shield What Are Crown Interests?
A Crown interest is any legal claim, lien, or encumbrance on property held by the federal government (the "Crown" in Canadian law) or a provincial government. In the context of tax sales, Crown interests are critically important because they are the primary category of liens that survive the tax sale process.
When a municipality sells a property for unpaid taxes, the tax deed generally extinguishes most private encumbrances — mortgages, judgment liens, utility arrears, and construction liens are typically wiped clean. However, debts owed to the Crown (federal or provincial government) enjoy special legal protection under Canadian law and are NOT cleared by a tax sale.
Critical Risk
If you buy a tax sale property with a $5,000 minimum tender but the previous owner had a $50,000 CRA lien registered against it, you now own a property with a $50,000 government debt attached. This is the single most common way tax sale investors lose money.
checklist What Survives vs What Gets Cleared
| Type of Lien/Interest | Survives Tax Sale? | Notes |
|---|---|---|
| CRA Income Tax Lien | YES | Registered under Income Tax Act s.223 |
| GST/HST Lien | YES | Excise Tax Act s.316 |
| Environmental Order | YES | Federal/provincial environmental protection acts |
| Utility Easements | YES | Hydro, gas, telecom right-of-way |
| Heritage Designation | YES | Ontario Heritage Act, similar provincial legislation |
| Private Mortgage | NO | Cleared by tax deed |
| Judgment Lien | NO | Cleared by tax deed |
| Construction Lien | NO | Cleared by tax deed |
| Municipal Utility Arrears | VARIES | Depends on province and municipal bylaws |
account_balance CRA Liens: The Most Common Crown Interest
The Canada Revenue Agency (CRA) can register a lien against real property when a taxpayer owes federal taxes. This is by far the most common type of Crown interest encountered in tax sales. CRA liens can be registered for:
Income Tax Debts
Under Section 223 of the Income Tax Act, CRA can register a certificate at the Federal Court creating a lien against all property of the debtor. This includes real estate, and the lien priority is based on registration date.
GST/HST Debts
Business owners who collect but fail to remit GST/HST create a deemed trust under Section 222 of the Excise Tax Act. This super-priority lien can take precedence over almost all other interests, including secured creditors.
Payroll Deductions
Employers who fail to remit CPP, EI, and income tax deductions withheld from employees' pay create a deemed trust. Like GST/HST, these enjoy super-priority status.
Environmental Orders
Environmental remediation orders under CEPA (federal) or provincial environmental protection acts can run with the land. If the property has contamination, you may inherit cleanup liability — potentially costing hundreds of thousands of dollars.
search How to Search for Crown Interests
Before bidding on any tax sale property, conduct these searches to identify potential Crown interests. This is not optional — it is the most important step in your due diligence.
Title Search (Land Registry)
Search the provincial land registry for all registered interests. In Ontario, use Teranet's OnLand portal. In BC, use LTSA's myLTSA. In Alberta, use SPIN2. Look for any instrument registered by 'Her Majesty', 'Canada Revenue Agency', 'Attorney General', or a government ministry.
Cost: $15-$50 per parcel (online self-search)
Personal Property Security Registry (PPSR)
Search the PPSR in the relevant province for the previous owner's name. CRA sometimes registers liens here instead of (or in addition to) the land registry. This search catches liens that may not appear on the land title itself.
Cost: $8-$20 per search
Environmental Site Registry
Check the provincial environmental site registry. In Ontario, use the Brownfields Environmental Site Registry. In BC, check the Site Registry. Look for any Record of Site Condition, remediation orders, or contaminated sites designations.
Cost: Free (most provinces have online search)
Lawyer Title Opinion
For high-value properties, hire a real estate lawyer to conduct a comprehensive title search and provide a written opinion on the state of title. A lawyer can identify issues that a self-search might miss, including historical interests that may have been improperly discharged.
Cost: $300-$600 for title search with opinion
map Crown Interest Rules by Province
| Province | Land Registry | Key Legislation | Environmental Registry |
|---|---|---|---|
| Ontario | Teranet OnLand | Municipal Act s.379 | Brownfields ESR |
| Alberta | SPIN2 | MGA Part 10 | EPEA Site Registry |
| British Columbia | LTSA myLTSA | Local Government Act | BC Site Registry |
| Nova Scotia | NSPI Online | MGA Part IX | NSE Contaminated Sites |
| New Brunswick | SNB Land Registry | Real Property Tax Act | DELG Registry |
assessment Crown Interest Risk Assessment
Use this framework to assess Crown interest risk before bidding. Higher-risk properties require more thorough due diligence and a larger margin of safety in your bid.
check_circle Lower Risk
- Vacant residential land
- Individual (non-business) owner
- Clean title search
- No prior commercial/industrial use
- Rural or small-town location
warning Moderate Risk
- Residential with structures
- Owner had a small business
- Property near commercial zones
- Multiple years of tax arrears
- Previously rented property
dangerous Higher Risk
- Commercial/industrial property
- Previous gas station or factory
- Corporate owner (potential GST)
- Existing registered government lien
- Property near known contaminated sites
help Frequently Asked Questions
Legislative Sources
- Income Tax Act, R.S.C., 1985, c. 1 (5th Supp.) — Section 223 (Registration of certificates)
- Excise Tax Act, R.S.C., 1985, c. E-15 — Section 222 (Deemed trust for GST/HST)
- Municipal Act, 2001, S.O. 2001, c. 25 — Part XI (Sale of Land for Tax Arrears)
- Bankruptcy and Insolvency Act, R.S.C., 1985, c. B-3
- Canadian Environmental Protection Act, 1999, S.C. 1999, c. 33
Protect Your Investment
Browse tax sale properties with government assessment data to make informed decisions. Always conduct proper due diligence before bidding.