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7/19/2001
LEGAL AID FOUNDATION OF LOS ANGELES
BEHIND IN YOUR PROPERTY TAXES?
Produced with the support and cooperation of the UCLA Advanced Policy Institute
7/19/2001
LEGAL AID FOUNDATION OF LOS ANGELES
BEHIND IN YOUR PROPERTY TAXES? What happens if you don’t pay the taxes? ……………………………… 1 How can you catch up on the delinquent taxes? ……………………….. 2 Plan 1 – Partial Payments ……………………………………….. 2 Plan 2 – Installment Plan of Redemption (The 5-Year Pay Plan) . …………………………………. 3 Full Payment ……………………………………………………… 5 What happens if the tax collector sells your property? ……………….. 6 How can you get your property back after it is sold? …………………. 7 a. Do you qualify for tax assistance from the State? …………..……. 8 b. Property Tax Postponement Program …………..………………… 8 Homeowner Assistance Program ………………………………………… 10 Can the bank foreclose because of delinquent taxes? ………………….. 12 How to Obtain A Reassessment of Your Property Due to a Decline in its Value? (Proposition 8) …………………………………… 13 How to Obtain A Reassessment Exclusion for Real Property Transfers Between a Parent and Child? (Proposition 58) ………………………. 14 Reassessment Exclusion for Real Property Transfers From Grandparents and Grandchildren (Proposition 193)…………………… 17 Important Phone Numbers ……………………………………………… 20
7/19/2001
LEGAL AID FOUNDATION OF LOS ANGELES
BEHIND IN YOUR PROPERTY TAXES? What happens if you don’t pay the taxes?
If you do not pay the first installment of your annual tax bill at the Tax
Collector’s office by 5:00 p.m. on December 10, or your payment is not postmarked
by that time and date, then that installment becomes delinquent and a 10%
delinquent penalty is incurred.
If you fail to pay the second installment at the Tax Collector’s office by 5:00
p.m. on April 10, or your payment is not postmarked by that time and date, it
becomes delinquent, and a 10% penalty on the unpaid taxes as well as an
administrative charge of $10 are added.
Likewise, if you fail to pay any supplemental tax bill installment by the
applicable delinquency date, the same penalties and charges accrue as for
delinquent annual taxes.
If there are any ANY unpaid taxes as of 5:00 p.m. on June 30, then the property
becomes tax defaulted. Once the property has become tax defaulted, a redemption fee of
$15.00 and additional penalties begin to accrue at the rate of 1 ½% per month of the unpaid
taxes. This monthly penalty is added at 5:00 p.m. on the last day of each month (or the
following business day if the last day of the month falls on a weekend or a holiday).
Your taxes can remain unpaid for a maximum of five (5) years following their tax
default, at which time your property becomes subject to the power of sale. This means
7/19/2001
that your property will be sold at a public auction or acquired by a public agency if you
do not pay the taxes before the date on which the property is offered for sale or
acquisition.
How can you catch up on the delinquent taxes?
If you are unable to pay the full redemption amount of your unpaid taxes, and your taxes
are in default you have the choice of making partial payments or you may choose to open an
installment plan of redemption.
To obtain an estimate of the amount required to redeem your property, you should
contact the Los Angeles County Tax Collector at (888) 807-2111. (This is a toll free
number), and make a request for an estimate of your taxes. This line operates 24 hours a
day, 7 days a week.
When you make your call you will need to provide the following:
a. Assessor’s Identification Number (consisting of the map book, page and
parcel number), which you can find on a previous tax bill, OR
b. The address, OR
c. The legal description of the property.
7/19/2001
Plan 1
Partial Payments
If you are unable to pay your delinquent taxes in full, the Tax Collector’s
Office accepts partial payments. Partial payments are applied according to the
following priority:
(a) Redemption fee,
(b) Costs;
(c) Secured penalties,
(e) Redemption penalties, and
(f) Tax amounts starting with the oldest year of default.
The 1/12% redemption penalty is calculated on the total unpaid tax balance.
If a “Subject to Power To Sell” legend appears on your statement, which indicates
that the taxes are more than five years in arrears, additional costs will also be
included and itemized.
Partial payments will not affect the “Subject to Power To Sell” tax status. If
the property is not fully redeemed, it will be eligible for sale at a public auction.
Plan 2
Installment Plan of Redemption (The 5-Year Pay Plan)
This Plan allows you to make payments on your delinquent taxes in five (5)
installments over a five–year period beginning the date you open the installment
account.
7/19/2001
IT IS RECOMMENDED THAT YOU CONTACT YOUR LENDER/MORTGAGE
COMPANY BEFORE YOU APPLY FOR THE INSTALLMENT PLAN OF
REDEMPTION TO MAKE SURE THAT THEY ALLOW THE 5-YEAR PAYMENT
PLAN TO PAY TAX DEFAULTED TAXES
To open an installment plan you must:
1. Pay a $20 application fee payable at the time the plan is opened.
2. Make an initial payment of at least 20% of the redemption amount
including penalty and interest charges of 1.5% per month).
3. Pay your current year’s taxes. All current year taxes must be paid on
or before April 10th. If during the course of an installment plan the
current taxes are not paid by April 10th, the plan is in default.
Once a year, you will receive an Installment Plan of Redemption statement
indicating the minimum amount required for that installment payment. Payoff
payments are accepted anytime before the 5th and final payment is due.
If the first account defaults because of your failure to make at least one
installment payment between July 1 and April 10, or because of your failure to pay
your current year’s taxes in full by April 10, you may open another account.
However, the second account may not be opened until July1 of the following fiscal
year.
If you default a second time, you may open a third installment account.
Previous payments will be treated as partial payments and will not be credited to
the new plan. Penalties will be computed on the unpaid balance each time a plan is
opened and a $20 application fee will be charged with each plan opening.
7/19/2001
If you default a third time, no further installment accounts will be permitted,
and your property will become subject to the power of sale the following June 30.
You may NEVER reopen a new Installment Plan of Redemption account in the
same calendar year that the property becomes subject to the power of sale. This occurs
when the property has been delinquent for more than five years.
In that case, your property will be sold at a public auction or acquired by a
public agency if you do not pay the full redemption amount before the date on
which the property is offered for sale or acquisition.
Example: If you have delinquent taxes from the 1994-95 tax year, as
of July 1, 2000, you CANNOT participate in the installment plan.
You must pay the full amount of outstanding taxes to keep the
property from being sold at the Public Auction.
Each time you open an account, you have five years to pay the full redemption
amount. However, it is your advantage not to default on any installment account, since there
is an additional penalty of 1 ½% on the unpaid balance.
Contact or write the Treasurer and Tax Collector’s Office to request an
application for the Installment Plan of Redemption:
Contact: Treasurer and Tax Collector 225 North Hill Street First Floor Los Angeles, CA 90012 (888) 807-2111 (Toll Free)
This line operates 24 hours a day, 7 days a week. (213) 974-2196 (Hearing Impaired Teleprinter)
Correspondence: Treasurer and Tax Collector P.O. Box 512102
7/19/2001
Los Angeles, CA 90051-2102
Full Payment
If you do not wish to make partial payments or enroll in the Installment
Plan, you may pay the full redemption amount (all unpaid taxes for all delinquent
years plus penalties and charges).
The amount needed to redeem tax-defaulted property in full is the sum of the
following:
1. The total amount of unpaid taxes for all delinquent years.
2. A 10% penalty on every unpaid installment.
3. A $10 administrative charge for each delinquent year.
4. Monthly penalties of 1 1/2% of the unpaid taxes accrued to
date.
5. A redemption fee of $15.
7/19/2001
What happens if the tax collector sells your property?
Upon the completion of the sale, the Treasurer and Tax Collector files reports
with the County Recorder, County Assessor and the State Controller to address the
transfer of title and distribution of proceeds from the sale.
For one year following the action sale the Treasurer and Tax Collector must
respond to issues concerning challenges to the validity of the sale and excess
proceeds claims.
If there is an excess of the proceeds from the sale, the Treasurer and Tax
Collector will send a claim form to the prior owner and all lien holders on the
property. The deadline to file a claim for the excess proceeds is one year after the
recordation date of the tax deed to the new owner.
7/19/2001
• How can you get your property back after it is sold?
All sales are final once the tax defaulted property has been sold at a public
auction by the L.A. County Treasurer and Tax Collector. The right to redeem Tax
Defaulted Property Subject to Power to Sell ceases at 5:00 p.m. on the last business
day prior to the first day of the auction.
Occasionally, however, a piece of property is sold at an auction after redemption
has been made or the property is sold in error. If that is the case, a refund of the
purchase price will be made to the purchaser and the Treasurer and Tax Collector
will inform the purchaser that title to the property will be maintained by the present
owner of record.
For information contact:
Los Angeles County Treasurer And Tax Collector, (213) 974-2045.
7/19/2001
• Do you qualify for tax assistance from the State? Property Tax Postponement Program
The Senior Citizens and Disabled Property Tax Program, administered by
the Division of Collections, State Controllers Office, allows qualified homeowners to
postpone payment of all or a portion of the property tax due on their residence.
To qualify you and all other recorded owners (**except your spouse and
direct-line relatives) must meet each of the following requirements:
1. Be a California resident;
2. Be 62 years of age or older as of December 31, 2000; OR
3. Blind or disabled at the time of the application. If you are disabled,
your disability must be expected to last for a continuous period of at
least twelve (12) months.
4. Your total household income for the calendar year 1999 must not
exceed $24,000.00. However, if you applied and qualified for a tax
postponement for the 1983-84 tax year, your income must not exceed
$34,000.
5. The owners must have a combined 20% equity interest in the home at
the time of filing. Your application cannot be approved if the liens,
deeds of trust, mortgages, or other encumbrances against the home
amount to more than 80% of its fair market value as determined by
the State Controller.
*Direct –line relatives are defined as (a) parents, children or grandchildren of the claimant and/or the claimant’s spouse
7/19/2001
6. As of December 31, 1999, you and all other recorded owners (except
your spouse and direct-line relatives) must have owned and occupied
your principal place of residence, the property for which property
taxes are to be postponed.
The amount of taxes postponed generally does not need to be repaid to the
State until:
(1) You move from the property;
(2) You sell or convey title to your home;
(3) You die and you do not have a spouse or other qualified
individual who continues to reside in the home; or
(4) Future property taxes or other senior liens are allowed to
become delinquent.
You may make payments on your postponed property tax account in any
amount at any time. All payments received are applied first toward accumulated
interest and then toward the outstanding principal balance (postponed tax amount).
You must apply for a Property Tax Postponement each year that you desire
to have the property taxes postponed. Claim forms and information regarding
Property Tax Postponements may be obtained by calling the State Controllers
Office at (800) 952-5661 or (916) 327-5587.
7/19/2001
Homeowner Assistance Program
Once a year the State of California reimburses a portion of the property
taxes paid on homes to qualified homeowners. If you qualify for the Property Tax
Postponement Program, you may also qualify for the Homeowner Assistance
Program, which is a separate and distinct program administered by the Franchise
Tax Board. You may participate in both programs if you qualify. If your
Homeowners Assistance application is granted and the State Controller’s Office
grants your claim for property tax postponement for the fiscal year, the amount of
the homeowners assistance will be sent to the State Controller’s Office to reduce the
balance due on the postponed tax payment.
Eligibility is determined by the State Controller’s Office. The requirements
are:
1. You must have owned and lived in the home in California on the
December 31st preceding the year of filing -- A home may include a
condominium, “own your own” apartment or mobile home.
2. Your household income must not exceed $33,993.00;
3. Have a gross household income of $60,240 or less in 1998. Gross
household income is the total household income plus all non-cash
business expenses such as depreciation, amortization and depletion;
and
4. You are a United States Citizen, a designated alien, or qualified alien
when you file your claim.
7/19/2001
Homeowners Assistance Program will not place a lien on your home.
However if you postpone your property taxes through the State Controller’s
Property Tax Postponement Program, a lien will be placed on your property.
Note: Only one homeowner from one household is entitled to
assistance each year. When two or more individuals of a household
meet the qualifications for filing a claim as a homeowner, they must
decide which one of them will file the claim.
You may apply for Homeowner Assistance even though you are not required
to file a state income tax return.
To apply for the Homeowners Assistance Program you should contact the
Franchise Tax Board at (800) 852-5711.
7/19/2001
• Can the bank foreclose because of your delinquent taxes?
Yes. The bank has the right to foreclose on your property if your property taxes become
delinquent. The deed of trust on your property requires that all taxes be kept current. Non-
payment of your property taxes will result in your property being placed in default by your
lender.
Under certain circumstances, the bank has the right to foreclose on your property if your
property taxes become delinquent and you have not made arrangements with the Tax
Collector’s Office to cure the delinquency.
The deed of trust on your property that the bank holds requires that all property taxes be
kept current. Non-payment of your property taxes can result in the bank paying the property
taxes and placing your property in default. If you do not make arrangements with your bank
to reimburse them for the advancement, they can start foreclosure proceedings against your
property that can lead to your property being sold.
7/19/2001
• How To Obtain A Reassessment Of Your Property Due To a Decline in its Value?
(Proposition 8)
Any property located in the County of Los Angeles that can be proven to be worth
less on the open market on January 1 of the current year, than its current assessment, will
qualify for a Proposition 8 “decline in value” reduction. Property owners must apply for the
reduction and provide proof of the decline in value, such as sales of comparable properties
in their neighborhood or deferred maintenance. If the Assessor agrees that the property has
declined in value, the assessed value will be reduced to the current market value as
determined by the Assessor.
The Assessor reviews properties with a Proposition 8 assessment each year on
January 1, to verify whether the conditions that resulted in the decline in value still exist.
Based upon the market condition the value may change annually, but will not exceed the
original base value.
Applications for a decline in value reassessment must be filed with the Assessor’s
office between January 1 and March 15 of the current year to be effective for your next
annual tax bill.
Applications are available at:
Assessor’s Office
Kenneth Hahn Hall of Administration 500 West Temple Street
Room 225 Los Angeles, CA 90012,
(213) 974-3211.
7/19/2001
• How to Obtain A Reassessment Exclusion For Real Property Transfers Between A Parent and Child (Proposition 58)
Transfers of real property between parents and children are excluded from
reassessment. Proposition 58 provides property tax relief by preventing reassessment of real
property when the property transfers between parents and *children.
If the parent or child who acquires the property files a claim that is approved by the
Assessor, the reassessment will be excluded. If the property has already been reassessed,
the reassessment will be reversed, a corrected tax bill will be issued and, if necessary, a
refund will be sent.
Proposition 58 applies to transfers occurring on or after November 6, 1986. The
claim must be filed within three (3) years of the date of transfer, or date of death, but before
transfer to a third party. The claim will also be considered timely if it is filed within six (6)
months after the Notice of Assessed Value Change.
The exclusion may only be applied to future tax years. It cannot be applied
retroactively back to the date of the transfer.
The following requirements apply:
1. Transfers of real property between parents and children, and between
children and parents are excluded from reassessment.
* (a) Any child born of the parent(s). (b) Any stepchild of the parent(s) and the spouse of that stepchild while the relationship of stepparent and stepchild exists. The relationship exists until the marriage on which the relationship is based is terminated by divorce, by death or until the remarriage of the surviving stepparent. (c) Any son-in-law or daughter-in-law of the parent(s) while the relationship exists. The relationship exists until the marriage on which the relationship is based is terminated by divorce or death or until the remarriage of the surviving son-in-law or daughter-in-law. (d) Any statutorily adopted child who was adopted before the age of 18.
7/19/2001
2. The seller’s or decedent’s principal residence is totally excluded from
reassessment. In addition, $1,000,000 of the seller’s or decedent’s other real
property is also excluded.
3. There is no value limit for excluding the seller’s or decedent’s principal
residence from reassessment. A Homeowners’ Exemption or Disabled
Veterans’ Exemption must have been granted to the seller or decedent. This
residence need not be the principal residence of the person who acquires the
property.
4. Real property other than the principal residence of the seller or decedent with
an assessed value up to $1,000,000 is excluded from reassessment. The
sales price or actual “current market value” does not affect the $1,000,000
limit.
5. The total value of property (or properties) which a parent may transfer to all
children without reassessment is $1,000,000 of assessed value, for property
other than the principal residence.
This limit is cumulative over time. After property (or properties) with
$1,000,000 of assessed value is transferred without reassessment, all future
reassessments (except the transfer of the principal residence if it has not
already been transferred).
The $1,000,000 limit applies only to transfers of properties within the
State of California.
6. The $1,000,000 exclusion is a limit for each parent separately. Community
property of married parents would have a $2,000,000 limit.
7/19/2001
7. Transfers by sale, gift, devise or inheritance qualify for the exclusion.
8. Transfers between parents and children as individuals, between joint tenants,
from trusts to individuals or from individuals to trusts may qualify for the
exclusion.
Transfers of ownership interest in legal entities DO NOT qualify for
exclusion. Transfers through trusts, however, may qualify.
9. The person who acquires the property must file their claim within three years
of the date of transfer, and before transfer to a third party; or within six
months after the date of mailing of a Notice of Assessed Value Change,
issued as a result of the transfer of property for which the claim is filed,
whichever is later.
To file for a reassessment, contact:
Assessor’s Office Kenneth Hahn Hall of Administration
500 West Temple Street Room 225
Los Angeles, CA 90012, (213) 893-1239
7/19/2001
• Reassessment Exclusion For Real Property Transfers From Grandparents and
Grandchildren (Proposition 193)
Transfers of real property from grandparents to grandchildren are excluded from
reassessment. Proposition 193 provides property tax relief by preventing reassessment of
real property when the property transfers from grandparents to ∗grandchildren.
If the grandchild who acquires the property files a claim that is approved by the
Assessor, the reassessment will be excluded. If the property was already reassessed, the
reassessment will be reversed and a corrected tax bill will be issued and, if necessary, a
refund will be sent.
Proposition 193 applies to transfers occurring on or after March 27, 1996. The claim
must be filed within three (3) years of the date of transfer, or date of death, but before
transfer to a third party. The claim will also be considered timely if it is filed within six (6)
months after the Notice of Assessed Value Change.
The exclusion may only be applied to future tax years. It cannot be applied
retroactively back to the date of the transfer.
The following requirements apply:
∗ (a) Any child born of the parent(s). (b) Any step-grandchild of the parent(s) and the spouse of that step-grandchild while the relationship of stepparent and step-grandchild exists. The relationship exists until the marriage on which the relationship is based is terminated by divorce, by death or until the remarriage of the surviving stepparent. (c) Any grandchildren-in-law of the parent(s) while the relationship exists. The relationship exists until the marriage on which the relationship is based is terminated by divorce or death or until the remarriage of the surviving son-in-law or daughter-in-law. (d) The parents of the grandchild(ren) who would qualify for a Proposition 58 exclusion from the grandparents must be deceased.
7/19/2001
1. Transfers of real property from grandparents to grandchildren are excluded
from reassessment. Transfers from grandchildren to grandparents are NOT
excluded from reassessment.
2. The seller’s or decedent’s principal residence is totally excluded from
reassessment. In addition, $1,000,000 of the seller’s or decedent’s other real
property is also excluded. There is a qualification to this rule under Prop.
193 -- If the grandchild had received property in the past that was
excludable under Section 63.1 of the Revenue & Taxation Code as a
principal residence, any principal residence that the grandchild receives
from grandparent is considered “other real property” that is subject to
the $1,000,000 limitation.
3. There is no value limit for excluding the seller’s or decedent’s principal
residence from reassessment. A Homeowners’ Exemption or Disabled
Veterans’ Exemption must have been granted to the seller or decedent. This
residence does not have to be the principal residence of the person who
acquires the property.
4. Real property other than the principal residence of the seller or decedent with
an assessed value up to $1,000,000 is excluded from reassessment. The
sales price or actual “current market value” does not affect the $1,000,000
limit. The $1,000,000 exclusion that is available to grandchildren for
property other than a principal residence received from their
grandparents is the same $1,000,000 exclusion that they have remaining
available from their parents under Prop 58.
7/19/2001
5. The total value of property (or properties) which a parent may transfer to all
children without reassessment is $1,000,000 of assessed value, for property
other than the principal residence.
This limit is cumulative over time. After property (or properties) with
$1,000,000 of assessed value is transferred without reassessment, all future
reassessments (except the transfer of the principal residence if it has not
already been transferred).
The $1,000,000 limit applies only to transfers of properties within the
State of California.
6. A grandchild can have excluded only $1,000,000 of property transferred
from his or her father AND his parents (paternal grandparents) and
$1,000,000 of property transferred from his or her mother AND her parents
(maternal grandparents).
7. Transfers by sale, gift, devise or inheritance qualify for the exclusion.
8. Transfers from grandparents to grandchildren as individuals, between joint
tenants, from trusts to individuals, or from individuals to trusts may qualify
for the exclusion.
Transfers of ownership interest in legal entities DO NOT qualify for
exclusion. Transfers through trusts, however, may qualify.
9. The person who acquires the property must file their claim within three years
from the date of transfer, or within six months after the date of mailing of a
Notice of Assessed Value Change, issued as a result of the transfer of
7/19/2001
property for which the claim is filed, whichever is later. The property,
however, must not have transferred to a third party.
To file for a reassessment, contact:
Assessor’s Office Kenneth Hahn Hall of Administration
500 West Temple Street Room 225
Los Angeles, CA 90012, (213) 893-1239
IMPORTANT PHONE NUMBERS
To Redeem Tax-Defaulted Property Contact:
Treasurer and Tax Collector Kenneth Hahn Hall of Administration
225 North Hill Street, First Floor Los Angeles, CA 90012
(888) 807-2111
Estimates of the Amount Required to Redeem Tax Defaulted Property:
Office of the Assessor Kenneth Hahn Hall of Administration
500 West Temple Street Room 225
Los Angeles, CA 90012 (213) 974-3211
Deed Recordation
Registrar-Recorder/County Clerk
12400 Imperial Highway Norwalk, CA 89650
(562) 462-2125 (800) 201-8999
Property Tax Postponement Program
7/19/2001
State Controllers Office P.O. Box 94250
Sacramento, CA 942250-2005 (800) 952-5661 or
Homeowner Assistance Program
Franchise Tax Board
P.O. Box 942840 Sacramento, CA 94240-0070
(800) 525-5711
Public Auction Sale of Tax Delinquent Real Property
Treasurer and Tax Collector Kenneth Hahn Hall of Administration
225 North Hill Street, First Floor Los Angeles, CA 90012
(888) 807-2111