Selling With an MPAC Reconsideration or Appeal Still Open: Three Ledgers Decide Who Gets the Refund (or the Bill)

A pending assessment dispute does not end at closing. The city, MPAC and your buyer each keep a separate record of the property, and each one answers a different question about the money.

I’m Arthur Zhao, a real estate broker in Toronto. Picture the moment a seller signs off on the statement of adjustments before closing. One line splits this year’s realty taxes between seller and buyer, to the day. That line is calculated on the assessment currently on the roll, which is the very number the seller has asked MPAC to reconsider, or has taken to the Assessment Review Board.

So the statement is precise, and it may also be provisional. If the dispute later changes the assessment, the taxes for that year get recalculated, and the money moves after everyone has already gone home with their keys. The useful question is not “who deserves the refund.” It is “whose books does the money actually flow through?” There are three sets of books here, and the law treats each one separately. This piece walks through them one at a time, mainly from the seller’s side, with the buyer’s exposure noted where it matters.

Three ledgers, three counterparties

Each ledger has its own counterparty and its own rule. None of them refers to the other two, which is the whole problem.

Ledger one: the city’s tax roll

Nothing changes on the tax side while the dispute is open. Assessment Act s.37(6) says no assessment is altered until all reconsiderations, appeals and proceedings are finally determined. Once they are, the taxes are “adjusted accordingly” and any overpayment is refunded by the municipality. Notice what s.37(6) does not say: it does not name the person who gets the refund.

The Municipal Act fills that in. Under s.341(1) the treasurer adjusts the year’s tax roll to reflect the assessment change, and under s.341(2) the city then either (a) refunds the overpayment to the owner of the land as shown on the tax roll on the date the adjustment is made, or (b) sends another tax bill for the underpayment. Section 341(3) also lets the city apply the refund against that owner’s outstanding tax liability first.

Read (a) as a rule of address, not of entitlement. The city is not deciding who economically paid the tax in, say, January to June. It pays whoever the roll shows on one particular day. If that day falls after closing and the roll has been updated to the buyer, the cheque is addressed to the buyer. Section 341 does not say when the roll changes names after a sale, so you cannot assume it either way.

Clause (b) says “send another tax bill” but does not say to whom. Who can be made to pay comes from s.349(1): taxes may be recovered as a debt due to the municipality from the taxpayer originally assessed for them and from any subsequent owner of the land. Section 349(2) adds that this does not affect anyone’s recourse against any other person, and s.349(3) makes unpaid taxes a special lien on the land.

If the change reduces the assessment, there is also interest. Section 345(6)(b) requires the municipality to pay interest on overpayments arising from a change under the Assessment Act, at the rate tied to the Education Act, and s.345(9) starts that interest 120 days after the city is notified of the change by MPAC, the ARB or a court.

Ledger two: the MPAC and ARB file

This ledger is a conversation, and the Act is specific about who is in it. A Request for Reconsideration can be filed by the owner of the property or by a person who received, or would be entitled to receive, a notice of assessment (s.39.1(1)). MPAC must send the result to the person making the request (s.39.1(7)), within 180 days, or 240 days if it gave notice within those 180 days that it needs an extension. If MPAC and the requester settle, s.39.1(9) and (10) send the settlement to the municipal clerk, who alters the tax roll. That is the hand-off from ledger two back into ledger one.

An appeal to the Assessment Review Board under s.40(1) is open to any person, including a municipality, on the basis that the current value of “the person’s land or another person’s land” is incorrect. For residential property, s.40(3) requires a timely reconsideration request first. Section 40(11) makes the parties MPAC, the appellants, everyone whose assessment is the subject of the appeal, and the municipality. The ARB’s information sheet on parties adds that a municipality may serve a Notice of Higher Assessment in an existing appeal, so a pending appeal is not guaranteed to move only downward.

Here is the gap, stated plainly. The Assessment Act, the ARB Rules of Practice and Procedure, and the ARB’s parties information sheet contain no provision on what happens when the property changes hands mid-dispute: whether the seller carries on after closing, whether the buyer takes over, or whether one simply stops. Section 40(14) lets the Board add a person who “should be a party,” but it does not say whether a buyer who takes title mid-appeal is such a person. How a particular file proceeds after a sale is a question for MPAC or the ARB in that file. I am not going to describe a procedure the statute does not contain.

Ledger three: the agreement between you and your buyer

This is the only ledger you and the buyer actually control, and the standard form says very little about a pending dispute.

Clause 18 (Adjustments) provides that realty taxes, among other items, “shall be apportioned and allowed to the day of completion, the day of completion itself to be apportioned to Buyer.” That is a single, one-time proration. There is no language about reopening the split if the year’s taxes are later recalculated.

Clause 19 (Property Assessment) has both parties acknowledge that properties may be re-assessed annually, and agree that no claim will be made against the buyer, the seller or any brokerage or salesperson for changes in property tax resulting from a re-assessment, save and except any property taxes that accrued prior to the completion of the transaction. Two things about that wording. First, it speaks of “re-assessment”; it does not mention a reconsideration or an ARB appeal by name, and whether a dispute outcome falls within it is a question of interpretation for a lawyer, not something I will settle here. Second, even where it applies, it preserves a claim without assigning one.

What about the OREA clause library? Its January 1, 2026 edition does contain TAX-3, “Tax Holdback – Completion of Building Increases Assessment.” It sets up a holdback by the seller’s lawyer for pre-completion taxes, settled once final taxes are known, with a release to the seller if no notice arrives within three years. But its own note limits it to the resale of nearly new construction where the initial assessment was based only on land value. It is built for taxes that are going up because the building was not yet assessed. It does not address a refund the seller is chasing, and the library has no clause aimed at a pending reconsideration or ARB appeal.

So if the money is worth arranging, the arrangement has to be drafted for this deal: who keeps a refund, who bears an increase, how one side tells the other a decision has arrived, and how payment actually changes hands. I will not give you clause wording here. That is your real estate lawyer’s job, and it should be done before the offer is signed, while both sides still have something to trade.

Where the ledgers fail to line up

Put the three side by side and the mismatches are predictable from the text alone.

The refund and the request can point to different people. MPAC writes to the seller who filed. The city pays the roll owner on the adjustment date. If those are different people, the person holding the result letter and the person holding the cheque are not the same, and nothing in either statute connects them.

The interest follows the refund. Section 345(6) interest is paid on the overpayment, so it travels with whoever the city refunds. Your contract is the only place that can redirect it.

The buyer carries real exposure too. Because s.349(1) lets the city recover taxes from any subsequent owner, and s.349(3) makes them a lien on the land, an increased assessment for a year that straddles closing can reach the buyer, including the part that relates to the seller’s months of ownership. Section 349(2) leaves the buyer’s recourse against others intact, but recourse is a claim to pursue, not money in hand. A buyer who learns of an open appeal before signing has as much reason to ask for contract wording as the seller does.

The standard form settles once. Clause 18 closes the books on completion day. Every later adjustment happens in ledgers one and two, outside the deal, unless ledger three was written to catch it.

What this means if you are listing now

If you have a reconsideration or appeal open, disclose it to your agent before the listing goes up, and get your lawyer involved before you accept an offer, not after. The reason is structural: the moment you sign a standard Form 100 without added terms, you have agreed to a one-time proration and a clause 19 that preserves claims without assigning them. Whether a later refund reaches you will then depend on the city’s roll and on how your file is handled after you no longer own the property, and neither of those is yours to control.

If the amount in dispute is small, you may decide it is not worth the negotiating capital. That is a legitimate choice, as long as it is a choice and not a default. I lay out the three ledgers; which one you rely on is your decision.