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California Tax Deed Law

    Function

    • Property owners who fail to pay their real estate taxes risk having their property declared in default by the tax collector in the county where the real estate is located.The county depends on the revenue generated from property taxes to provide essential and services for the residents. The counties sell delinquent property taxes to raise revenue to make up for the shortfall. Typically, the county government will allow the owner three to five years to pay the delinquent taxes, interest and penalties. If at the end of the period the taxes remain unpaid, the government may seize the real estate and sell it at a public auction to the highest bidder.

    Time Frame

    • Annual property taxes become default after 12:01 a.m. on July 1 throughout all California counties. If the property taxes remain in default for a minimum of five years, or three years in the case of non-residential real estate and properties that have nuisance abatement issues, the county tax collector has the authority to sell the real estate to pay off the delinquent taxes. California regulation states that the tax collector has to sell the property within four years of the eligibility date for sale.

      Counties also have the responsibility of giving the State Controller’s Office a minimum of a 45-day notice prior to the sale, but no more than 120 days. The law requires county tax collectors to publish eligible properties a minimum of three weeks and three times before the sale.

    Effects

    • When the county offers delinquent property taxes for sale, the process eliminates junior liens and mortgages on the property. Senior liens, including municipal, state and federal taxes remain on the property.

    Redemption

    • The property owner has up until 5 p.m. of the close of business the day before the sale takes place, to redeem their property. The owner must pay the delinquent taxes, interest payments and any cost associated with the sale. The regulations do not allow an extension to pay the taxes after the deadline.

    Considerations

    • Tax deed buyers must conduct their own due diligence on the properties. The county tax collectors do not warrant the conditions of the properties or the accuracy of the conformity to permits, building codes or local zoning ordinances. Most counties explicitly state that the tax deed process is an "as-is" transaction.



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