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8130-8137 Public Auction: Property Not Eligible for Sale – Other Disqualifying Factors

8130. ERROR INVALIDATING SALE
Either before or after publication, the tax collector should withdraw property from the sale if an error would invalidate its sale.  Examples of errors that would invalidate a sale are: failure to publish or errors in the Published Delinquent List and/or the Notice of Impending Power to Sell Tax Defaulted Property; the default is cancelled or held void; or the property should not have been declared in default.

8131. OBJECTION BY PUBLIC AGENCY OR NONPROFIT ORGANIZATION
Public agencies and nonprofit organizations having the right to acquire a tax-defaulted property under the provisions of Chapter 8, may object to the Chapter 7 sale and cause withdrawal of the property from a scheduled Chapter 7 sale if, before the first published Notice of Sale (Rev. & Tax. Code §§3695.4, 3695.5):

  1. The public agency or nonprofit organization files a written objection to the Chapter 7 sale with the tax collector; and
  2. The written objection is accompanied by an application to purchase the property for no less than the minimum price approved for the Chapter 7 sale, or for the amount to redeem plus costs, whichever is greater (Rev. & Tax. Code §§3695.4, 3695.5, 3793.1); M-8132 and M-8345. 

NOTE:  Revenue Districts as defined in Revenue and Taxation Code section 122 may file an objection to the Chapter 7 sale up to the last day prior to the sale, but only to preserve their lien.  The objection does not require the parcel to be withdrawn from the sale (Rev. & Tax. Code §3695).

NOTE:  If the property has been offered for sale at least once and no bids were received, the tax collector may, with the approval of the board of supervisors, offer the property at a minimum price that the tax collector deems appropriate (Rev. & Tax Code §3793.1).

8132. OBJECTION TO SALE OF A PORTION OF PROPERTY
The state, a city, or any taxing agency or revenue district may object to the Chapter 7 sale of a portion of the property scheduled for sale, on the basis that such portion is needed for public use (Rev. & Tax Code §3695.4).

The objection must:

  1. Be filed with the tax collector before the first publication date; 
  2. Describe the property needed; 
  3. Specify the public purpose to be served and whether the entire fee or an easement is required; and 
  4. Be accompanied by an application to purchase the property under Chapter 8.

8133. REDEMPTION
If a parcel is redeemed before the close of business on the last business day prior to the date of sale, the power to sell is automatically nullified and the parcel must be withdrawn from the sale. If a parcel is redeemed within 90 days of the scheduled sale, $150 must be collected to reimburse the county for costs incurred in preparing to conduct the sale (Rev. & Tax. §4112(a)(3)).

If the tax-defaulted property is redeemed prior to the proposed sale, but after the county has paid notice or publication costs, pursuant to Sections 3702 or 3798, a fee may be collected in an amount reasonably necessary to reimburse the tax collector for those costs (Rev. & Tax. §4112(b)). 

Fees imposed must be established by the county board of supervisors and are subject to the requirements of Chapter 12.5 (commencing with Section 54985) of Part 1 of Division 2 of Title 5 of the Government Code (Rev. & Tax. §4112(d)).

NOTE:  If the redemption is received by mail, the procedures outlined in M-8178 should be followed.  See also M-5100 and M-8135 (Rev. & Tax Code §3707(b)).

8134. BANKRUPTCY PROCEEDINGS
The filing of a bankruptcy petition creates an automatic stay in the enforcement of any lien against the estate of the debtor.  The stay continues in effect until the case is closed or the real property no longer belongs to the estate (11 USC §§362, 363).

Upon learning that there is a current bankruptcy proceeding active for the assessed owner, the tax collector must ensure that no attempt is made to sell the secured property covered by the bankruptcy unless permission has been obtained from the bankruptcy court.  This permission is in the form of a "relief from stay."  The tax collector should contact the county counsel to file such a motion with the court.

The automatic stay does not prevent the tax collector from asking the debtor or the debtor’s attorney what his/her intentions are with respect to the secured property, nor does it prevent the tax collector from creating or perfecting a statutory lien or function imposed by a political subdivision of the State if such a tax or function becomes due after filing of the petition.  This includes post-petition taxes as well as the power to sell, and other notices as required by law.

8135. WITHDRAWAL OF PORTION
If part of the property is withdrawn, the portion remaining may be sold.  The tax collector may reduce the original minimum bid if a portion is redeemed or cancelled after the minimum bid is established, but not to an extent greater than the ratio that the delinquency for the redeemed or cancelled portion bears to the delinquency of the whole (Rev. & Tax Code §3706), M-8132.

8136. INJUNCTION OR RESTRAINING ORDER TO STOP A TAX SALE
An injunction, restraining order, or other legal action is not effective against the county, municipality, or district to either prevent or enjoin the collection of property taxes sought to be collected (Rev. & Tax. Code §4807 ; Const., Art. XIII, §32).  If an injunction or restraining order is brought to stop a tax sale, the county counsel should be notified of the court action and of the statutes cited.  If the county counsel is unable to stop an injunction or a restraining order at a hearing before the date of the sale, or if the hearing is within 40 days of the sale, an extension of the sale must be announced.  If the order is lifted before the original date of the sale, the sale can be held as announced (Rev. & Tax. Code §3706.1).

EXCEPTION:  This does not include the automatic stay provisions of a bankruptcy court (M-8123).  If an injunction is issued by either a bankruptcy court or a federal court, compliance is recommended.

8137. WITHDRAWAL OF A PARCEL FOR ANY OTHER REASON
The tax collector may withdraw a parcel from a scheduled tax sale if it is determined that it would be in the best interest of the county to do so.  Consent from county counsel must be obtained prior to withdrawal from the sale (Rev. & Tax. Code §3698.8).