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5110-5112 Processing Procedures and Requirements: Delinquent Penalties and Interest

5110. GENERAL APPLICATIONS
When computing the redemption amount for property tax-defaulted prior to September 18, 1959, the six-percent delinquency penalty and cost charge are included for the first year only. In other words, property tax-defaulted for unpaid taxes for the year 1958-59 or an earlier year carries the delinquency penalty and cost only for the year of the original tax default.

Property tax-defaulted for unpaid taxes of fiscal year 1959-60 through 1981-82 bears, as part of the redemption amount, the six-percent delinquency penalty charge plus cost for each of the years (see annotations to Rev. & Tax. Code §4102).

Property tax-defaulted for unpaid taxes of fiscal year 1982-83 or a subsequent fiscal year bears, as part of the redemption amount, the ten-percent delinquent penalty plus cost charge for each year. (Rev. & Tax. Code §§2617, 2618, 2704, 2705).

COMMENT: The schedule of cost charges is as follows:

$.50 - 1947-48 and prior years

$1 - 1948-49 through 1961-62

$3 - for 1962-63 through 1980-81

$5 - for 1981-82 through 1982-83

$10 - for 1983-84 and subsequent years

See annotations to Revenue and Taxation Code section 2621.

5111. REDEMPTION PENALTIES
Redemption penalties are charged from July 1 following the date on which the property became tax-defaulted and remain at the rate in effect at the time the property was tax-defaulted until it is redeemed (see Teralta Land and Water Co. v. E. E. Shaffer (April 20, 1897) 116 Cal. 518).

EXAMPLE: On a parcel that was tax-defaulted for fiscal year 1980-81 taxes and was redeemed in April 1984, redemption penalties are charged at the rate of one percent per month from July 1, 1981, through April 1984. The redemption penalty would not increase to one and one-half percent even though the Legislature increased the redemption penalties for fiscal year 1981-82 (M-5112).

NOTE: In a joint interim policy statement on the payment of state and local real taxes dated July 12, 1990, the FDIC (Federal Deposit Insurance Corporation) and RTC (Resolution Trust Corporation) announced that, in both their corporate and receivership capacities, they "will neither pay, nor recognize liens for, any penalties, fines or similar claims imposed for the non-payment of taxes, whether arising before or after acquisition of the subject property" (Sec. 15 Federal Deposit Insurance Act, 12 U.S.C. 1825(B)(3)).

5112. PROPERTY TAX-DEFAULTED FOR 1981-1982 AND SUBSEQUENT FISCAL YEARS 
For property tax-defaulted for fiscal year 1981-82 and subsequent fiscal years, redemption penalties (Rev. & Tax. Code §4103) charged are computed as follows:

1) Beginning July 1 of the year on which the property became tax-defaulted, one and one-half percent per month is charged to the time of redemption; plus,

2) Beginning July 1 of each subsequent year of unpaid taxes, one and one-half percent per month is charged to the time of redemption for each year's amount.

If the last day of the month falls on a Saturday, Sunday, or legal holiday, the additional penalty of one and one-half percent shall attach after the close of business on the next business day.

If the board of supervisors, by adoption of an ordinance or resolution, closes the county's offices for business prior to the time of delinquency on the "next business day" or for that whole day, that day shall be considered a legal holiday.