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AB-445 Property tax: tax-defaulted property sales.(2023-2024)

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Date Published: 02/06/2023 09:00 PM
AB445:v99#DOCUMENT


CALIFORNIA LEGISLATURE— 2023–2024 REGULAR SESSION

Assembly Bill
No. 445

Introduced by Assembly Member Essayli

February 06, 2023

An act to amend Sections 4675 and 4676 of, and to add Section 3777 to, the Revenue and Taxation Code, relating to taxation.


LEGISLATIVE COUNSEL'S DIGEST


AB 445, as introduced, Essayli. Property tax: tax-defaulted property sales.
Existing law governs the sale to certain entities of a property that has been tax defaulted for 5 years or more, or 3 years or more, as applicable, in an applicable county, including by authorizing the state, county, any revenue district the taxes of which on the property are collected by county officers, or a redevelopment agency created pursuant to the California Community Redevelopment Law, to purchase the property or any part thereof, as prescribed. Existing law also authorizes a nonprofit organization to purchase, with the approval of the board of supervisors of the county in which it is located, a residential or vacant property that has been tax-defaulted for 5 years or more, or 3 years or more if the property is subject to a nuisance abatement lien, as prescribed. Existing law requires the sales price of a property sold pursuant to the provisions described or referenced above to include certain amounts, including all defaulted taxes and assessments and all associated penalties and costs.
This bill would prohibit a property or property interest from being offered for sale under the provisions described above if that property or property interest has not been offered for sale under the provisions described below.
Existing law generally authorizes a county tax collector to sell to any person tax-defaulted property 5 years or more, or 3 years or more, as applicable, after that property has become tax defaulted. Existing law authorizes a party of interest in the property to file with the county a claim for the excess proceeds, in proportion to that person’s interest held with others of equal priority in the property at the time of sale, at any time before the expiration of one year following the recordation of the tax collector’s deed to the purchaser and provides for the distribution of those excess proceeds. Existing law requires, if excess proceeds from the sale of tax-defaulted property exceed $150, the county to provide notice of the right to claim the excess proceeds, as prescribed.
This bill would increase the claims period described above to 2 years if the county does not receive any claims before the expiration of one year following the recordation of the tax collector’s deed to the purchaser and would make conforming changes. The bill would also require the notice described above to include certain information, including the consequences for failing to apply for excess proceeds within the claims period. By requiring a county to administer the claims period for a longer time period and to include additional information in the required notice of the right to claim excess proceeds, the bill would impose a state-mandated local program.
The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.
This bill would provide that, if the Commission on State Mandates determines that the bill contains costs mandated by the state, reimbursement for those costs shall be made pursuant to the statutory provisions noted above.
Vote: MAJORITY   Appropriation: NO   Fiscal Committee: YES   Local Program: YES  

The people of the State of California do enact as follows:


SECTION 1.

 Section 3777 is added to the Revenue and Taxation Code, immediately following Section 3776, to read:

3777.
 Property or a property interest shall not be offered for sale under the provisions of this chapter if that property or property interest has not been offered for sale under the provisions of Chapter 7 (commencing with Section 3691).

SEC. 2.

 Section 4675 of the Revenue and Taxation Code is amended to read:

4675.
 (a) Any (1)  Subject to paragraph (2), any party of interest in the property may file with the county a claim for the excess proceeds, in proportion to that person’s interest held with others of equal priority in the property at the time of sale, at any time prior to before the expiration of one year following the recordation of the tax collector’s deed to the purchaser. The claim shall be postmarked on or before the one-year expiration date to be considered timely.
(2) The claim expiration date shall be two years following the recordation of the tax collector’s deed to the purchaser if the county does not receive a claim by a person described in subparagraph (B) of paragraph (1) of subdivision (e) before the expiration of one year following the recordation of the tax collector’s deed to the purchaser.
(3) A claim pursuant to this subdivision shall be postmarked on or before the claim expiration date to be considered timely.
(b) After the property has been sold, a party of interest in the property at the time of the sale may assign their right to claim the excess proceeds only by a dated, written instrument that explicitly states that the right to claim the excess proceeds is being assigned, and only after each party to the proposed assignment has disclosed to each other party to the proposed assignment all facts of which that party is aware relating to the value of the right that is being assigned. Any attempted assignment that does not comply with these requirements shall have no effect. This subdivision applies only with respect to assignments on or after the effective date of this subdivision.
(c) Any person or entity who in any way acts on behalf of, or in place of, any party of interest with respect to filing a claim for any excess proceeds shall submit proof with the claim that the amount and source of excess proceeds have been disclosed to the party of interest and that the party of interest has been advised of their right to file a claim for the excess proceeds on their own behalf directly with the county at no cost.
(d) The claims shall contain any information and proof deemed necessary by the board of supervisors to establish the claimant’s rights to all or any portion of the excess proceeds.
(e) (1) Except as provided in paragraph (2), no sooner than one year following the recordation of the tax collector’s deed claim expiration date determined pursuant to the purchaser, subdivision (a), and if the excess proceeds have been claimed by any party of interest as provided herein, the excess proceeds shall be distributed on order of the board of supervisors to the parties of interest who have claimed the excess proceeds in the order of priority set forth in subdivisions (a) and (b). For the purposes of this article, parties of interest and their order of priority are:
(A) First, lienholders of record prior to before the recordation of the tax deed to the purchaser in the order of their priority.
(B) Second, any person with title of record to all or any portion of the property prior to before the recordation of the tax deed to the purchaser.
(2) (A) Notwithstanding paragraph (1), if If the board of supervisors has been petitioned to rescind the tax sale pursuant to Section 3731, any excess proceeds shall not be distributed to the parties of interest as provided by paragraph (1) sooner than one year before the earlier of the claim expiration date determined pursuant to subdivision (a) or two years following the date the board of supervisors determines the tax sale should not be rescinded, and only if the person who petitioned the board of supervisors pursuant to Section 3731 has not commenced a proceeding in court pursuant to Section 3725.
(B) If a proceeding has been commenced in a court pursuant to Section 3725, any excess proceeds shall not be distributed to the parties of interest as provided by paragraph (1) until a final court order is issued.
(f) In the event that If a person with title of record is deceased at the time of the distribution of the excess proceeds, the heirs may submit an affidavit pursuant to Chapter 3 (commencing with Section 13100) of Part 1 of Division 8 of the Probate Code, to support their claim for excess proceeds.
(g) Any action or proceeding to review the decision of the board of supervisors, or the county officer to whom the board delegated authority pursuant to Section 4675.1, to accept or deny the claim shall be commenced within 90 days after the date of that decision of the board of supervisors or the county officer.

SEC. 3.

 Section 4676 of the Revenue and Taxation Code is amended to read:

4676.
 (a) When If excess proceeds from the sale of tax-defaulted property exceed one hundred fifty dollars ($150), the county shall provide notice of the right to claim the excess proceeds, as provided in this section.
(b) No later than 90 days after the sale of the property, the county shall mail written notice of the right to claim excess proceeds to the last known mailing address of parties of interest, as defined in Section 4675. The county shall make a reasonable effort to obtain the name and last known mailing address of parties of interest.
(c) If the last known address of a party of interest cannot be obtained, the county shall publish notice of the right to claim excess proceeds in a newspaper of general circulation in the county. Publication is not required if the cost to publish is equal to or greater than the amount of the excess proceeds. The notice shall be published once a week for three successive weeks and shall commence no later than 90 days after the sale of the property.
(d) The cost of obtaining the name and last known mailing address of parties of interest and of mailing or publishing the notices required under this section shall be deducted from the excess proceeds and shall be distributed to the county general fund.
(e) A notice pursuant to this section shall contain all of the following information:
(1) The amount of the tax debt with respect to which the tax-defaulted property was in default.
(2) The amount for which the property was sold.
(3) The consequences for failing to apply for excess proceeds within the time period prescribed in Section 4675.

SEC. 4.

  If the Commission on State Mandates determines that this act contains costs mandated by the state, reimbursement to local agencies and school districts for those costs shall be made pursuant to Part 7 (commencing with Section 17500) of Division 4 of Title 2 of the Government Code.