BILL ANALYSIS
AB 143
Page 1
CONCURRENCE IN SENATE AMENDMENTS
AB 143 (Jeffries)
As Amended June 24, 2009
2/3 vote. Urgency
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|ASSEMBLY: |70-0 |(April 16, |SENATE: |34-0 |(July 9, 2009) |
| | |2009) | | | |
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Original Committee Reference: REV. & TAX.
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.
The Senate amendments delete the language requiring
reimbursement for costs incurred by a local agency or school
district and, instead, declare that the state is not required to
reimburse local agencies because the only costs that may be
incurred by a local agency or school district are the result of
a program for which legislative authority was requested by that
local agency or school district, within the meaning of
Government Code Section 17556 and Section 6 of Article XIII B of
the California Constitution.
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
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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.
AS PASSED BY THE ASSEMBLY , this bill:
1)Declared 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 did not own,
and to establish a clear and simplified system for the return
of replicated tax payments.
2)Allowed an owner of record to instruct a tax collector to
refund a replicated payment on a current assessment to the
tendering party that was not an owner of record, if that
tendering party was known at the time the request was made by
the owner.
3)Required 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)Did not require the tax collector to determine the ownership
of the property before refunding a replicated property tax
payment.
5)Did not apply to delinquent property tax payments.
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6)Imposed a state-mandated local program by changing the manner
in which tax collectors return replicated property tax
payments. Declared that the state shall reimburse local
agencies and school districts for the costs incurred if the
Commission on State Mandates determines that this bill
contains costs mandated by the state.
7)Included an urgency clause.
FISCAL EFFECT : According to the Senate Appropriations
Committee, pursuant to Senate Rule 28.8, negligible state costs.
COMMENTS : 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."
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.
Usually, owners of record are unaware of those third-party
payments until their own property tax payments are returned by
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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 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.
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.
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.
Analysis Prepared by : Oksana Jaffe / REV. & TAX. / (916)
319-2098
FN: 0001787