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Scathing report issued after City of Penticton sells vulnerable woman’s home to pay $10K tax bill

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Scathing report issued after City of Penticton sells vulnerable woman’s home to pay $10K tax bill
Scathing report issued after City of Penticton sells vulnerable woman’s home to pay $10K tax bill – Dec 8, 2021

British Columbia’s ombudsperson is calling for drastic changes to the way municipalities collect outstanding property taxes after a woman’s home was sold to cover a $10,000 debt.

According to ombudsperson Jay Chalke, the City of Penticton sold the 60-year-old woman’s home for $150,000. However, the ombudsperson said the home’s fair market value was $420,000.

In a report titled ‘A Bid for Fairness,’ Chalke said the woman was vulnerable, and had the funds, but that personal challenges made it difficult to pay. The woman’s identity wasn’t revealed, but she was given a fictitious name: Ms. Wilson.

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The report said her failure to pay resulted in her home being sold in a tax sale auction, a statutory process that allows municipalities to collect unpaid taxes by selling properties two years after taxes are first due.

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“When the sale completed one year later, Ms. Wilson was evicted and lost approximately $270,000 of equity in her home,” reads the report.

“The results of this investigation are disturbing,” said Chalke. “Ms. Wilson was a vulnerable member of the Penticton community and just needed some extra assistance to pay her taxes.

“The City of Penticton called Ms. Wilson once but did not contact the public guardian and trustee or Interior Health who have the legal mandate to make inquiries as to whether an adult is vulnerable and needs support or assistance. The city’s failure to reach out to one of these helping organizations contributed to a devastating and preventable loss.”

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Also, according to the report, written communication from the city both leading up to and following the sale of Ms. Wilson’s home contained numerous errors.

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Among the errors were incorrect deadlines and inaccurate references to sections of the Local Government Act. The report also said the city failed to include key information that would have informed Ms. Wilson about the consequences of the tax sale process.

“Selling someone’s home to pay a relatively small tax debt is an extraordinary power and I expect when a municipality takes such action it is scrupulously accurate,” said Chalke.

“While the City of Penticton may view its own errors as immaterial, I do not agree. The cumulative effect of the city’s multiple mistakes was to make the process unfair for Ms. Wilson.”

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The ombudsperson said the investigation also examined the provincial legislative framework governing tax sales, and that gaps were identified. The gaps included no requirement to provide notices of a pending tax sale, and low starting bids, which would likely prevent fair market value pricing.

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The report said the starting bid for Ms. Wilson’s home was just over $10,000.

The ombudsperson said the report made five recommendations to the Ministry of Municipal Affairs:

  • Develop a plain language template letter for tax sales.
  • Develop guidelines to notify a property owner before a tax sale occurs.
  • Amending the Local Government Act to require municipalities to provide adequate notice to property owners.
  • Studying the issue of linking minimum bids to property values rather than taxes owing.
  • Issuing best practice guidelines to municipalities about how to protect vulnerable people whose home is at risk of a tax sale.
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The ombudsperson said the ministry accepted all recommendations made to it.

The ombudsperson said it also recommended that the City of Penticton compensate Ms. Wilson $140,922.88 — approximately one-half of her lost home equity.

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Chalke said the city rejected this recommendation.

“I am disappointed that the City of Penticton is not taking responsibility for both the multiple errors and omissions it made in its communication with Ms. Wilson and the insufficient action it took to help her get the assistance she needed,” said Chalke.

“I am calling on the city to realize the gravity of this situation for this vulnerable member of its community and compensate Ms. Wilson as I have recommended. It’s never too late to do the right thing.”

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Global News reached out to the City of Penticton for comment.

“The City of Penticton fully recognizes the seriousness of the situation and the impact the loss of the ‘Ms. Wilson’s’ home through the tax sale process had on her,” Penticton’s chief administrative officer, Donny van Dyk, said in a press release.

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“This is a most unfortunate situation, but as noted in appendix C to the report, City staff were unaware that ‘Ms. Wilson’ was a vulnerable person in need of support or assistance until after the conclusion of the tax sale process.

“We were disappointed that the ombudsperson chose not to include our complete and detailed response to the recommendations in the report, particularly information that does not support the ombudsperson’s conclusions.

“Our legal counsel is reaching out to the ombudsperson office to better understand why a significant part of the city’s response was excluded.”

Van Dyk concluded, stating “we disagree with the report’s findings as they relate to the City of Penticton, but we endorse the position of the Ministry of Municipal Affairs in their response.

“We look forward to working with the Ministry and other stakeholders as they engage in consultation about the development of best practice guidelines and amendments to the tax sale legislation.”

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B.C.’s seniors advocate, Isobel Mackenzie, was asked about the situation on Wednesday.

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Mackenzie said “broader education may have allowed the City of Penticton to realize perhaps there should have been some outreach to the designated agency, or the (public guardian and trustee), prior to the actions that they took.”

Mackenzie continued, saying “it might be that there were people around (that person) who could have seen what was happening, and if they were aware of their ability to report and who to report to … the wheels might have been put in motion to try and address the situation, which may or may not have resulted in the same outcome.”

To view the full report, visit the B.C. ombudsperson website.

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