Tax Arrears Certificate

Tax Arrears Certificate Mortgage — Redeem Before an Ontario Tax Sale

A registered tax-arrears certificate starts a redemption clock. Equity-based financing can pay the arrears in full and cancel the certificate before the window closes — banks won't fund with one on title, but a B-lender or private lender can.

Certificate on titleRedemption clock runningEquity-based optionsB-lender + privateCancels the certificateConfidential

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Written by the Mortgage Squad Advisors Editorial Team · Reviewed by Surrayya Afzal, Principal Broker, FSRA #M14001433 · Updated August 2026 · Reviewed quarterly; next review November 2026

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Time-sensitive: can equity stop the sale?

If there's equity, financing may be able to pay the cancellation price and clear the certificate before the redemption period ends. Check your numbers.

Redemption deadlineHome value$Mortgage owing$

Cancellation price (amount to redeem)$

42 days

Days remaining

$280,000

Equity in the home

$105,000

Refinance headroom (to 75% LTV)

Possible — worth a call

Could equity cover it?

Estimate only — not an assessment, offer or approval. This is a simplified calculation using a 75% loan-to-value assumption; it does not confirm you qualify. Actual options depend on your property, credit, income and lender, and a "possible" result is not a guarantee of financing.

Time matters once the redemption period is running. Don’t wait for the deadline — call an advisor at (905) 553-8550 (Mon–Fri 9–5 ET), or call Maya, our AI assistant, 24/7 at (647) 584-0105.

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A registered tax-arrears certificate changes your situation in two ways. First, a redemption clock is now running — a defined window (in Ontario, one year from registration) after which the municipality can proceed to a tax sale. Second, the certificate clouds your title, so a bank won’t refinance you until it’s cancelled. That’s the trap: you need financing to clear the arrears, but the cheapest lender won’t lend while the certificate is there. Equity is the way out.

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The short answer

A tax-arrears certificate is what a municipality registers when property taxes stay in arrears — it opens a redemption period (in Ontario, one year from registration) before a tax sale can proceed. Paying the full amount owing during that window cancels it. Because A-lenders won’t fund with a certificate on title, a B-lender or private lender funds the redemption on your equity. General information, not legal advice.

What is a tax-arrears certificate?

A tax-arrears certificate is a document a municipality registers against a property’s title when taxes stay unpaid (in Ontario, when any tax arrears are still owing on January 1 of the second year after the taxes became owing).^{Municipal Act s.373} It signals the municipality’s intent to sell if the arrears aren’t paid, and it opens a redemption period during which paying the full amount owing cancels the certificate and stops a tax sale. It clouds title, so A-lenders won’t fund until it’s cleared.

On this page

What the certificate means for your options
How the redemption is funded and the certificate cancelled
Why speed decides the cost
What makes up the cancellation price
Extension agreements: paying over time under s.378
What happens after the one-year period ends
A sample timeline, in dates
FAQ

What the certificate means for your options

The certificate is the formal turning point in the arrears process. Before it, you may still qualify for a lower-cost alt-A refinance; after it, an A-lender is essentially off the table until the certificate is cancelled, because it clouds your title. The upside is that the certificate also opens the redemption period — a defined window (in Ontario, one year from the date the certificate is registered) during which paying the full cancellation price cancels it and stops a tax sale.^{Municipal Act ss.373, 379}

So a certificate is serious but not the end. A private lender will fund on equity with a certificate registered — that’s exactly what makes redemption possible at this stage. The amount to cancel rises over time (penalty and interest keep accruing), so confirm it close to when you plan to pay. This is general information, not legal advice; confirm your dates and amount with your municipality and a lawyer.

How the redemption is funded and the certificate cancelled

The mechanism is clean, and the money never passes through your hands. An alternative lender advances a mortgage sized to cover your existing balance plus the full amount to cancel the certificate plus costs. At funding, the money flows to your real estate lawyer in trust, who pays the municipality the full cancellation amount; the municipality cancels the certificate and it comes off title.

Qualifying is equity-first — generally the new mortgage stays under about 80% loan-to-value at alt-A, or 65–75% on private, subject to lender and file.^basis You can often keep a low first mortgage in place and use a second to fund just the arrears. Once the certificate is cancelled your title is clean, and the plan is to refinance back toward A-lender pricing as your file stabilizes. See the full picture on our property tax arrears mortgage hub.

Why speed decides the cost

With a redemption deadline running, timing is the single biggest factor in both whether you can redeem and what it costs. Early in the window you may have room for a lower-cost B-lender refinance, an extension agreement or an orderly sale; close to the deadline, a private mortgage that funds quickly is often the realistic option. Private capital is priced for that speed and the equity risk — illustratively, CMHC reported the 25 largest private lenders averaged about 9.6% on single-family mortgages in Q3 2025, plus fees.^CMHC

No honest broker can promise a closing date sight-unseen — it depends on your equity, the property, title, legal steps and the time remaining. Acting the day you learn of a certificate or a sale date, rather than the week of the sale, is what keeps the cheaper options on the table. It’s a temporary premium, with a plan to refinance toward prime once the arrears are cleared.

What makes up the cancellation price

The cancellation price is the amount that cancels a registered certificate. Under the Municipal Act it is all the tax arrears owing at the time you pay, plus the current year’s property taxes owing, plus interest and penalties on them, plus the reasonable costs the municipality has incurred since it started the tax-sale process (title searches, notices and similar).^{Municipal Act s.371} That is why the figure keeps rising: penalty and interest accrue every month, and costs are added as the process moves forward.

In practice, ask the municipality’s tax office for a written statement of the cancellation price as of the date you expect to pay, and have your lawyer confirm the certificate’s registration date and any other claims on title. We size the financing to that dated figure plus a margin for the extra weeks of interest, so the payment cancels the certificate in full rather than leaving a balance that keeps it on title.

Extension agreements: paying over time under s.378

You don’t always have to pay the cancellation price in one lump sum. Before the one-year redemption period ends, a municipality can enter into an extension agreement that gives you more time to pay it, usually in instalments.^{Municipal Act s.378} It is the municipality’s choice whether to offer one, and the agreement has to be in place before the year runs out.

An extension agreement can be the cheapest route if your income can carry the instalments, because it avoids new borrowing. If the terms aren’t met, the municipality can move ahead with the sale. Where an agreement isn’t offered, or the instalments don’t fit your budget, equity-based financing that pays the full cancellation price is the alternative. We can model both side by side before you speak to the tax office.

What happens after the one-year period ends

If the cancellation price isn’t paid within one year of registration, the municipality can advertise the property for sale by public tender or auction.^{Municipal Act s.379} The redemption period closing is not quite the end: you can generally still pay the full cancellation price until the property is sold, which cancels the certificate and stops the sale. But options narrow quickly. An extension agreement is no longer available, the costs added to the price grow, and lenders have less time to appraise and fund.

That is why the best time to act is early in the year, not after it. Confirm the exact cut-off for your property with the municipality and your lawyer, because the rules turn on precise dates and registrations.

A sample timeline, in dates

This is an illustrative Ontario example, not a specific client or legal advice. A homeowner’s 2024 property taxes go unpaid. Because arrears are still owing on January 1, 2026 (the second year after the taxes became owing), the municipality can register a tax arrears certificate.^{Municipal Act s.373} Say it is registered on March 15, 2026. The municipality then notifies the owner and others with an interest on title.

The one-year redemption period runs to March 15, 2027. Any extension agreement has to be signed before that date. A refinance or second mortgage arranged in, say, June 2026 leaves months of room for an appraisal, a proper lender search and legal work, and the lawyer pays the cancellation price from the closing funds. If nothing is paid by March 15, 2027, the property can be advertised for sale, and the owner can still redeem by paying the full price until it is sold. Every municipality’s dates differ, so check yours.

What you get

Why Canadians choose Mortgage Squad Advisors.

Equity-based options — some private lenders will lend with a certificate registered, subject to appraisal, title and lender approval

Pays the full amount owing so the certificate is cancelled, not partially paid

Works within the redemption window to stop a tax sale

Private capital can fund quickly where the redemption deadline is close (no guaranteed timeline)

Existing first mortgage can stay in place — a second where it's cheaper

Your lawyer pays the municipality directly and confirms the certificate is cancelled

All lender, broker and legal fees disclosed in writing before you commit

Plan to refinance back toward A-lender pricing once the certificate is cleared

How it works

Three simple steps, no pressure.

Confirm certificate + window

Get from your municipality the exact amount owing to cancel the certificate (it rises over time) and the redemption deadline. Confirm the certificate details via title. Send us the property address and these details.

Fund the redemption

A B-lender where you have time and provable income; a private lender that funds on equity where the deadline is close. We disclose rate, LTV, fees and timeline in writing before you commit.

Cancel + plan the exit

Your lawyer pays the municipality the full amount, the certificate is cancelled and comes off title, and we set a target to refinance back toward A-lender pricing once your file stabilizes.

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FAQ

Common questions, answered.

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Can I get a mortgage with a tax-arrears certificate on my title?

Not from a bank — the certificate clouds your title, so A-lenders won't fund until it's cancelled. But a B-lender or private lender will refinance on your equity to pay the arrears out and cancel the certificate at closing. It's equity-based.

How long is the redemption period?

In Ontario, one year from registration of the certificate, during which paying the full cancellation price cancels it and stops a tax sale.^{Municipal Act ss.373, 379} Timing varies by province and municipality — confirm yours. The amount to cancel rises over time as penalty and interest accrue.

How much equity do I need?

Generally the new mortgage needs to stay under about 80% of value at alt-A, or 65–75% on private.^basis Illustrative and varies by file. Meaningful equity is what makes the redemption possible.

How fast can it fund?

Private funding typically takes 1–2 weeks; some straightforward files close in a few days. Not guaranteed — it depends on appraisal, title, legal steps, lender and documentation. If your deadline is close, tell us the exact date.

Can I pay in instalments instead?

Before the one-year period ends, you can ask the municipality for an extension agreement (Municipal Act s.378), which lets you pay the cancellation price over time.^{Municipal Act s.378} The municipality decides whether to offer one. Once the year expires you can still pay the full cancellation price until the property is sold, but options narrow.

Can I keep my existing first mortgage?

Often yes. If you have a low first-mortgage rate you want to keep, a second mortgage that funds just the arrears — behind your first — is frequently cheaper than a full refinance. We model both and pick the lower total cost.

What happens after the certificate is cancelled?

Your title is clean and the tax-sale process stops. We plan the refinance back toward A-lender pricing once the arrears are cleared and your file stabilizes — commonly around 12–24 months, a planning target subject to lender criteria.

How do I stop an Ontario tax sale?

By redeeming: paying the full cancellation price to the municipality, which cancels the tax arrears certificate and stops the sale.^{Municipal Act s.379} Partial payments generally don't redeem the account unless the municipality has agreed an extension agreement. If you have equity but not the cash, a mortgage against your home can fund the redemption.

Can I still sell instead?

Before the tax sale, you may still be able to sell the property yourself, with the arrears paid from the proceeds on closing, which usually preserves more equity than a municipal sale. A short bridge can sometimes buy the time to sell properly. We'll help you weigh redeeming against selling.

Does this apply outside Ontario?

The certificate, redemption and extension rules on this page are Ontario's (Municipal Act, 2001). Other provinces have similar but different tax-sale processes and timelines. We arrange financing for Ontario properties; elsewhere, speak with a locally licensed broker and confirm your province's process.

Is this the same as your property tax arrears service?

It's the registered-certificate stage of it. For the full picture — early arrears through tax sale, all provinces, second mortgage vs refinance — see our property tax arrears mortgage hub.

Related products

Property tax arrears mortgage (hub)Private mortgage B-lender mortgage Judgment & lien mortgage Ontario tax-arrears timeline How to stop a tax sale

Sources & references

Figures on this page are sourced below and re-checked each quarter. Rates, insurer rules and lender policies change — confirm anything you plan to act on with a licensed advisor.

1. Government of Ontario (e-Laws), Municipal Act, 2001, S.O. 2001, c. 25 (Part XI — sale of land for tax arrears, ss.371, 373, 378, 379) (accessed August 2026) — s.371: the cancellation price is all tax arrears owing when it is paid, plus current taxes, interest and penalties, and the municipality’s reasonable costs. s.373: a tax arrears certificate may be registered when arrears are owing on January 1 of the second year after the taxes became owing. s.378: before the one-year period expires, a municipality may enter into an extension agreement that extends the time to pay the cancellation price. s.379: if the cancellation price (arrears, current taxes, penalties/interest and costs) is not paid within one year of registration, the land may be advertised for tax sale; paying it within that year cancels the certificate. General information, not legal advice.
2. Canada Mortgage and Housing Corporation (CMHC), Residential Mortgage Industry Report (Q3 2025) — Table 2: the 25 largest mortgage investment entities (private lenders) averaged about a 9.6% single-family lending rate in Q3 2025.
3. Mortgage Squad Advisors rate desk (internal verification), Illustrative alt-A/private pricing and LTV ranges (reviewed August 2026) — Alt-A files typically to about 80% LTV; private files typically to about 65–75% LTV and fund faster. Illustrative, vary by file — not a quote.

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