CRA Liens on Property

Understanding CRA Liens on Property: Your Comprehensive Guide

The topic of CRA Liens on Property can often bring about stress and confusion for many property owners. This comprehensive guide aims to summarize what a CRA (Canada Revenue Agency) lien is, how it operates, and the various options available if you find yourself faced with one.

Defining CRA Liens on Property

A CRA lien, in essence, is a legal claim made on your property by the Canada Revenue Agency for unsettled tax debts. This claim can impact your property, including your house, cottage, rental property, or any other real estate owned. Consider a lien as similar to a mortgage; it’s a charge registered against your property, and it doesn’t necessarily imply that the CRA will seize your assets. However, it does secure payment against your property’s value when it gets sold.

The Registration Process of a CRA Lien

Before a lien gets registered, the CRA attempts various other collection methods. If these methods fail, the CRA proceeds with the lien registration. The CRA needs to first certify your debt in Federal Court. Once certified, the lien registration happens through the land registry system in Ontario. The lien will persist until dealt with or until the property is sold. Additionally, the lien’s amount may increase over time due to the added interest on the outstanding amount.

Impact of a CRA Lien on Your Credit Report

Just like any other debt, a tax lien can negatively affect your credit report. The CRA may register a lien on your credit report, which could, in turn, influence your credit score.

Ranking Order of a CRA Lien

The CRA lien does not supersede any previously registered mortgages or encumbrances on your property. The ranking order depends on the date of registration. As you continue to pay off your mortgage, the CRA’s position improves gradually, but it doesn’t directly jump to the front of the line.

The Outcome of a CRA Lien

The presence of a CRA lien doesn’t necessarily mean your property will be seized. However, it does mean that when you decide to sell your property, the outstanding tax debt will need to be settled before the transfer of ownership occurs. If you neglect to settle a tax lien, and your property’s value increases over time, the increased value will go towards paying off the lien.

Options for Dealing with a CRA Lien

There are several options available if a CRA lien has been placed on your property:

 

Negotiating Repayment:
The first option is to negotiate repayment arrangements with the CRA. After the debt is repaid, the lien gets removed.

Selling the Property:
The second option is to sell the property. After the mortgage gets paid off, the remaining funds are used to pay off the lien.

Filing a Consumer Proposal:
The third option is to file a consumer proposal. However, this option could be challenging depending on the amount owed.

One important point to remember is that filing bankruptcy will not remove the lien in the same way it doesn’t remove a mortgage on a property.

Seeking Professional Help

Dealing with CRA liens can be complex, and seeking professional help is often recommended, especially if you owe a significant amount to the CRA. Professionals can help review your situation and develop a strategic plan to deal with the debts effectively.

Conclusion

Having CRA Liens on Property can be daunting, but it’s important to remember that you have options. Understanding these options and seeking professional advice can help you navigate this tricky situation with more confidence and less stress.

Licensed Insolvency Trustee

If you need comprehensive advice on dealing with CRA Liens on Property, Book A Free Consultation with a Licensed Insolvency Trustee today.

Don’t let the fear of a lien hold you back. Remember, no matter how big or small your tax debt is, there’s always a way to deal with it effectively.

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