Home Publications Guides, Manuals, and Reference Materials County Tax Collectors' Reference Manual (2012) Chapter 5000 Redemptions 5920-5928 Sale of Tax Certificates: Process Information

5920-5928 Sale of Tax Certificates: Process Information

5920. AUTHORIZATION AND ADMINISTRATION
Any county may, upon the recommendation of the tax collector and by resolution of the board of supervisors, adopted during the first fiscal year to which it applies, sell tax certificates. If the board orders the discontinuance of the procedures authorized, all of the following shall occur.

1) All of the provisions, other than Revenue and Taxation Code section 4521, remain in full force and effect until all tax certificates have been canceled;

2) The county maintains the Tax Certificate Redemption Fund until all tax certificates have been canceled; and, 

3) After all tax certificates have been canceled, all funds on deposit in the Tax Certificate Redemption Fund are paid to the tax collector, to be applied and distributed in the same manner as amounts received from the collection of taxes and assessments and any costs, fees, penalties, or related amounts (Rev. & Tax. Code §4511).

Each county that elects to sell tax certificates shall create a Tax Certificate Redemption Fund. Money in the fund shall be used exclusively for the purposes described in Revenue and Taxation Code section 4527 (Rev. & Tax. Code §4512).

Nothing in this section shall reduce, change, affect, or otherwise alter the rights of any property owner or taxpayer that exist in the absence of this part. Under no circumstances shall the property owner or taxpayer be required to pay more than would have been owed if the sale of a tax certificate had not occurred (Rev. & Tax. Code §4513).

5921. SALE OF TAX CERTIFICATES
Commencing no earlier than the date the property is declared in default, the tax collector may offer for sale, as provided in Revenue and Taxation Code section 4511, tax certificates for defaulted taxes in connection with secured roll property or property on the supplemental roll, along with defaulted taxes for any previous year, provided that such tax certificates have not previously been sold (Rev. & Tax. Code §4521).

The receipt by the tax collector of the proceeds of the sale of a tax certificate shall be deemed to be the receipt of the due and unpaid taxes and assessments specified in the tax certificate and, if in excess of that amount, the related delinquency penalty set forth in Revenue and Taxation Code sections 2617, 2618, 2704 or 2705. These provisions shall not be construed as removing any lien for taxes or extinguishing any unpaid taxes or assessments or fees, penalties, costs or related amounts (Rev. & Tax. Code §4522).

A tax certificate shall not be considered as having situs in the county in which the real property is located for which the tax certificate is issued (Rev. & Tax. Code §4526).

5922. PROCEEDS FROM THE SALE OF A TAX CERTIFICATE

1) Proceeds from the sale of a tax certificate shall be applied as follows.

a. Three percent of the proceeds shall be deposited in the Tax Certificate Redemption Fund. However, if the amount of the Tax Certificate Redemption Fund is equal to or greater than three percent of the then-current amount of taxes and assessments assigned under all outstanding tax certificates, those proceeds shall be applied as provided in (2). The amount deposited under this paragraph shall be in lieu of any amount otherwise required by the alternate method of distribution (Teeter), pursuant to Chapter 3 of Part 8 (beginning with Rev. & Tax. Code §4701).

b. Any amount on deposit in the Tax Certificate Redemption Fund shall be invested at the direction of the county treasurer, as required by law. All interest earned on the fund shall be paid to the county.

2) The balance of the proceeds shall be applied as follows:

a. Except as provided in (1)(b), the balance shall be distributed in the same manner as amounts received from the collection of taxes and assessments and costs, fees, penalties, and related amounts.

b. In the case of a county that has elected the alternative procedure for the distribution of property tax levies pursuant to Revenue and Taxation Code section 4701 et seq., the balance shall be distributed to the county general fund (Rev. & Tax. Code §4523).

5923. CANCELLATIONS OF TAX CERTIFICATE
Upon the receipt by the tax collector of the entire amount of the taxes, assessments, and penalties assigned by a tax certificate, the tax collector shall pay that amount to the holder of the tax certificate, cancel the tax certificate, and enter the fact of the cancellation in the tax certificate record opposite the entry of the sale of the tax certificate. The tax collector shall make the payments from amounts received in the taxes, assessments, and assigned penalties, whether those amounts are received by the tax collector by payment or by redemption (Rev. & Tax. Code §4524).

If the tax collector receives only a portion of the taxes, assessments, and assigned penalties or interest in the case of an installment plan of redemption assigned by a tax certificate, the tax collector shall pay that amount to the holder of the tax certificate and shall make a corresponding adjustment to the amounts set forth in the tax certificate and the tax certificate record.

If part of a tax assessment on a parcel specified in a tax certificate is paid or redeemed, the tax collector shall pay to the holder of the tax certificate that portion of the payment relating to the amounts assigned under the tax certificate and shall adjust the information in the tax certificate and the tax certificate record accordingly.

Any amount collected shall be first applied to the oldest outstanding certificate. The taxpayer shall still be considered delinquent with respect to any unredeemed certificate on the property.

Notwithstanding any other provision of law, any partial payment with respect to a tax certificate, including annual payments from installment plans of redemption, shall be applied to the monthly penalty first.

5924. PAYMENT TO HOLDER OF TAX CERTIFICATE
The tax collector may stop the collection of amounts with respect to a delinquency by the holder of a tax certificate at any time by canceling the tax certificate and paying the holder, from amounts on deposit in the Tax Certificate Redemption Fund, the amount owed with respect to the delinquency. This action may be taken at the sole discretion of the tax collector (Rev. & Tax. Code §4525).

The tax collector shall pay to the holder of a tax certificate, from amounts on deposit in the Tax Certificate Redemption Fund, an amount equal to the purchase price of the tax certificate, together with interest thereon at a rate equal to the rate the county would pay on any refund to a taxpayer for the same fiscal year. This rate is to be applied to all amounts paid with respect to the certificate from the date of the sale of the tax certificate. The tax collector shall cancel the tax certificate if any of the following occurs (Rev. & Tax. Code §4527(a)).

1) The taxes and assessments assigned by the tax certificate were paid prior to the sale of the tax certificate.

2) After the sale of the tax certificate, the taxes and assessments assigned by the tax certificate are canceled for any reason other than the payment of the taxes and assessments.

3) The lien on the parcel specified in the tax certificate is removed, other than pursuant to Revenue and Taxation Code sections 2195 or 4105.2, or by order of the federal bankruptcy court, prior to the time the holder of the tax certificate receives all amounts due under the tax certificate.

4) The parcel specified in the tax certificate is deeded to a taxing agency, pursuant to Chapter 8, Part 6 (commencing with Rev. & Tax. Code §3771).

5) The holder of the tax certificate requests cancellation, when there has been a violation of Revenue and Taxation Code section 3441 with respect to the parcel specified in the tax certificate.

a. Promptly after obtaining knowledge of any occurrence described in Revenue and Taxation Code section 4527(a) (second paragraph above), the tax collector shall notify, in writing, the holder of the applicable tax certificate.

b. If the delinquency penalty assigned by a tax certificate is canceled, pursuant to Revenue and Taxation Code sections 2610.5 or 4985.2 or for any reason other than payment in full of the penalty, the tax collector shall, at the option of the holder of the tax certificate and from amounts on deposit in the Tax Certificate Redemption Fund, do either of the following:

i. Pay to the holder of the tax certificate an amount equal to the purchase price of the tax certificate, together with interest at a rate equal to the rate the county would pay on any refund to a taxpayer for the same fiscal year, that rate to be applied to all amounts paid with respect to the certificate from the date of the sale of the tax certificate, and cancel the tax certificate; or

ii. Pay to the holder of the tax certificate an amount equal to the difference between the purchase price of the tax certificate and the total amount of taxes and assessments assigned by the tax certificate, together with interest on that amount at a rate equal to the rate the county would pay on any refund to a taxpayer for the same fiscal year, that rate to be applied to all amounts paid with respect to the certificate from the date of its sale, and adjust the information contained in the tax certificate and the tax certificate record accordingly.

c. If a redemption certificate is issued pursuant to Revenue and Taxation Code section 4105.2 with respect to a parcel specified in a tax certificate, and if all amounts assigned under the tax certificate, including, without limitation, amounts due under Revenue and Taxation Code section 4103, are not paid to the holder of the tax certificate, the tax collector shall immediately pay to the holder, from amounts on deposit in the Tax Certificate Redemption Fund, any amount so assigned but not paid.

d. The tax collector may use amounts on deposit in the Tax Certificate Redemption Fund to make the payments permitted under Revenue and Taxation Code sections 3729, 3731, 4920 and 5103.

5925. METHOD OF SALE

1) The tax collector may sell tax certificates by any form of public or private sale, including, but not limited to, auction, negotiated sale, or bulk sale. Except as provided in subdivision (3) below, the price received for a tax certificate shall not be less than the amount of taxes and assessments being assigned thereby. Prior to the sale of any tax certificate, the tax collector shall do all of the following (Rev. & Tax. Code §4528):

a. Determine the size of the offering and the parcels to be included in the sale;

b. Establish the fees necessary to cover the county expenses;

c. Establish the rules and procedures for the sale;

d. Publish the rules and procedures and the fees; and e. Have the published rules and procedures available to the public.

NOTE: The tax collector has the right to accept or reject any or all bids.

2) Except as provided in subdivision (3) below, the tax collector shall not sell a tax certificate if any of the following apply:

a. The parcel is not on the secured roll or the supplemental roll;

b. The parcel is owned by a governmental agency;

c. The total amount of taxes and assessments to be assigned thereby is less than one hundred dollars ($100), unless the parcel is included in a bulk sale;

d. The parcel has a recorded or public notice concerning pollution or contamination to a degree that poses a public health concern or environmental hazard;

e. The parcel was subject to a proceeding in federal bankruptcy court prior to the sale of the tax certificate; or

f. The parcel was subject to a condemnation proceeding prior to the sale of the tax certificate.

3) Notwithstanding subdivisions (1) and (2) above, the tax collector may sell or resell, at a discount and in accordance with published rules and procedures: tax certificates for parcels described in paragraphs (c), (d), (e), and (f) of subdivision (2); any certificate subject to the Sailors and Soldiers Relief Act; and certificates for parcels described in paragraphs (e), (f), and (g) of subdivision (1) (Rev. & Tax. Code §4528).

If, pursuant to Revenue and Taxation Code section 4521, the tax collector is required to offer for sale a tax certificate on property that has an outstanding tax certificate for the assignment of taxes and assessments for a previous year, until the date occurring six months after the date specified in Revenue and Taxation Code section 4521, the tax collector shall offer to sell the tax certificate to the holder of the outstanding tax certificate.

The tax collector shall notify the holder of the outstanding tax certificate by certified mail of the default requiring the issuance of an additional tax certificate on the same parcel and of the tax certificate holder's right, until the date one month after receipt of the notice, to purchase the additional certificate on the same terms as the outstanding certificate.

In addition, the holder of the outstanding tax certificate shall have the right of first refusal to purchase the tax certificate on the same parcel for the highest bid until all tax certificates on that parcel are redeemed or canceled. During the six-month period, at the option of the holder of the most recently issued outstanding tax certificate, the tax collector shall sell the tax certificate to the holder of the outstanding tax certificate on the same terms as the outstanding tax certificate (Rev. & Tax. Code §4528).

5926. MAINTAINING A RECORD OF SALES
The tax collector shall make and maintain the tax certificate record, which is a list of all the tax certificates sold, containing the date of the sale, a description of the parcel, the name of the purchaser (or the successor), the purchase price, the amount of any payments received by the holder, and how those amounts were applied to the taxes, assessments, and assigned penalties (Rev. & Tax. Code §4529).

5927. TRANSFER OF A CERTIFICATE
Any tax certificate may be transferred at any time before it is canceled, by endorsement by the tax collector if it is held in physical form or by electronic transfer if it is held in book-entry form. The tax collector shall modify the tax certificate to indicate the new holder. The official endorsement of a tax certificate by the tax collector with the date and entry on the tax certificate record, together with a notation showing the new holder, is sufficient evidence of the assignment of the tax certificate (Rev. & Tax. Code §4530).

5928. REQUEST FOR DUPLICATE CERTIFICATE

1) A holder of a tax certificate may apply to the tax collector for a duplicate certificate if the original certificate has been lost or destroyed. The tax certificate holder shall give an affidavit to the tax collector stating that the affiant is the owner of the tax certificate and that the tax certificate was lost or destroyed. The tax certificate holder shall pay a fee for issuance of the duplicate tax certificate (Rev. & Tax. Code §4531).

2) The tax collector shall issue a duplicate tax certificate, shall plainly mark or stamp it as a duplicate, and shall enter the fact of the duplicate in the tax certificate record opposite the entry of the sale for which the lost or destroyed tax certificate was issued. The tax collector shall enter in the same place a notation of the alleged loss or destruction, whether or not the duplicate certificate is issued.