BILL ANALYSIS AB 1684 Page 1 Date of Hearing: March 16, 2010 ASSEMBLY COMMITTEE ON JUDICIARY Mike Feuer, Chair AB 1684 (Jeffries) - As Amended: March 11, 2010 PROPOSED CONSENT SUBJECT : Adverse Possession: Payment of Taxes KEY ISSUE : Should a person claiming title to land as an adverse possessor be required to prove, by certified records of the county tax collector, that he or she has paid all taxes levied upon the property continuously throughout the required five year period? FISCAL EFFECT : As currently in print this bill is keyed non-fiscal. SYNOPSIS This bill seeks to address the problem of persons who attempt to acquire land by adverse possession by paying taxes on the land even though they do not own or occupy that land. "Adverse possession" permits a person to acquire title to land if the person has "openly, continuously, and notoriously" occupied such land for a prescribed statutory period and the rightful owner has not exercised his or her right to remove the adverse possessor during that period. California, like many other states, requires additionally that the adverse possessor must have paid all taxes levied upon the land during the five year period that the adverse possessor openly and continuously occupied the land. In recent years, a number of county tax collectors have noted that modern-day land "speculators" are attempting to make payments on mostly rural parcels of land in hopes of building a claim for title to the land, even though the speculator is not using or occupying the land in question. This bill, which is sponsored by the California Association of County Treasurers and Tax Collectors (CACTTC), addresses the situation in which a speculator attempts to make a lump-sum tax payment on a parcel with an outstanding tax obligation and then claims to have continuously and openly occupied the land for the entire five-year period. This bill would clarify that the adverse possessor must make timely payments throughout the statutory period and that this must be established by certified records of AB 1684 Page 2 the county tax collector. There is no known opposition to this bill. SUMMARY : Provides that annual payment of taxes, which is already a required element of adverse possession in California, must be established by certified records of the county tax collector and show that the taxes were paid continuously throughout the five year statutory period. Specifically, this bill : 1)Provides that for purposes of constituting an adverse possession, in addition to meeting other prescribed elements, the person claiming title as an adverse possessor, or the person's predecessors and grantors, shall have timely paid all state, county, or municipal taxes that have been levied and assessed upon the land for such period of five years during which the land has been occupied and claimed. 2)Specifies that payment of taxes, in the manner described above, must be established by certified records of the county tax collector. EXISTING LAW : 1)Provides generally, in case law, that to establish a claim to property by adverse possession, the claimant must prove all of the following: (1) possession under claim of right or color of title; (2) actual, open, and notorious occupation of premises sufficient to give reasonable notice to the true owner; (3) possession which is adverse to the true owner; (4) continuous possession for at least five years; and (5) payment of all taxes assessed and levied against the property during the five-year period. (Mehdizadeh v. Mincer (1996) 46 Cal. App. 4th 1296.) 2)Provides that, for purposes of constituting adverse possession by a person claiming title, not founded upon a written instrument, judgment, or decree, land is deemed to have been possessed and occupied where it has been (1) protected by substantial enclosure and (2) usually cultivated or improved. Provided, however, that in no case shall adverse possession be considered established unless it is shown that the land has been occupied and claimed for the period of five years continuously, and the party or persons, their predecessors or grantors, have paid all taxes, State, county, or municipal, AB 1684 Page 3 which have been levied and assessed upon such land. (Code of Civil Procedure Section 325.) 3)Provides a process by which a property owner of record may instruct a tax collector, by written request, to refund a replicated, or second, payment on a current property tax assessment to the tendering party who is not the owner of record. (Revenue & Taxation Code Section 2781.5.) COMMENTS : This bill, like last year's AB 143 by the same author, seeks to address the problem of persons attempting to acquire land by adverse possession by paying taxes on land that they do not own and that they have not occupied. Specifically, this bill addresses a problem in which would-be adverse possessors scan tax records for parcels of land with outstanding tax obligations, make a lump-sum payment of taxes for the previous five years, and then claim that they have occupied the land for that five-year period. Last year's bill addressed the problem of persons attempting to make payments prior to any payment made by the owner of record, so that the claimant's payment would take precedence over the payment of the true owner. This bill addresses the problem of persons who attempt to make post hoc payments on land with outstanding tax obligations. Background : The centuries-old common law doctrine of "adverse possession" permits a person to acquire title to land if the person has "openly, continuously, and notoriously" occupied land for a prescribed statutory period and the rightful owner, who is presumed to have notice of this occupation, has not exercised his or her right to remove the adverse possessor during the statutory period. Historically, this doctrine prevented land owners from letting land sit idle while others were willing to productively use and improve the land. Traditionally statutory periods ran from 15 to 20 years, but California has adopted a relatively short statutory period of five years. California also imposes an additional statutory requirement that, in order to prevail on the claim, the adverse possessor must have paid all taxes assessed and levied upon the land during the five year period. In recent years, some county tax collectors have pointed out that modern-day land "speculators" are attempting to make payments on rural parcels of land in hopes of building a claim for title to the land, even though they are not using or AB 1684 Page 4 occupying the land in question. (See e.g. "Obscure Law That Benefits Squatters Criticized," Riverside County Press-Enterprise, June 22, 2007.) Last year's measure created a mechanism by which a tax collector could return a redundant payment to the payer who was not the owner of record. (Previously the tax collector was required to return the payment to the party that made the later payment, so that the adverse possessor would be credited with paying the tax if his payment arrived before the true owner's payment.) This bill, on the other hand, addresses a situation in which a speculator attempts to make a lump sum payment on a parcel with taxes due and then attempts to claim that he or she has continuously and openly occupied the land for the entire period. This bill would clarify that the adverse possessor must establish, by certified records of the county tax collector, that he or she made those tax payments continuously throughout the required five year period. There is no known opposition to this bill. Last year's measure, which was signed by the Governor and chaptered, received unanimous votes in all committee and floor votes in both the Assembly and the Senate. Prior Legislation . AB 143 (Ch. 95, Stats of 2009) created a mechanism for a county tax collector to refund a replicated property tax payment to a person who is not the property owner but who has paid the property tax on the current assessment of that property. AB 1959 (Jeffries) 2007-08 legislative session was nearly identical to AB 143, above. AB 1959 passed out of the Assembly, was amended in the Senate, was returned for concurrence in the Assembly, but was never taken up for concurrence before the session ended. REGISTERED SUPPORT / OPPOSITION : Support California Association of County Treasurers and Tax Collectors (sponsor) Opposition None on file AB 1684 Page 5 Analysis Prepared by : Thomas Clark / JUD. / (916) 319-2334