BILL ANALYSIS
AB 143
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Date of Hearing: March 23, 2009
ASSEMBLY COMMITTEE ON REVENUE AND TAXATION
Charles M. Calderon, Chair
AB 143 (Jeffries) - As Introduced: January 22, 2009
2/3 vote. Urgency. Fiscal committee.
SUBJECT : Property tax: adverse possession: replicated tax
payments.
SUMMARY : Creates 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. Specifically, this bill :
1)Declares the intent of the Legislature, in enacting this bill,
to address issues of adverse possession, including the
problems and difficulties arising when an adverse party
attempts to pay taxes for property that he/she does not own,
and to establish a clear and simplified system for the return
of replicated tax payments.
2)Allows an owner of record to instruct a tax collector to
refund a replicated payment on a current assessment to the
tendering party that is not an owner of record, if that
tendering party is known at the time the request is made by
the owner.
3)Requires the owner of record to submit a written request and a
certified copy of a deed, judgment, or other instrument that
legally verifies ownership of the property.
4)Does not require the tax collector to determine the ownership
of the property before refunding a replicated property tax
payment.
5)Does not apply to delinquent property tax payments.
6)Imposes a state-mandated local program by changing the manner
in which tax collectors return replicated property tax
payments. Declares that no reimbursement for the costs that
may be incurred by a local agency or school district is
required.
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7)Takes effect immediately as an urgency.
EXISTING LAW :
1)Requires the payment of property tax annually to the treasurer
or tax collector of the county within which the property is
located. Payments for the secured roll must be made in two
installments - by December 10th and April 10th of each year,
after which interest and penalties apply.
2)Provides that the retention by counties of replicated property
tax payments and the failure to return any replicated payment
to the tendering party for a period of time greater than two
months create a hardship for taxpayers and businesses engaged
in processing real estate transfer.
3)Defines "replicated payment" as a payment, submitted by or on
behalf of a taxpayer, which is indicated for application to a
specific tax or tax installment which has already been paid,
whether or not the prior payment and the replicated payment
are in the same amount.
4)Requires the collection agency to return a replicated property
tax payment within 60 days of receipt, if a taxpayer or agent
for the taxpayer submits a payment indicated for application
to a specific tax or tax installment and that tax or tax
installment already has been paid.
5)Provides that, if a replicated tax payment is not returned to
the tendering party within 60 days as provided, interest
accrues for the period beginning 60 days after receipt until
the replicated payment is returned to the
tendering party.
6)Allows a right of adverse possession, where a person can claim
title to a piece of land without written title by occupying
the land openly for five years, improving the property, and
paying all the state, county, and municipal taxes.
FISCAL EFFECT : Negligible effect on local property tax
revenues.
PROPOSITION 98 FISCAL EFFECT : Unknown
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COMMENTS :
1)The author states that, "AB 143 will rectify an important but
little known problem in current law. AB 143 will allow tax
collectors to return replicated property tax payments to
non-owners of record. This bill will clarify the tax
collection process and allow rightful owners to have more
confidence and clarity that their property tax payments will
be quickly processed and their claim to the property will
remain intact. AB 143 will allow tax collectors to correctly
collect and process property tax payments, rather than holding
duplicate payments on the same parcel of property, thus,
adding to the confusion. AB 143 will also lead to a decrease
in litigation as the only recourse that rightful property
owners have when a replicated tax payment is made on parcels
of land is to file a lawsuit to have the payment returned to
the non-owner."
2)This bill is sponsored by the California Association of County
Treasurers and Tax Collectors. The sponsor indicates that,
recently, the tax collectors in Riverside and Lake Counties
have been receiving property tax payments due on rural parcels
of land from third parties who are not the owners of record
but are attempting to establish adverse possession of those
parcels of land. For example, during the five-year period,
from 2002 until 2007, Riverside County received more than 50
replicated property payments made by third parties attempting
to establish adverse possession. As noted before, adverse
possession is a process by which one party seeks to claim
another party's real property by way of open and hostile
means. Generally, the actions of the party attempting to
establish adverse possession must be open and the possessor
must use or improve the property and pay property taxes within
a specified time period.
3)Usually, owners of record are unaware of those third-party
payments until their own property tax payments are returned by
the county tax collector as replicated payments. Under
existing law, a county tax collector is required to return a
replicated tax payment within 60 days to the tendering party.
Thus, when a county receives a property tax payment indicated
for a property where tax has already been paid, the county
keeps the first payment and returns the replicated payment.
If a third party that is trying to establish adverse
possession of the property has already paid the property tax
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on that property, the tax collector has no choice but to
return the property tax payment made by the property owner as
a replicated payment (i.e. a payment for a specific tax or a
tax installment which has already been paid). In cases of
known adverse possession controversy, tax collectors have been
instructed by the State Controller's Office to keep both
payments so that the payers have equal standing on the tax
issue. Apparently, neither option is acceptable to property
owners who are faced with the third-party attempts to
establish adverse possession of the property. The sponsor
also notes that both of those approaches create an unnecessary
and ongoing accounting obligation and, potentially, a legal
liability for the tax collectors.
4)The purpose of this bill is to establish a mechanism for tax
collectors, in the cases of adverse possession, to return a
replicated property tax payment to the non-property owner, by
authorizing the tax collector to refund the replicated
payment to the tendering party, as designated by the owner of
record, and to allow rightful property owners the chance to
retain property rights without resorting to other legal
remedies.
5)This bill is identical to AB 1959 (Jeffries) introduced in the
2007-08 Legislative Session. AB 1959 passed out of the
Assembly, was amended in the Senate, and when it was returned
for concurrence in the Assembly, it died in the Assembly Local
Government Committee.
REGISTERED SUPPORT / OPPOSITION :
Support
California Association of County Treasurers and Tax Collectors
(sponsor)
Opposition
None on file
Analysis Prepared by : Oksana Jaffe / REV. & TAX. / (916)
319-2098