Senate Bill No. 909

Introduced by Senator Beall

January 26, 2016

An act to amend Sections 16190 and 16191 of the Government Code, and to amend Sections 20505, 20583, 20627, 20639.11, 20640.2, 20640.3, 20640.5, and 20640.11 of the Revenue and Taxation Code, relating to taxation.

LEGISLATIVE COUNSEL’S DIGEST

SB 909, as introduced, Beall. Property tax postponement: special needs trust claimants.

Existing law authorizes the Controller, upon approval of a claim for the postponement of ad valorem property taxes, to directly pay a county tax collector for the property taxes owed by the claimant, as provided. Existing law requires all sums paid for the postponement of property taxes pursuant to these provisions to be secured by a lien in favor of the state. Amounts owed by a claimant are due if the claimant, or his or her surviving spouse, ceases to occupy the premises as his or her residential dwelling, dies, disposes of the property, or allows specified taxes and special assessments to become delinquent, as provided. Existing law requires that a claimant, generally, be an individual who is a member of the household, is either an owner-occupant, tenant stockholder occupant, or possessory interestholder occupant of the residential dwelling as to which postponement is claimed, and is either 62 years of age or older, blind, or disabled. Existing law requires a claimant to file a claim containing specified information under penalty of perjury.

This bill would provide that a claimant for property tax postponement also includes a special needs trust claimant, defined as a special needs trust of which the primary beneficiary is an individual who meets the above-described criteria. The bill would also make various technical and conforming changes.

By requiring a special needs trust claimant for property tax postponement to file certain information under penalty of perjury, thereby expanding the expanding the crime of perjury, this 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 no reimbursement is required by this act for a specified reason.

Vote: majority. Appropriation: no. Fiscal committee: yes. State-mandated local program: yes.

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

SECTION 1.  

Section 16190 of the Government Code, as
amended by Section 4 of Chapter 391 of the Statutes of 2015, is
amended to read:

16190.  

All amounts owing pursuant to Article 1 (commencing
with Section 16180) of this chapter shall become due if any of the
following occurs:

(a) The claimant, who is either the sole owner or sole possessory
interestholder of the residential dwelling, as defined in Section
20583 or Section 20640 of the Revenue and Taxation Code, or a
coowner or copossessory interestholder with a person other than
a spouse or other individual eligible to postpone property taxes
pursuant to Chapter 2 (commencing with Section 20581), Chapter
3 (commencing with Section 20625), Chapter 3.3 (commencing
with Section 20639), or Chapter 3.5 (commencing with Section
20640) of Part 10.5 of Division 2 of that code, begin insert or, in the case of a
special needs trust claimant, the beneficiary, end insert ceases to occupy the
premises as his begin insert or her end insert residential dwelling, dies, or sells, conveys,
or disposes of the property, or allows any tax or special assessment
on the premises described in Section 20583 of such code to become
delinquent. If the sole owner or possessory interestholder claimant
dies and his or her surviving spouse inherits the premises and
continues to own and occupy it as his or her principal place of
residence, then the lien amount does not become due and payable
unless taxes or special assessments described in the preceding
sentence become delinquent, or such surviving spouse dies, or
sells, conveys, or disposes of the interest in the property.

(b) The claimant, who is a coowner or copossessory
interestholder of the residential dwelling, as defined in Section
20583 or Section 20640.2 of the Revenue and Taxation Code, with
a spouse or another individual eligible to postpone property taxes
pursuant to Chapter 2 (commencing with Section 20581), Chapter
3 (commencing with Section 20625), Chapter 3.3 (commencing
with Section 20639), or Chapter 3.5 (commencing with Section
20640) of Part 10.5 of Division 2 of that code, begin insert or, in the case of a
special needs trust claimant, the beneficiary, end insert dies, and the surviving
spouse or other surviving eligible individual allows any tax or
special assessment on the premises described in Section 20583 of
such code to become delinquent or such surviving spouse or other
individual ceases to occupy the premises as a residential dwelling,
dies, or conveys, or disposes of the interest in the property.

(c) The begin delete failure of the end delete claimant begin insert fails end insert to perform those acts the
claimant is required to perform where begin delete such end delete begin insert his or her end insert performance
is secured, or will be secured in the event of nonperformance, by
a lien which is senior to that of the lien provided by Section 16182.

(d) Postponement was erroneously allowed because eligibility
requirements were not met.

(e) The claimant is refinancing the residential dwelling.

(f) The claimant has elected to participate in a reverse mortgage
program for the residential dwelling.

SEC. 2.  

Section 16191 of the Government Code, as amended
by Section 5 of Chapter 391 of the Statutes of 2015, is amended
to read:

16191.  

The amounts paid pursuant to Section 16180 shall
continue to draw interest but amounts owing pursuant to Article
1 (commencing with Section 16180) of this chapter shall not
become due and payable if any of the following occurs:

(a) The begin delete claimant end delete begin insert claimant, or, in the case of a special needs
trust claimant, the beneficiary, end insert continues to own and occupy or
hold the possessory interest and occupy the premises as a
residential dwelling, but ceases to postpone property taxes pursuant
to Chapter 2 (commencing with Section 20581), Chapter 3
(commencing with Section 20625), Chapter 3.3 (commencing with
Section 20639), or Chapter 3.5 (commencing with Section 20640)
of Part 10.5 of Division 2 of the Revenue and Taxation Code, and
does not allow any tax or assessment against the premises, as
described in Section 20583 of such code, to become delinquent.

(b) The surviving spouse of a begin delete claimant end delete begin insert claimant, or, in the case
of a special needs trust claimant, the beneficiary, end insert continues to own
and occupy or hold the possessory interest and occupy the premises
as a residential dwelling, but is ineligible to postpone property
taxes pursuant to Chapter 2 (commencing with Section 20581),
Chapter 3 (commencing with Section 20625), Chapter 3.3
(commencing with Section 20639), or Chapter 3.5 (commencing
with Section 20640) of Part 10.5 of Division 2 of the Revenue and
Taxation Code, or elects not to postpone such taxes, and does not
allow any tax or assessment against the premises, as described in
Section 20583 of such code, to become delinquent.

(c) The surviving individual otherwise eligible to postpone
property taxes pursuant to Chapter 2 (commencing with Section
20581), Chapter 3 (commencing with Section 20625), Chapter 3.3
(commencing with Section 20639), or Chapter 3.5 (commencing
with Section 20640) of Part 10.5 of Division 2 of the Revenue and
Taxation Code continues to own and occupy or hold the possessory
interest and occupy the premises as a residential dwelling, but
elects not to postpone the property taxes pursuant to such chapter,
and does not allow any tax or assessment against the premises, as
described in Section 20583 of such code, to become delinquent.

SEC. 3.  

Section 20505 of the Revenue and Taxation Code, as
amended by Section 8 of Chapter 391 of the Statutes of 2015, is
amended to read:

20505.  

“Claimant” means an individual who--

(a) For purposes of this chapter was either (1) 62 years of age
or older on the last day of the calendar year or approved fiscal year
designated in subdivision (b) or (c) of Section 20503, whichever
is applicable, or (2) blind or disabled, as defined in Section 12050
of the Welfare and Institutions Code on the last day of the calendar
year or approved fiscal year designated in subdivision (b) of
Section 20503, who was a member of the household, and who was
either: (1) the owner and occupier of a residential dwelling on the
last day of the year designated in subdivision (b) or (c) of Section
20503, or (2) the renter of a rented residence on or before the last
day of the year designated in subdivision (b) of Section 20503. An
individual who qualifies as an owner-claimant may not qualify as
a renter-claimant for the same year.

(b)  begin insert (1) end insert  For purposes of Chapter 2 (commencing with Section
20581), Chapter 3 (commencing with Section 20625), Chapter 3.3
(commencing with Section 20639), and Chapter 3.5 (commencing
with Section begin delete 20640) end delete begin insert 20640), end insert was a member of the household and
either an owner-occupant, or a tenant stockholder occupant, or a
possessory interestholder occupant, or a mobilehome
owner-occupant, as the case may be, of the residential dwelling
as to which postponement is claimed on the last day of the year
designated in subdivision (b) or (c) of Section 20503, and who
was (1) 62 years of age or older by December 31 of the fiscal year
for which postponement is claimed, or (2) blind or disabled, as
defined in Section 12050 of the Welfare and Institutions Code, at
the time of application or on December 10 of the fiscal year for
which postponement is claimed, whichever is earlier.

begin insert

(2) For purposes of this subdivision, “claimant” shall include
a special needs trust claimant. “Special needs trust claimant”
means a special needs trust of which the primary beneficiary is
an individual who would qualify as a “claimant” pursuant to
paragraph (1).

end insert

SEC. 4.  

Section 20583 of the Revenue and Taxation Code is
amended to read:

20583.  

(a) “Residential dwelling” means a dwelling occupied
as the principal place of residence of the claimant, begin insert or, in the case
of a special needs trust claimant, the beneficiary, end insert and so much of
the land surrounding it as is reasonably necessary for use of the
dwelling as a home, owned by the claimant, begin insert the beneficiary of a
special needs trust claimant, end insert the claimant and spouse, or by the
claimant and either another individual eligible for postponement
under this chapter or an individual described in subdivision (a),
(b), or (c) of Section 20511 and located in this state. It shall include
condominiums that are assessed as realty for local property tax
purposes. It also includes part of a multidwelling or multipurpose
building and a part of the land upon which it is built.

(b) As used in this chapter in reference to ownership interests
in residential dwellings, “owned” includes (1) the interest of a
vendee in possession under a land sale contract provided that the
contract or memorandum thereof is recorded and only from the
date of recordation of the contract or memorandum thereof in the
office of the county recorder where the residential dwelling is
located, (2) the interest of the holder of a life estate provided that
the instrument creating the life estate is recorded and only from
the date of recordation of the instrument creating the life estate in
the office of the county recorder where the residential dwelling is
located, but “owned” does not include the interest of the holder of
any remainder interest or the holder of a reversionary interest in
the residential dwelling, (3) the interest of a joint tenant or a tenant
in common in the residential dwelling or the interest of a tenant
where title is held in tenancy by the entirety or a community
property interest where title is held as community property, and
(4) the interest in the residential dwelling in which the title is held
in trust, as described in subdivision (d) of Section 62, provided
that the Controller determines that the state’s interest is adequately
protected.

(c) Except as provided in subdivision (c), and Chapter 3
(commencing with Section 20625), ownership must be evidenced
by an instrument duly recorded in the office of the county where
the residential dwelling is located.

(d) “Residential dwelling” does not include any of the following:

(1) Any residential dwelling in which the owners do not have
an equity of at least 40 percent of the full value of the property as
determined for purposes of property taxation or at least 40 percent
of the fair market value as determined by the Controller and where
the Controller determines that the state’s interest is adequately
protected. The 40-percent equity requirement shall be met each
time the claimant or authorized agent files a postponement claim.

(2) Any residential dwelling in which the claimant’s interest is
held pursuant to a contract of sale or under a life estate, unless the
claimant obtains the written consent of the vendor under the
contract of sale, or the holder of the reversionary interest upon
termination of the life estate, for the postponement of taxes and
the creation of a lien on the real property in favor of the state for
amounts postponed pursuant to this act.

(3) Any residential dwelling on which the claimant does not
receive a secured tax bill.

(4) Any residential dwelling in which the claimant’s interest is
held as a possessory interest, except as provided in Chapter 3.5
(commencing with Section 20640).

SEC. 5.  

Section 20627 of the Revenue and Taxation Code, as
amended by Section 15 of Chapter 391 of the Statutes of 2015, is
amended to read:

20627.  

begin insert (a) end insert begin insert   end insert A tenant-stockholder claimant (hereinafter referred
to as “claimant”) is an individual who, on the last day of the
calendar year ending immediately prior to the commencement of
the fiscal year for which postponement is claimed is: (a) a
tenant-stockholder in a cooperative housing corporation (as defined
in Section 216(b) of the Internal Revenue Code) and (b) occupies
as a principal place of residence a residential unit in the cooperative
housing corporation (notwithstanding Section 216(b) of the Internal
Revenue Code). For the purposes of this chapter, a claimant must
be (1) 62 years of age or older on or before December 31 of the
fiscal year for which postponement is claimed or (2) blind or
disabled, as defined in Section 12050 of the Welfare and
Institutions Code, at the time of application or on December 10 of
the fiscal year for which the postponement is claimed, whichever
is earlier.

begin insert

(b) For purposes of this chapter, “tenant-stockholder claimant”
and “claimant” shall include a special needs trust claimant.
“Special needs trust claimant” means a special needs trust of
which the primary beneficiary is an individual who would qualify
as a “tenant-stockholder claimant” or “claimant” pursuant to
subdivision (a).

end insert

SEC. 6.  

Section 20639.11 of the Revenue and Taxation Code
is amended to read:

20639.11.  

All amounts postponed pursuant to this chapter shall
be due if any of the following occurs:

(a) The begin delete claimant end delete begin insert claimant, or, in the case of a special needs
trust claimant, the beneficiary, end insert ceases to occupy the residential
dwelling as the principal place of residence, sells, or otherwise
disposes of his or her mobilehome.

(b) The begin delete claimant end delete begin insert claimant, end insert begin insert or, in the case of a special needs
trust claimant, the beneficiary, end insert dies. However, if the surviving
spouse was previously approved pursuant to this chapter continues
to occupy the mobilehome, then the postponed amounts shall not
be due unless that person dies or ceases to occupy the residential
dwelling.

(c) The begin delete failure of a end delete claimant begin insert fails end insert to perform those acts required
by the legal owner or junior lienholder.

(d) The claimant allows any subsequent taxes to remain unpaid
or to be transferred to the unsecured roll.

(e) Postponement was erroneously allowed because eligibility
requirements were not met.

SEC. 7.  

Section 20640.2 of the Revenue and Taxation Code,
as amended by Section 28 of Chapter 391 of the Statutes of 2015,
is amended to read:

20640.2.  

For the purposes of this begin delete chapter: end delete begin insert chapter, the following
definitions shall apply: end insert

(a) “Possessory interest” means (1) possession of, or right to
the possession of land located in this state whether or not coupled
with ownership of the residential dwelling on the same, or (2) a
possessory interest or right of occupancy on tax exempt begin delete land; end delete begin insert land. end insert

(b) “Residential dwelling” means a dwelling occupied as the
principal place of residence of the claimant, begin insert or, in the case of a
special needs trust claimant, the beneficiary, end insert and so much of the
land surrounding it as is reasonably necessary for use of the
dwelling as a home, located on possessory interest property. It
shall include condominiums upon which property taxes, as defined
in subdivision (c), are assessed. It also includes part of a
multidwelling or multipurpose building and a part of the land upon
which it is built.

(c) “Property taxes” means the amount of property tax for which
the claimant is personally liable as assessee or is obligated to pay
directly to the tax collector pursuant to the terms of the agreement
establishing the possessory interest, including all ad valorem
property taxes, special assessments, capitalization of leasehold
interest, and other charges or user fees which are attributable to
the residential dwelling on the county tax bill and the ad valorem
property taxes, special assessments, capitalization of leasehold
interest, or other charges or user fees appearing on the tax bill of
any chartered city which levies and collects its own property taxes.

SEC. 8.  

Section 20640.3 of the Revenue and Taxation Code,
as amended by Section 29 of Chapter 391 of the Statutes of 2015,
is amended to read:

20640.3.  

begin insert (a) end insert begin insert   end insert A claimant is an individual who:

begin delete

(a)

end delete

begin insert (1) end insert  Holds a right to a possessory interest pursuant to a validly
recorded instrument conveying such possessory interest for a term
of years no less than 45 years beyond the last day of the calendar
year ending immediately prior to the fiscal year for which taxes
are initially postponed;

begin delete

(b)

end delete

begin insert (2) end insert  Occupies as a principal place of residence the residential
dwelling affixed to such possessory interest real property on the
last day of the year designated in begin insert subdivision (c) of end insert Section
begin delete 20503(c) end delete begin insert 20503 end insert of this code;

begin delete

(c)

end delete

begin insert (3) end insert   begin delete (1) end delete begin delete   end delete Is begin insert (1) end insert 62 years of age or older on or before December
31 of the fiscal year for which postponement is claimed or (2)
blind or disabled, as defined in Section 12050 of the Welfare and
Institutions Code, at the time of application or on December 10 of
the fiscal year for which the postponement is claimed, whichever
is earlier.

begin insert

(b) For purposes of this chapter, “claimant” shall include a
special needs trust claimant. “Special needs trust claimant” means
a special needs trust of which the beneficiary is an individual who
would qualify as a “claimant” pursuant to subdivision (a).

end insert

SEC. 9.  

Section 20640.5 of the Revenue and Taxation Code
is amended to read:

20640.5.  

(a) The Controller may require as security for the
postponement of property taxes pursuant to this chapter any of the
following:

begin delete

1.

end delete

begin insert (1) end insert  An assignment to the State of California of the remaining
term of the claimant’s begin insert or, in the case of a special needs trust
claimant, the beneficiary’s, end insert possessory interest.

begin delete

2.

end delete

begin insert (2) end insert  A security interest in any improvement owned or leased by
begin insert the end insert claimant begin insert or, in the case of a special needs trust claimant, the
beneficiary, end insert located on the land which is subject to the possessory
interest.

begin delete

3.

end delete

begin insert (3) end insert  Any other additional security interest, created and perfected
with respect to the rights of third persons in the manner provided
by law for such type of security interest, which the Controller
deems necessary to protect the interest of the state with regard to
the repayment of postponed amounts by the claimant or a deceased
claimant’s estate.

(b) On the form supplied by the Controller, the claimant shall
obtain the written consent of any coholder of the possessory interest
and of the grantor of the possessory interest to the assignment by
claimant of the remaining term of claimant’s begin insert or, in the case of a
special needs trust claimant, the beneficiary’s end insert possessory interest.
The consent shall be in begin delete such end delete begin insert the end insert form and contain begin delete such end delete begin insert those end insert
provisions as begin insert prescribed by end insert the begin delete Controller shall prescribe, end delete
begin insert Controller, end insert and shall provide for written notice by the grantor of
the possessory interest to the Controller of the occurrence of a
default by the claimant under the terms of the instrument creating
the possessory interest, a coholder or a prior recorded possessory
interest holder which would result in the termination or diminution
of claimant’s begin insert or the beneficiary’s, as applicable, end insert interest.

The term “grantor of the possessory interest,” as used in this
section shall be deemed to include the fee owner of the real
property subject to the possessory interest and the holders of all
prior recorded unterminated possessory interests.

SEC. 10.  

Section 20640.11 of the Revenue and Taxation Code
is amended to read:

20640.11.  

All amounts postponed pursuant to this chapter shall
be due if any of the following occurs:

(a) The begin delete claimant end delete begin insert claimant, or, in the case of a special needs
trust claimant, the beneficiary, end insert ceases to occupy the residential
dwelling as the principal place of residence, sells or otherwise
disposes of his possessory interest, or the possessory interest
agreement expires by its terms.

(b) The begin delete claimant end delete begin insert claimant, or, in the case of a special needs
trust claimant, the beneficiary, end insert dies. However, if the surviving
spouse or another person eligible to postpone pursuant to this
chapter continues to occupy the residential dwelling, then the
postponed amounts shall not be due unless such person dies, or
ceases to occupy the residential dwelling.

(c) The failure of the claimant, the fee title owner, or any owner
of a prior recorded possessory interest to perform those acts
required by a security interest holder which is senior to the state’s
security interest for postponed amounts.

(d) Postponement was erroneously allowed because eligibility
requirements were not met.

SEC. 11.  

No reimbursement is required by this act pursuant to
Section 6 of Article XIII B of the California Constitution because
the only costs that may be incurred by a local agency or school
district will be incurred because this act creates a new crime or
infraction, eliminates a crime or infraction, or changes the penalty
for a crime or infraction, within the meaning of Section 17556 of
the Government Code, or changes the definition of a crime within
the meaning of Section 6 of Article XIII B of the California
Constitution.