the high bidder gets their money back and that 15% bonus. If the property isn’t redeemed, then the high bidder pays the land transfer tax (1% of the assessed value), and then is awarded the property with a clear title (unless there are any federal liens against it, such as from the CRA or CBDC).

There is definite risk involved in purchasing tax sale properties. For one, there’s no guarantee of “vacant possession”. So you could wind up buying a property that has the original owners living in a house, or tenants, or whatever material is left behind. There could be environmental issues with the property, such as a spilled oil tank. There’s no opportunity to inspect any buildings. And during the redemption period, it’s up to the buyer to protect the property against vandalism, fire, flooding or any other sources of potential damage.

Last week I took a look at the tax sale properties list, as I’ve done a few times before, but having just paid off my mortgage I was feeling particularly entrepreneurial, so I took a closer look.

One property in particular caught my attention. It’s a small piece of land (about 0.29 acres) in St. George, N.B., which is about 45 minutes from my home. On the land sat a small house. I did some preliminary research including purchasing a tax certificate ($20) and obtaining a Title Search (about $50). Everything looked good so far. The Google StreetView from 2019 showed a small house that likely needed a fair amount of work.

Given that I’ve still got lots of work to do on my own home, I wasn’t really looking at it as a potential renovate-and-flip project or as an income property. But rather I thought, if I could get it for a really good price, (I was thinking a budget of $3,000) I could then just clean out the house, mow the lawn, and stick it back on the market to try to make a profit.

So the day before the action, I went for a drive for my last bit of due diligence. I wanted to check for any signs of whether someone was living in it, and to confirm that it looked substantially the same as it did in the StreetView image.

Well, nobody’s living in it–but it doesn’t look the same as it did…

The building had been burned to the ground just a couple of days prior!

Given the size of the property, I didn’t figure it held much value without the building. At less than an acre, a future buyer would be hard pressed to get approval to install a septic system. The existing well could have some value, but for all I knew it had been rendered useless by being filled with metal or concrete. So even with a likely upset price of only around $1,000, I was out.

But that didn’t stop me from going to the auction!

I’d never actually been to a tax sale before, and I had already asked for an adjusted work schedule for the day so that I could attend. So off I went to the Delta Brunswick Hotel on Friday afternoon to conduct a little research for future tax sale opportunities.

It was an educational experience. I saw that of the 18 properties up for auction from Saint John County, Charlotte County and Kings County, only seven of them received bids.

Three of them went for the upset sale prices:

• Vacant land, $1,301
• Mobile home, no land, $2,523
• Vacant land, $6,201

Four of them had multiple bids

So now I’ll just wait until the next round of tax sales and perhaps I’ll make my move.