Nice Explanation from the BAP of the Mechanics of Property Tax Sales in California

Judge Jury lays out the process very nicely in County of Imperial Treasurer Tax Collector v. Stadtmueller (In re RW Meridian LLC), — B.R. — (9th Cir. BAP February 2017)

California’s statutory scheme for tax sales Taxes on real property are secured by and serve as a lien on the real property for which they are assessed. Secured property taxes that remain unpaid at the close of the fiscal year (June 30) are deemed to be in default. Tax Code § 3436.  Properties which have been tax defaulted for a minimum of five years are subject to the county tax collector’s power to sell them to satisfy the outstanding defaulted taxes. Tax Code § 3691. [per FN 5, For nonresidential commercial property, the period is three years. Tax Code § 3691]  Sale is to the highest bidder at a public auction.  Public auction includes the internet. Tax Code § 3693.  Various notices and publication are required prior to the tax sale. Tax Code §§ 3351, 3361, 3371, 3701, 3704.7.For tax sales, the “‘Date of the sale’ means the date upon which a public auction begins.” Tax Code § 3692.1(b).  This definition has relevance to the expiration of a debtor’s right to redeem. Tax Code § 4101 states: “Tax defaulted property may be redeemed until the right of redemption is terminated.”  To redeem the property the total amount of all prior year defaulted taxes must be paid, together with the penalties, costs, and fees. Tax Code § 4102.  The termination of the redemption period, the circumstances under which the right to redeem revives, and when the sale is complete are governed by Tax Code § 3707 which provides in relevant part:

(a)(1) The right of redemption terminates at the close of business on the last business day prior to the date of the sale. (Emphasis added)
(2) If the tax collector approves a sale as a credit transaction and does not receive full payment on or before the date upon which the tax collector requires pursuant to Section 3693.1, the right of redemption is revived on the next business day following that date. . . .
(c) The sale shall be deemed complete when full payment has been received by the tax collector.
(d) The right of redemption revives if the property is not sold.

When the sale is “deemed” complete (i.e., the full purchase price has been paid) a debtor’s right to redeem the tax defaulted property will not revive under Tax Code § 3707(a)(2) and (d).  When the sale is complete, the tax collector executes a deed to the purchaser. Tax Code § 3708.  The tax deed “conveys title to the purchaser free of all encumbrances of any kind existing before the sale” with certain exceptions set forth in the statute. Tax Code § 3712.”

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