'Vulnerable' B.C. senior loses home, hundreds of thousands in equity after city sold house over unpaid taxes
Woman had the money to cover the bill but needed help to make the payments
A new report has found a vulnerable senior in Penticton, B.C., lost her home and hundreds of thousands of dollars in equity after the city auctioned off her house — for a third of its assessed value — over just $10,000 in unpaid property taxes.
The provincial ombudsperson's review published Wednesday found the woman, referred to as Ms. Wilson, had the money to pay off her taxes, but health concerns meant she needed help to submit the payments.
The city, it said, didn't communicate clearly with Wilson about what she stood to lose and didn't make an effort to find out if she needed help before proceeding to sell her house for $150,000 in 2017.
At the time, the home was assessed at $420,000.
"What happened to Ms. Wilson is tragic," wrote provincial ombudsperson Jay Chalke in the report. "One simple telephone call ... could have resulted in an entirely different outcome in this case."
The story exposed a number of problems in the laws around tax sales to recover outstanding property taxes in B.C., Chalke said, namely the fact that it is a life-altering, complicated process that can leave homeowners at a crushing disadvantage if communication isn't clear.
In a statement to CBC, the city said it disagreed with the report's findings about its staff.
Trouble begins with unpaid taxes
Wilson, whose name was changed for the report, once lived in the house with her mother. After her mother died in 2013, Wilson stayed in the home and became responsible for paying the property taxes.
She didn't pay in 2015 or 2016. The report did not provide specifics to protect confidentiality, but said she did not make the payments because she was "a vulnerable member of the community in a disadvantaged position" who was "unable to take steps on her own" to manage those bills.
In B.C., municipal governments can collect outstanding property taxes by selling the house at auction two years after the taxes were first due. The minimum bid at auction is only the amount of the unpaid taxes, interest, penalties and some fees — no matter the actual value of the home.
The city sent Wilson nearly a dozen notices about her unpaid bills between June 2015 and September 2017, but the report found some weren't clear and several had outright mistakes such as the wrong deadline for payment.
Critically, it found, the city didn't tell Wilson her home would only be listed at auction for a fraction of what it was worth — which would have stressed the magnitude of the issue.
"The inadequate, inaccurate and inconsistent descriptions of the tax sale process in the City of Penticton's correspondence with Ms. Wilson made the process unfair," the report said.
Police remove Wilson from her home
Wilson's home sold for $150,000 at the auction in September 2017. The highest bidder took over the house in 2018, after the one-year grace period passed without payment from Wilson.
The police were called to take Wilson out of the house, the report said. The ombudsperson launched an investigation after Wilson's family, who had been unaware of the tax dispute, filed a complaint with the office.
Wilson received a net payout of $138,154 from the city after the sale.
Less than two years later, another owner sold the house for $498,000.
"A vulnerable 60-year-old woman was evicted from her home and lost at least $270,000 of the equity in her property," the report said, in summary.
"As a result, she no longer had financial security or the independence that comes from home ownership — all because of about $10,000 in property tax debt, which she had the resources to pay."
Chalke described it as a "devastating and preventable loss."
City declines to compensate Wilson
Chalke recommended the city pay Wilson $140,922 to compensate her for some of the equity she lost.
"This is a most unfortunate situation but from the city's perspective it is important to bear in mind that city staff had no information to suggest that [Wilson] was a vulnerable person in need of support or assistance until after the conclusion of the tax sale process," said a letter from the city included in the report.
The city said it has made changes to improve its property tax notices, but said it gave Wilson the level of notice required by law. It disagreed that staff should have tried to check whether Wilson needed help.
Finally, the report called for significant changes to the way municipalities in B.C. use such tax sales.
Chalke said there isn't a consistent set of guidelines for municipalities to follow for a tax sale and the "interests of vulnerable individuals are not adequately considered."
He recommended the provincial government review and change the Local Government Act to require municipalities to develop plain-language notices to property owners about the sales and develop guidelines for local governments to protect people at risk of losing their homes.
The City of Penticton's letter said it would "welcome" those changes. The provincial Ministry of Municipal Affairs accepted all of the recommendations.