BILL ANALYSIS �
AB 261
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Date of Hearing: May 27, 2011
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Felipe Fuentes, Chair
AB 261 (Dickinson) - As Amended: May 11, 2011
Policy Committee: Revenue and
Taxation Vote: 8-0
Urgency: No State Mandated Local Program:
Yes Reimbursable: Yes
SUMMARY
This bill clarifies that prescriptive easements run with the
tax-defaulted property sold in a tax sale and provides that a
proceeding based on alleged invalidity or irregularity of a sale
of tax-defaulted property may only be commenced by a recorded
interest holder or his/her successors, as specified.
Specifically, this bill:
1)Specifies that, in the case of a tax-defaulted property sale,
the title conveyed to the purchaser is not free from
prescriptive easements or easements of any kind, among other
liens and encumbrances.
2)Provides that a proceeding based on alleged invalidity or
irregularity of a tax lien sale may be commenced only by
recorded interest holders and their successors in interest in
the real property sold at the challenged tax sale.
FISCAL EFFECT
Negligible GF impact and potential savings to counties as a
result of.
COMMENTS
1)Author's Statement . The author contends, AB 261 is a modest
measure to clarify the complex area of tax lien sales of real
property, ultimately protecting taxpayers.
2)Argument in Support . The California Association of County
Treasurers and Tax Collectors, the bill's sponsor, argues that
AB 261
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AB 261 is a simple, common sense measure that provides
protections for counties conducting tax lien sales by ensuring
that third parties cannot initiate or intervene in litigation
to invalidate tax sales without cause.
3)Background. Recently, the County of Sacramento was sued by a
person who did not have a recorded interest in the property
sold at a tax sale. One of the issues in that case was
whether the alleged easement holder had the right to challenge
a tax sale of a property in which the easement holder had no
recorded interest, for example, a prescriptive easement.
According to the author, the court struggled with the issue
but reasoned that, since existing law is silent on the issue,
anyone, including the alleged easement holder, has standing to
sue the county and challenge a tax lien sale. Counties are
concerned the court's decisions to allow unrelated third
parties to bring legal actions to undo transactions, will be
at great expense to the counties.
4)Prescriptive Easements . An easement is merely a right to use
the land of another, a restricted right to specific, limited,
definable use or activity upon another's property. Easements
are usually obtained through a written agreement, but a
prescriptive easement is acquired through continuous use of
another person's property, without the owner's permission, for
a period of five years under California law. Thus, a
prescriptive easement is an easement that has not been
recorded.
5)Proposed Solution . Effectively, this bill would overturn the
court's decision in the recent County of Sacramento case and
will therefore limit the plaintiff's standing to challenge the
tax lien sale and would limit the ability of unrelated third
parties to sue counties and challenge a tax lien sale.
Specifically, AB 261 provides that only recorded interest
holders and their successors in interest in the real property
sold at the challenged tax sale may institute a legal
proceeding and, thus, denies standing to challenge a tax lien
sale based on irregularities to holders of unrecorded
interests in the property, including prescriptive easements.
People with unrecorded prescriptive easements would still be
able to enforce their interests against the buyer, as long as
they could establish the existence of the easements.
Arguably, they would not be interested in blocking the tax
sale as long as other avenues of asserting their rights exist.
AB 261
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6)There is no recorded opposition to this bill .
Analysis Prepared by : Roger Dunstan / APPR. / (916) 319-2081