BILL ANALYSIS
SENATE REVENUE & TAXATION COMMITTEE
Senator Lois Wolk, Chair
AB 143 - Jeffries
Amended: June 3, 2009
Urgency
Hearing: June 10, 2009 > Fiscal: Yes
SUMMARY: Allows Property Owners to Direct Tax Collectors to
Refund Non-Owner Property Tax Payments
EXISTING LAW requires taxpayers to make property tax
payments for the secured roll by December 10th and April
10th of each year, after which interest and penalties
apply. When counties receive a property tax payment
indicated for a property where tax has already been paid,
they keep the first payment, and must return the replicated
tax payment within 60 days or interest applies.
EXISTING LAW (Code of Civil Procedure) allows a right
of adverse possession, where a person can claim title to a
piece of land without written title, a practice of Anglo
Saxon common law meant to punish vacant landlords for
failing to put land to economic use. Individuals may
establish adverse possession when occupying land openly and
without objection from the owner. To establish adverse
possession, the property must be protected by substantial
enclosure, and usually cultivated and improved. Current
law states that a person can only establish adverse
possession if he or she occupied the land for five years,
and paid all the state, county, and municipal taxes.
THIS BILL allows an owner of record to instruct the
tax collector in writing to refund a replicate payment to
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the tendering party who is not an owner of record if the
tendering party is known at the time of the request. The
written request must be accompanied by a copy of a
certified deed, judgment, or other instrument that legally
verified ownership of the property.
THIS BILL provides that the tax collector shall not be
required to determine the property's ownership.
THIS BILL also makes legislative findings and
declarations stating that the intent of this measure is to
address issues of adverse possession, and that the bill
seeks to establish a clear and simplified system for the
return of replicated payments by authorizing tax collectors
to return payments to non-owning tendering parties.
FISCAL EFFECT:
Committee Staff estimate no fiscal effect.
COMMENTS:
A. Purpose of the Bill
According to the Author, "AB 143 will remedy a
little-known yet serious problem. Adverse possession is
the process by which a third party attempts to claim the
property of the rightful owner through open and hostile
means. In California, adverse possession requires, among
other things, hostile and notorious possession of another's
land along with paying property taxes on that parcel for
five years.
In cases where a county tax collector receives two
property tax payments- one from the rightful owner and one
from the adverse possessor- there is often confusion as to
how to proceed. Currently, county tax collectors are not
authorized by statute to return a duplicate property tax
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payment made by a hostile third party. In cases where
multiple property tax payments are received, county tax
collectors are often only allowed to retain both payments,
which then gives legitimacy to an adverse possessor's
payment and claim. Often the only way the rightful
property owner can rectify this situation is through costly
litigation and lawsuits against the adverse possessor,
which, of course, can take many years.
AB 1959 will rectify and clarify this grey-area in the
law by authorizing county tax collectors to return a
hostile property tax payment to the non-rightful payer,
thereby solving this issue without having to constantly
resort to lengthy and costly litigation."
B. Squatter's Rights in the Modern Age
The right of adverse possession historically attempts
to require owners to use and improve land; however, in
today's world, speculators attempt to establish rights of
adverse possession by paying property taxes before the
owners get the chance, according to county tax collectors
who state that they have received such payments in Lake and
Riverside Counties. State law inadvertently helps
individuals trying to acquire adverse possession rights by
requiring tax collectors to refund whichever tax payment
arrives last regardless of who pays, often without the
property owner even knowing until the tax collector refunds
his or her property tax payment. Property owners must then
file suit against the party seeking to establish adverse
possession. The measure allows property owners to request
that tax collectors honor their payment, and not the
payment that serves to establish the right of adverse
possession, thereby addressing the problem before a lawsuit
occurs.
C. Not Just Adverse Possession
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AB 143 seeks to address the problem of adverse
possession against the will of the property owner; however,
the bill's changes to the law would also allow tax
collectors to refund payments by third parties in other
cases, such as when a mortgage servicer pays property taxes
on behalf of a taxpayer that subsequently receives benefits
under the Property Tax Postponement for Senior Citizens,
Blind, and Disabled, where property tax payments are
delayed, but taxpayers may still make payments. In that
case, the tax collector could refund the mortgage
servicer's payment, and accept the taxpayer's reduced
payment under the postponement program.
D. Same Song, Second Verse
AB 143 is functionally identical to AB 1959 (Jeffries,
2008), which the Committee unanimously approved last year.
After being approved by the Senate, the Assembly did not
take up the measure for concurrence in Senate Amendments
before the end of the legislative session.
Support and Opposition
Support:California Association of County Treasurer-Tax
Collectors
Oppose:None Received
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Consultant: Colin Grinnell
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