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5230-5235 Installment Plans: Defaults

5230. NEW INSTALLMENT PLAN AFTER DEFAULT
If an installment payment goes into default (M-5224), a new plan cannot be started until July 1 following default of the original plan (Rev. & Tax. Code §4217).

Credit should be allowed for payments made under a prior installment plan, or plans, in the same manner as when a redemption is made (Rev. & Tax. Code §4337).

See M-5170 et seq.

EXAMPLE: A plan defaulted on April 10, 1997, (1996-97 fiscal year) may not be restarted before July 1, 1997, (1997-1998 fiscal year).

EXCEPTION: Payments on property subject to a power to sell during the current calendar year may not be started again unless the tax collector determines that the failure to make a timely payment was not the fault of the assessee (Rev. & Tax. Code §4222) and (M-5221).

5231. PROCEDURE FOR STARTING NEW PLAN AFTER DEFAULT

1) Determine that the property has become subject to sale by the tax collector or that a period of five years has elapsed since it became tax-defaulted (Rev. & Tax. Code §4217) and (M-5201).

2) If the installment plan is reinstated on or after the delinquency date of the last installment of current taxes in any fiscal year (excepting the first fiscal year), the current taxes, including penalties and costs, must be paid on or prior to the reinstatement date. Payments consist of a portion of the redemption amount plus interest on the unpaid balance (Rev. & Tax. Code §4219).

NOTE: The term back taxes in Revenue and Taxation Code section 4337 is defined in Revenue and Taxation Code section 4187 as all payments required to be made on an installment plan, excluding current taxes and their penalties and costs.

3) The remaining payments must be at least 20 percent of the redemption amount, plus interest on the unpaid balance, computed in accordance with Revenue and Taxation Code section 4221 (M-5228) and accruing on the first day of each month from the date of the last payment.

5232. TO REDEEM IN FULL: PLAN NOT IN DEFAULT
If an installment plan is in good standing, redemption may be made at any time (Rev. & Tax. Code §4221).

5233. TO REDEEM IN FULL: PLAN IN DEFAULT

1) The installment payments made under the defaulted plan are disregarded. The total amount necessary to redeem, as of the date of redemption, is then computed (M-5100 et seq.).

2) The defaulted plan payments and credits, including an allowance for interest paid, shall be allowed after computation of the amount necessary to redeem. The balance remaining is the amount to be paid to complete redemption (Rev. & Tax. Code §§4222, 4336) and M-5221.

5234. TO REDEEM IN FULL AFTER SUBJECT TO POWER TO SELL
If redemption occurs after the property becomes subject to the power to sell but before the sale, the redemptioner receives credit for prior installment payments but only after computation of the amount necessary to redeem (Rev. & Tax. Code §4336). Any money collected is distributed pursuant to Revenue and Taxation Code section 4656 et seq.

5235. NO NOTIFICATION TO STATE CONTROLLER
This section was deleted on January 1, 1999.