BILL ANALYSIS
SB 663
Page 1
Date of Hearing: August 20, 2003
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Darrell Steinberg, Chair
SB 663 (Speier) - As Amended: June 18, 2003
Policy Committee: Revenue and
Taxation Vote: 6-0
Urgency: No State Mandated Local Program:
Yes Reimbursable: Yes
SUMMARY
This bill revises the notification requirements preceding a
tax-defaulted sale of real property subject to a homeowner's
exemption. Specifically, this bill:
1)Requires the tax collector to make an additional attempt to
contact the owner-occupant in person or by telephone not more
than 120 days nor less than 10 days prior to the date of sale
if the first attempt to contact the owner-occupant in person
was unsuccessful.
2)Requires the tax collector to remove the property from the
sale if a personal contact with the owner-occupant did not
result from the additional attempt.
3)Prohibits the property from being offered for sale until at
least one of the following occurs:
a) The tax collector successfully makes contact with the
owner-occupant;
b) The assessor removes the homeowner's exemption based
upon information from the tax collector; or
c) Four years elapse from the time the property was removed
from sale under this section provided that the tax
collector makes at least two additional attempts to
personally contact the owner-occupant but was unsuccessful.
4)Increases the redemption price of the property for the actual
SB 663
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and reasonable costs incurred by the tax collector to comply
with the contact requirements of this section, not to exceed
$200.
FISCAL EFFECT
Unknown property tax sale cash flow delays, potentially several
hundred thousand dollars annually, from the 4-year prohibition
on tax sales if the tax collector is not successful in making
contact with an assessee. The state General Fund indirectly
benefits from 53% of property tax collections, on average,
through the Proposition 98 funding guarantee.
COMMENTS
1)Background . Current law provides that a county tax collector
may declare unpaid property taxes to be tax defaulted, publish
the information on the defaulted roll, and transmit the
information to the State Controller. If the owner does not
redeem the property by full payment of the defaulted taxes,
interest, and penalties within five years, the property may be
noticed for public sale.
Prior to sale, the tax collector must notify the Controller
that a parcel is subject to the power of sale and must notice
the intended sale with specific information including the time
and location of sale, a description of the minimum acceptable
bid for the property, and the name of the last assessee. If
the tax-defaulted property is the primary residence of the
last known assessee, the tax collector must make a reasonable
effort to contact the owner in person to inform him or her
that the property will be offered for sale at a public auction
if not redeemed and must provide a statement of the owner's
redemption rights. If the property is not redeemed, by the
owner before the close of the business day immediately
preceding the noticed date for sale of the property, the tax
collector shall sell the property at public auction to the
highest bidder.
2)Purpose . This bill responds to a specific situation that
occurred in Los Angeles County in which an elderly man who
owned his home outright and was current in payment of property
taxes lost his home at a foreclosure sale for delinquent
property taxes of $546. After the delinquency had not been
paid for five years, the tax collector noticed the property
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for sale and attempted personal service of the notice of sale.
Because the home was located in a gated community, the tax
collector's agent could not accomplish personal service of the
notice of sale. Instead, the tax collector's agent posted the
notice of sale in a public place, at the community gate.
Unfortunately, the homeowner did not receive notice of the
sale and the property was sold.
3)Is a Nine-Year Foreclosure Period Excessive ? Although
existing law requires an attempt at personal contact, the
failure to make a personal contact does not require any
additional attempts to personally contact the homeowner. This
bill requires additional efforts to be made by the tax
collector, and prohibits the tax sale of the property for a
period of four years if no personal contact attempt is
successful. The tax collector would need to make at least two
additional attempts to personally contact the owner-occupant
during the four-year period.
The committee may wish to consider whether this additional
four-year period, on top of the existing 5-year tax sale
period, amounts to an excessive burden for counties seeking to
collect tax delinquencies. In particular, it may open up the
possibility of delinquent homeowners "gaming" the system, and
getting up to nine years to remedy a tax delinquency, simply
by screening their phone calls and avoiding the tax man.
Analysis Prepared by : Stephen Shea / APPR. / (916) 319-2081