Tax Lien

Placing Liens on Property

 

Many taxpayers will tell you that while they were in collections the CRA placed a lien on their properties.  This is commonplace.  Where the collections officer is not confident that the taxpayer will pay off the debt in a reasonable time period, they can secure the debt by placing a lien on properties owned by the taxpayer.  And for as long as there is a debt outstanding the CRA will typically refuse to lift the lien.

 

The idea behind the lien is that it goes on title and guarantees the CRA that upon a sale or refinance of the property, the CRA will receive what is remaining after any mortgages and security ahead of CRA are paid out. If there is anything left over it belongs to the taxpayer, and if there is a shortfall the difference remains outstanding.  Similarly, if the taxpayer wishes to refinance their property the lien will make it difficult to do so.  And while I have had clients refinance their mortgage successfully while a lien is in place, it requires the CRA to produce a “letter of postponement” which can be hard to negotiate.

 

Even though they have the ability to do so, the CRA will not typically force the sale of a taxpayer’s primary residence.  This only happens in the most extreme of circumstances.

 

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