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8180-8186 Public Auction: Recommended Sale Procedures

8180. ANNOUNCEMENTS
It is recommended that a copy of the preamble be posted on the auction website or be read aloud, in the case of an in-person auction, along with a statement that no bid will be accepted for less than the minimum price, and a list of parcels that have been withdrawn from the sale.

If it is the tax collector's policy to permit a deferred payment option, he/she should also post on the website or explain in person the conditions of payment required pursuant to Revenue and Taxation Code section 3693.1.  The tax collector should emphasize that the balance of the purchase price must be paid, in cash, in lawful money of the United States, by electronic funds transfer, including credit card transactions, or by negotiable paper, as specified by the tax collector, within a period specified by the tax collector, not to exceed 90 days from the date of the auction, before title will be transferred to the successful purchaser (Rev. & Tax. Code §3693.1).

The tax collector should also include a statement that failure on the part of the successful bidder to consummate the sale within the period specified by the tax collector will result in the forfeiture of the deposit, possible criminal prosecution, and a ban from future auctions for up to five (5) years. 

All rights the successful bidder may have with respect to the property are also forfeited (Rev. & Tax. Code §3693.1).  Any forfeiture of deposit is distributed to the county general fund and not applied to outstanding delinquent taxes.  Upon forfeiture, the right of redemption revives (Rev. & Tax. Code §3693.1).

NOTE:  At the in-person auction, it may be helpful to announce that only the assessor's parcel number or other simplified description, such as the item number in the publication to identify the property being sold, will be read, rather than the entire legal description.

Properties on which no bids are received during the course of the sale may be re-offered before the close of the sale.  The tax collector may reduce the minimum bid amount on re-offered parcels to whatever he/she feels is appropriate.  An announcement to this effect should be published on the Internet website or announced at the beginning of the sale. 

If it appears there will not be enough time to complete the sale of each parcel at the in-person auction as indicated on the Published Notice of Sale, and the notice did not contain a statement regarding continuation of the sale (M-8153 and M-9522); e.g., the notice stipulated that the sale was to take place on a single day when, in fact, it will take more time, the tax collector should announce at the beginning of the sale that the sale may be continued if necessary.

NOTE:  If previous approval has been granted by the board of supervisors and notice according to statute has been provided indicating that unsold parcels will be re-offered at a tax sale within 90 days from the present sale, the time, date, and location should be included in the announcements.

Also included should be the information that a county transfer tax, at the rate of $.55 for each $500 of value, with a minimum charge of $.55, applies to any property selling for $100 or more. The tax must be determined and collected in addition to the amount of the purchase price.  There may be cities within the county that also charge a transfer tax that is collected with the purchase price.  Include this information in the announcements.  Copies of tax-rate tables are available from the county recorder.

8181. AUCTION PROCEDURES:  IN-PERSON AUCTION
There are no set rules for conducting a sale.  However, the following procedures have proven effective.

1) Provide all bidders with a copy of the Notice of Tax Sale before the first parcel is offered.

2) Announce that bidding will start with the published minimum bid, and give the acceptable increments to increase the bid.

3) Read aloud the assessor's parcel number and the minimum bid as each parcel is offered for sale.

4) Announce that all property is sold "as is" (Rev. & Tax. Code §3692.3).

When a parcel is sold, record the high bid and the high bidder's name.  Hand the receipt form to the cashier, and inform the successful bidder that he/she must make an immediate settlement with the cashier (unless prior arrangements have been made to have each purchase credited to an advance deposit account).  Then proceed with the next parcel.

When bidding on the last parcel is concluded and before closing the sale, each parcel on which no bid was received may be re-offered (M-8180).

Answer questions briefly and hold delays to a minimum.  Upon any interruption in the bidding, note the current high bid.

8181.5 AUCTION PROCEDURES:  INTERNET AUCTION
A public auction conducted via electronic media must allow bidders to submit bids by computer.  The close of auction is defined as the date and time for which the tax collector provides public notice that bidding for that auction will end (Rev. & Tax. Code §3692.1).  However, the tax collector must have the capability to continue to receive bids for as long as there are competitive bidders.  An Internet auction provider should be able to keep the sale open until a period of time (three to five minutes, for example) when no bids are received (Rev. & Tax. Code §3692.2).

All property is sold "as is."  The State, county and employees are not liable for failure to disclose any known or unknown conditions of the property or the failure of any device that is not owned, operated, or managed by the State or county that prevents a person from participating in the sale.  A "device" includes any computer hardware, software, network, or website (Rev. & Tax. Code §3692.3).

All the announcements, preambles, and rules of the auction, including any deposit requirements and payment settlement requirements, should be posted on the auction site with a list of the parcels. 

Even though property is sold "as is," any condition of a particular parcel such as Mello-Roos or IRS liens should be posted.  Pictures and maps of the property can be included but are not required.  Information on the county transfer tax and any city transfer tax should be clearly posted.

You may require that bidders pre-register.  At the time of registration, request vesting information in the case that they are a successful bidder.

Include an announcement that clearly states that if winning bidders fail to consummate the sale, legal action may be taken against them, any deposit they made on the property is forfeited to the county, and they may be barred for up to five (5) years from participating in another sale.

8182. RECEIPT
At the time of settlement, the cashier determines the transfer tax due (M-8180) and completes the remainder of the receipt.  The name in which the deed is to be issued should be verified as correct, as well as the name and address of the person to whom the deed is to be mailed.  If the auction is via the Internet, the bidder verifies the vesting information at the point of sale.

A receipt should be given to the purchaser and a copy kept by the tax collector.

NOTE:  A deed issued to "John Jones or Mary Jones," "John Jones and/or Mary Jones," or "John and Mary Jones" is void for uncertainty (M-8411).

A description such as, "John Jones and Mary Jones" is one example of an appropriate and clear title vesting.

8183. DEFERRED PAYMENT OPTION
The tax collector may allow a deferred payment option.  All Internet tax sales should be treated as a deferred payment if the tax collector opts to accept electronic payment.  If the tax collector elects to treat the sale as a deferred payment, he/she may require a deposit of $5,000 or ten percent (10%) of the minimum bid price, whichever is greater (Rev. & Tax. Code §3693.1).  The balance of the purchase price shall be paid in lawful money of the United States, negotiable paper, EFT, or credit card, as specified by the tax collector.  The purchaser then has a period specified by the tax collector, not to exceed 90 days from the date of the auction, in which to pay the balance remaining.  Forty-eight to seventy-two hours after the close of the sale is a reasonable time in which to settle EFT payments and is recommended for Internet auction sales.  Title is not transferred to the purchaser until full payment has been received.  Use of form SCO 8-24 is recommended when a purchaser wishes to purchase property on credit.

CAUTION:  The tax collector should not issue a deed to the purchaser until the credit transaction has been completed.

COMMENT:  Employment of the credit transaction law is totally at the discretion of the tax collector.  If credit transactions are to be allowed at a sale, the tax collector should give notice of the intention to do so prior to the sale.  Failure of the successful bidder to consummate the sale within the period specified results in forfeiture of the deposit, possible criminal prosecution, ban from future auctions for up to five (5) years, and all rights the bidder may have with respect to the property (Rev. & Tax. §3456).  Any forfeited deposit is distributed to the county general fund and not applied to outstanding delinquent taxes.  Upon forfeiture, the right of redemption is restored.

8184. CONTINUANCE OF SALE: IN-PERSON AUCTION
When all of the property cannot be offered on the date set at a sale requiring the physical presence of bidders, the sale may be continued to the next business day, on a day-to-day basis.  When selling is concluded for the day, it should be clearly announced that the sale will be continued at a specified time on the next business day.

8185. NOTICE OF POSTPONEMENT OF THE DATE OF SALE
The tax collector may postpone a public auction or any portion thereof for seven or fewer days simply by declaring, at the time and place originally fixed for the sale, the new time, date, and place.  To postpone a public auction for eight to ninety days, the tax collector should make a declaration to this effect and send written notice of the postponement to parties of interest as defined in Revenue and Taxation Code section 4675.  Although it’s not legally required, a notice of the postponement may be published in a newspaper of general circulation in the county.  The right of redemption is automatically extended, as prescribed by Revenue and Taxation Code section 3706, to the new sale date.

Events that may cause postponement of a public auction are public calamity, illness of staff members, inclement weather, or other unexpected events that may occur on the day the sale is scheduled.  Individual items may also be postponed for any reason by the tax collector, including bankruptcy. 

NOTE:  A sale held on a holiday is not considered invalid (Young v. Patterson, 9 Cal. App. 469).  However, the tax collector has discretionary authority to postpone an auction scheduled for a holiday, since there is no law that prohibits such postponement (Rev. & Tax. Code §3706.1; Baxter v. Vineland Irrigation District (1902) 136 Cal. 185).

8186. 90-DAY RE-OFFER OPTION
If the tax collector is forced to withdraw one or more parcels from a tax sale or any parcel remains unsold after a tax sale, the tax collector may schedule a new sale within 90 days to re-offer those parcels under the provisions of Revenue and Taxation Code section 3692(e).  However, the scheduling of such a sale, including the date, time and location, must be included with the initial tax sale approval request submitted to the board of supervisors (SCO 8-02).

Additionally, if the tax collector is planning to use the 90-day re-sale option, preliminary information referencing such sale must be provided in the Notice of Intended Sale (Rev. & Tax. Code §3692(e)).  The SCO forms that relate to the above named notices are as follows:  SCO 8-02, 8-05.2, and SCO figures 9.5 and 9.6.