BILL NUMBER: AB 2144 CHAPTERED 09/30/04 CHAPTER 944 FILED WITH SECRETARY OF STATE SEPTEMBER 30, 2004 APPROVED BY GOVERNOR SEPTEMBER 29, 2004 PASSED THE ASSEMBLY AUGUST 27, 2004 PASSED THE SENATE AUGUST 26, 2004 AMENDED IN SENATE AUGUST 23, 2004 AMENDED IN ASSEMBLY MAY 17, 2004 AMENDED IN ASSEMBLY MAY 5, 2004 INTRODUCED BY Assembly Member Ridley-Thomas FEBRUARY 18, 2004 An act to amend Sections 3361, 3362, 3691, 3691.2, 3791, 3791.3, 3792, and 4217 of the Revenue and Taxation Code, relating to property taxation. LEGISLATIVE COUNSEL'S DIGEST AB 2144, Ridley-Thomas. Property taxation: tax-defaulted property: redemption period. Existing law requires a tax collector to attempt to sell property that has become tax defaulted 5 years or more after that property has become tax defaulted, as provided. Existing law authorizes the tax collector to sell tax-defaulted property that is subject to a nuisance abatement lien 3 years or more after that property becomes tax defaulted, as specified. This bill would require the county tax collector to attempt to sell tax-defaulted nonresidential commercial property, as defined, 3 years or more after the property becomes tax defaulted, unless a county elects not to have this requirement apply, as specified. This bill would specify that this requirement applies only to property that becomes tax defaulted on or after January 1, 2005. This bill also would require the tax collector to notify specified parties of an intended sale of nonresidential commercial property, as provided. This bill also would make conforming changes to related provisions. This bill would incorporate the substantive changes in Sections 3361, 3362, 3691, 3691.2, and 4217 of the Revenue and Taxation Code proposed by both this bill and SB 1596, which would become operative only if SB 1596 and this bill are both chaptered and become effective January 1, 2005, and this bill is chaptered last. THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS: SECTION 1. Section 3361 of the Revenue and Taxation Code is amended to read: 3361. Annually, on or before June 8th, the tax collector shall publish a notice of power and intent to sell all property that will be tax defaulted for five years or more, or three years or more in the case of nonresidential commercial property, as defined in Section 3691, in an applicable county, on the date specified. SEC. 1.5. Section 3361 of the Revenue and Taxation Code is amended to read: 3361. Annually, on or before June 8th, the tax collector shall publish a notice of power and intent to sell all property that will be tax defaulted for one of the following: (a) Five years or more on the date specified. (b) Three or more years on the date specified in the case of residential real property that could serve the public benefit by providing housing or services directly related to low-income persons, for which a request has been made by a city, county, city and county, or nonprofit organization, pursuant to Section 3692.4, to offer that property at the next scheduled public auction. (c) Three years or more in the case of nonresidential commercial property, as defined in Section 3691, in an applicable county, on the date specified. SEC. 2. Section 3362 of the Revenue and Taxation Code is amended to read: 3362. The published notice shall show: (a) The date of the notice. (b) That on July 1, five years or more, or three years or more in the case of nonresidential commercial property, as defined in Section 3691, in an applicable county, will have elapsed since the property became tax defaulted. (c) That, unless sooner redeemed or an installment plan of redemption is initiated, the property will be sold. (d) That the power to sell for nonpayment of taxes arises if the property remains tax defaulted at 12:01 a.m. on July 1. (e) That if the property is sold for nonpayment of taxes the right of redemption will terminate. (f) The official who will furnish all information concerning redemption. (g) The fiscal year for which the defaulted taxes were levied. (h) A description of the property. The assessments contained in this notice shall be numbered in ascending numerical order. (i) The amount of taxes originally declared in default opposite the description of the property. (j) The name of the assessee on the current roll. (k) The street address of the property, if any, shown on the county assessment records. SEC. 2.5. Section 3362 of the Revenue and Taxation Code is amended to read: 3362. The published notice shall show: (a) The date of the notice. (b) (1) That on July 1, five years or more will have elapsed since the property became tax defaulted; or (2) That, on July 1, three years or more in the case of nonresidential commercial property, as defined in Section 3691, in an applicable county will have elapsed since the property became tax defaulted; or (3) That, on July 1, in the case of real property that could serve the public benefit by providing housing or services directly related to low-income persons, three years or more have elapsed, and a request has been made by a city, county, city and county, or nonprofit organization, pursuant to Section 3692.4, to offer that property at the next scheduled public auction. (c) That, unless sooner redeemed or an installment plan of redemption is initiated, the property will be sold. (d) That the power to sell for nonpayment of taxes arises if the property remains tax defaulted at 12:01 a.m. on July 1. (e) That if the property is sold for nonpayment of taxes the right of redemption will terminate. (f) The official who will furnish all information concerning redemption. (g) The fiscal year for which the defaulted taxes were levied. (h) A description of the property. The assessments contained in this notice shall be numbered in ascending numerical order. (i) The amount of taxes originally declared in default opposite the description of the property. (j) The name of the assessee on the current roll. (k) The street address of the property, if any, shown on the county assessment records. SEC. 3. Section 3691 of the Revenue and Taxation Code is amended to read: 3691. (a) (1) (A) Five years or more, or three years or more in the case of nonresidential commercial property, after the property has become tax defaulted, the tax collector shall have the power to sell and shall attempt to sell in accordance with Section 3692 all or any portion of tax-defaulted property that has not been redeemed, without regard to the boundaries of the parcels, as provided in this chapter, unless by other provisions of law the property is not subject to sale. Any person, regardless of any prior or existing lien on, claim to, or interest in, the property, may purchase at the sale. In the case of tax-defaulted property that has been damaged by a disaster in an area declared to be a disaster area by local, state, or federal officials and whose damage has not been substantially repaired, the five-year period set forth in this subdivision shall be tolled until five years have elapsed from the date the damage to the property was incurred. (B) A county may elect, by an ordinance or resolution adopted by a majority vote of its entire governing body, to have the five-year time period described in subparagraph (A) apply to tax-defaulted nonresidential commercial property. (C) For purposes of this subdivision, "nonresidential commercial property" means all property except the following: (i) A constructed single-family or multifamily unit that is intended to be used primarily as a permanent residence, is used primarily as a permanent residence, or that is zoned as a residence, and the land on which that unit is constructed. (ii) Real property that is used and zoned for producing commercial agricultural commodities. (2) When a part of a tax-defaulted parcel is sold, the balance continues subject to redemption and shall be separately valued for the purpose of redemption in the manner provided by Chapter 2 (commencing with Section 4131) of Part 7. (3) The tax collector shall provide notice of an intended sale under this subdivision in the manner prescribed by Sections 3704 and 3704.5 and any other applicable statute. If the intended sale is of nonresidential commercial property that has been tax-defaulted for fewer than five years, all of the following apply: (A) On or before the notice date, the tax collector shall also mail, in the manner specified in paragraph (1) of subdivision (c) of Section 2924b of the Civil Code, notice containing any information contained in the publication required under Sections 3704 and 3704.5 to, as applicable, all of the following: (i) The parties specified in paragraph (2) of subdivision (c) of Section 2924b of the Civil Code. (ii) Each taxing agency specified in paragraph (3) of subdivision (c) of Section 2924b of the Civil Code. (iii) Any beneficiary of a deed of trust or a mortgagee of any mortgage recorded against the nonresidential commercial property, and any assignee or vendee of these beneficiaries or mortgagees. (B) For purposes of this paragraph: (i) "Notice date" means a date at least 90 days before an intended sale or at least 90 days before the date upon which the property may be sold. (ii) "Recording date of the notice of default" as used in subdivision (c) of Section 2924b of the Civil Code means a date that is 30 days before the notice date. (iii) "Deed of trust or mortgage being foreclosed" as used in subdivision (c) of Section 2924b of the Civil Code means the defaulted tax lien. (b) (1) (A) Three years or more after the property has become tax defaulted and subject to a nuisance abatement lien, the tax collector shall have the power to sell and may sell all or any portion of tax-defaulted property that has not been redeemed, without regard to the boundaries of parcels, as provided in this chapter, unless by other provisions of law the property is not subject to sale. Any person, regardless of any prior or existing lien on, claim to, or interest in, the property, may purchase at the sale. (B) When a part of a tax-defaulted parcel is sold, the balance continues subject to redemption and shall be separately valued for the purpose of redemption in the manner provided by Chapter 2 (commencing with Section 4131) of Part 7. (2) Before the tax collector sells vacant residential developed property pursuant to this subdivision, actual notice, by certified mail, shall be provided to the property owner, if the property owner' s identity can be determined from the county assessor's or county recorder's records. The tax collector's power of sale shall not be affected by the failure of the property owner to receive notice. (3) Before the tax collector sells vacant residential developed property pursuant to this subdivision, notice of the sale shall be given in the manner specified by Section 3704.7. (c) The amendments made to this section by the act adding this subdivision apply to property that becomes tax defaulted on or after January 1, 2005. SEC. 3.5. Section 3691 of the Revenue and Taxation Code is amended to read: 3691. (a) (1) (A) Five years or more, or three years or more in the case of nonresidential commercial property, after the property has become tax defaulted, the tax collector shall have the power to sell and shall attempt to sell in accordance with Section 3692 all or any portion of tax-defaulted property that has not been redeemed, without regard to the boundaries of the parcels, as provided in this chapter, unless by other provisions of law the property is not subject to sale. Any person, regardless of any prior or existing lien on, claim to, or interest in, the property, may purchase at the sale. In the case of tax-defaulted property that has been damaged by a disaster in an area declared to be a disaster area by local, state, or federal officials and whose damage has not been substantially repaired, the five-year period set forth in this subdivision shall be tolled until five years have elapsed from the date the damage to the property was incurred. (B) A county may elect, by an ordinance or resolution adopted by a majority vote of its entire governing body, to have the five-year time period described in subparagraph (A) apply to tax-defaulted nonresidential commercial property. (C) For purposes of this subdivision, "nonresidential commercial property" means all property except the following: (i) A constructed single-family or multifamily unit that is intended to be used primarily as a permanent residence, is used primarily as a permanent residence, or that is zoned as a residence, and the land on which that unit is constructed. (ii) Real property that is used and zoned for producing commercial agricultural commodities. (2) When a part of a tax-defaulted parcel is sold, the balance continues subject to redemption and shall be separately valued for the purpose of redemption in the manner provided by Chapter 2 (commencing with Section 4131) of Part 7. (3) The tax collector shall provide notice of an intended sale under this subdivision in the manner prescribed by Sections 3704 and 3704.5 and any other applicable statute. If the intended sale is of nonresidential commercial property that has been tax-defaulted for fewer than five years, all of the following apply: (A) On or before the notice date, the tax collector shall also mail, in the manner specified in paragraph (1) of subdivision (c) of Section 2924b of the Civil Code, notice containing any information contained in the publication required under Sections 3704 and 3704.5 to, as applicable, all of the following: (i) The parties specified in paragraph (2) of subdivision (c) of Section 2924b of the Civil Code. (ii) Each taxing agency specified in paragraph (3) of subdivision (c) of Section 2924b of the Civil Code. (iii) Any beneficiary of a deed of trust or a mortgagee of any mortgage recorded against the nonresidential commercial property, and any assignee or vendee of these beneficiaries or mortgagees. (B) For purposes of this paragraph: (i) "Notice date" means a date at least 90 days before an intended sale or at least 90 days before the date upon which the property may be sold. (ii) "Recording date of the notice of default" as used in subdivision (c) of Section 2924b of the Civil Code means a date that is 30 days before the notice date. (iii) "Deed of trust or mortgage being foreclosed" as used in subdivision (c) of Section 2924b of the Civil Code means the defaulted tax lien. (b) (1) (A) Three years or more after the property has become tax defaulted and subject to a nuisance abatement lien or a request has been made by a city, county, city and county, or nonprofit organization, pursuant to Section 3692.4, to offer that property at the next scheduled public auction, the tax collector shall have the power to sell and may sell all or any portion of tax-defaulted property that has not been redeemed, without regard to the boundaries of parcels, as provided in this chapter, unless by other provisions of law the property is not subject to sale. Any person, regardless of any prior or existing lien on, claim to, or interest in, the property, may purchase at the sale. (B) When a part of a tax-defaulted parcel is sold, the balance continues subject to redemption and shall be separately valued for the purpose of redemption in the manner provided by Chapter 2 (commencing with Section 4131) of Part 7. (2) Before the tax collector sells vacant residential developed property pursuant to this subdivision, actual notice, by certified mail, shall be provided to the property owner, if the property owner' s identity can be determined from the county assessor's or county recorder's records. The tax collector's power of sale shall not be affected by the failure of the property owner to receive notice. (3) Before the tax collector sells vacant residential developed property pursuant to this subdivision, notice of the sale shall be given in the manner specified by Section 3704.7. (c) The amendments made to this section by the act adding this subdivision apply to property that becomes tax defaulted on or after January 1, 2005. SEC. 4. Section 3691.2 of the Revenue and Taxation Code is amended to read: 3691.2. The notice shall specify: (a) A statement that five years or more, or three years or more in the case of nonresidential commercial property, as defined in Section 3691, in an applicable county, have elapsed since the taxes or assessments on the parcel were declared in default. (b) That the property was duly assessed for taxation and the tax legally levied. (c) That the property is subject to sale for nonpayment of taxes. (d) The amount of taxes originally declared to be in default, unless there has been a partial cancellation of taxes, a redemption from a portion thereof, or a correction under Sections 4831.5 and 4876.5, in any of which events, the amount shall be the balance remaining. (e) A metes and bounds or lot-block-tract description of the property. SEC. 4.5. Section 3691.2 of the Revenue and Taxation Code is amended to read: 3691.2. The notice shall specify: (a) A statement that five years or more have elapsed since the taxes or assessments on the parcel were declared in default; that three years or more in the case of nonresidential commercial property, as defined in Section 3691, have elapsed since the taxes or assessments on the parcel were declared in default; or that, pursuant to Section 3692.4, three years or more have elapsed and a request has been made by a city, county, city and county, or nonprofit organization to offer that property at the next scheduled public auction. (b) That the property was duly assessed for taxation and the tax legally levied. (c) That the property is subject to sale for nonpayment of taxes. (d) The amount of taxes originally declared to be in default, unless there has been a partial cancellation of taxes, a redemption from a portion thereof, or a correction under Sections 4831.5 and 4876.5, in any of which events, the amount shall be the balance remaining. (e) A metes and bounds or lot-block-tract description of the property. SEC. 5. Section 3791 of the Revenue and Taxation Code is amended to read: 3791. Whenever property tax defaulted for five years or more, or three years or more in the case of nonresidential commercial property, as defined in Section 3691, in an applicable county, has been sold for taxes for two or more years or has been deeded for taxes to a taxing agency other than the state, the governing body of the taxing agency may, as provided in this article, make an agreement with the board of supervisors of the county in which the property is situated for the purchase of, or for an option to purchase, all or any of the tax-defaulted property or any part thereof including a right-of-way or other easement. When a part of a tax-defaulted parcel is sold the balance continues subject to redemption, if the right of redemption has not been terminated, and shall be separately valued for the purpose of redemption in the manner provided by Chapter 2 (commencing with Section 4131) of Part 7 of this division, except that no application need be made. SEC. 6. Section 3791.3 of the Revenue and Taxation Code is amended to read: 3791.3. Whenever property has been tax defaulted for five years or more, or three years or more in the case of nonresidential commercial property, as defined in Section 3691, in an applicable county, whether or not the property is subject to or has been sold or deeded for taxes to a taxing agency other than the state, 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, may purchase the property or any part thereof, including any right-of-way or other easement, pursuant to this chapter. A redevelopment agency, however, may only purchase this tax-defaulted property located within a designated survey area. SEC. 7. Section 3792 of the Revenue and Taxation Code is amended to read: 3792. If property tax defaulted for more than five years, or more than three years in the case of nonresidential commercial property, as defined in Section 3691, in an applicable county, has been sold for taxes for two or more years or has been deeded for taxes to two or more taxing agencies, they may make a joint agreement with the board of supervisors under this article. The joint agreement may provide for the conveyance of all or any interest in the property to one of them or to any combination of them. SEC. 8. Section 4217 of the Revenue and Taxation Code is amended to read: 4217. (a) Any person may elect to pay delinquent taxes in installments under this article at any time prior to 5 p.m. on June 30 of the fifth year, or the third year in the case of nonresidential commercial property, as defined in Section 3691, in an applicable county, after the property became tax defaulted, except that if payment of delinquent taxes in installments is started under this article and the amount required to be paid in any fiscal year is not paid as required by this article, payments on property that, but for the installment redemption plan, would have been subject to a power of sale pursuant to Section 3691 during the calendar year in which default on the redemption plan occurs may not again be started under this article. All other payments may be started on or after July 1 of the fiscal year commencing after the fiscal year in which default occurred. (b) (1) A person electing to pay delinquent taxes in installments may be subject to a fee for processing the person's request. (2) The fee for payment of delinquent taxes in installments to the tax collector may be established by ordinance by the board of supervisors. The fee shall be governed by the provisions of Chapter 12.5 (commencing with Section 54985) of Part 1 of Division 2 of Title 5 of the Government Code and may be collected on the tax bill. SEC. 8.5. Section 4217 of the Revenue and Taxation Code is amended to read: 4217. (a) Any person may elect to pay delinquent taxes in installments under this article at any time prior to 5 p.m. on the last business day prior to the date when the tax collector obtains the power to sell the property, except that if payment of delinquent taxes in installments is started under this article and the amount required to be paid in any fiscal year is not paid as required by this article, payments on property that, but for the installment redemption plan, would have been subject to a power of sale pursuant to Section 3691 during the calendar year in which default on the redemption plan occurs may not again be started under this article. All other payments may be started on or after July 1 of the fiscal year commencing after the fiscal year in which default occurred. (b) (1) A person electing to pay delinquent taxes in installments may be subject to a fee for processing the person's request. (2) The fee for payment of delinquent taxes in installments to the tax collector may be established by ordinance by the board of supervisors. The fee shall be governed by the provisions of Chapter 12.5 (commencing with Section 54985) of Part 1 of Division 2 of Title 5 of the Government Code and may be collected on the tax bill. SEC. 9. Section 1.5 of this bill incorporates the same substantive changes to Section 3361 of the Revenue and Taxation Code proposed by both this bill and SB 1596. It shall only become operative if (1) both bills are enacted and become effective on or before January 1, 2005, (2) each bill amends Section 3361 of the Revenue and Taxation Code, and (3) this bill is enacted after SB 1596, in which case Section 1 of this bill shall not become operative. SEC. 10. Section 2.5 of this bill incorporates the same substantive changes to Section 3362 of the Revenue and Taxation Code proposed by both this bill and SB 1596. It shall only become operative if (1) both bills are enacted and become effective on or before January 1, 2005, (2) each bill amends Section 3362 of the Revenue and Taxation Code, and (3) this bill is enacted after SB 1596, in which case Section 2 of this bill shall not become operative. SEC. 11. Section 3.5 of this bill incorporates amendments to Section 3691 of the Revenue and Taxation Code proposed by both this bill and SB 1596. It shall only become operative if (1) both bills are enacted and become effective on or before January 1, 2005, (2) each bill amends Section 3691 of the Revenue and Taxation Code, and (3) this bill is enacted after SB 1596, in which case Section 3 of this bill shall not become operative. SEC. 12. Section 4.5 of this bill incorporates the same substantive changes to Section 3691.2 of the Revenue and Taxation Code proposed by both this bill and SB 1596. It shall only become operative if (1) both bills are enacted and become effective on or before January 1, 2005, (2) each bill amends Section 3691.2 of the Revenue and Taxation Code, and (3) this bill is enacted after SB 1596, in which case Section 4 of this bill shall not become operative. SEC. 13. Section 8.5 of this bill incorporates the same substantive changes to Section 4217 of the Revenue and Taxation Code proposed by both this bill and SB 1596. It shall only become operative if (1) both bills are enacted and become effective on or before January 1, 2005, (2) each bill amends Section 4217 of the Revenue and Taxation Code, and (3) this bill is enacted after SB 1596, in which case Section 8 of this bill shall not become operative.