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8340-8348 Sale by Agreement: Terms and Conditions

8340. GENERAL PROVISIONS
Any agreement under the provisions of Chapter 8 may make the following provisions:

1) It may cover any tax-defaulted property without regard to the boundaries of the parcels when they became subject to sale (Rev. & Tax. Code §3793). This means that parcels covered by a notice of tax collector's power of sale may be consolidated into one agreement (Rev. & Tax. Code §3793(a)).

The purchase or option to purchase may be for the entire fee interest, a right of way, or an easement Rev. & Tax. Code §3791).

2) It may provide for either the purchase of or an option to purchase tax-defaulted properties (Rev. & Tax. Code §3791). The option is limited to a period of three years (Rev. & Tax. Code §3794). 

3) It may provide for the sale of various portions at various prices and on various terms and for an option to purchase any remaining portion (Rev. & Tax. Code §3793(b)). The option is limited to a period of three years (Rev. & Tax. Code §3794). Exercise of this option does not prevent the assessee from redeeming the remaining portion of the tax-defaulted property. It merely creates a proprietary right, to the exclusion of other taxing agencies.

4) It may provide for payment of an amount agreed upon by the board of supervisors and the taxing agency in lieu of taxes while the property is in public ownership and rented, leased, or sold on contract by the taxing agency (Rev. & Tax. Code §3791.5).

5) Notwithstanding any other provisions of law, the terms may include, but are not limited to, a condition that the property be used by the purchasing agency for a public purpose (Rev. & Tax. Code §3805).

8341. ENFORCEMENT OF TERMS
The board of supervisors may impose any terms and conditions it deems necessary as part of the agreement sale.

This may include a requirement that the purchasing entity execute a deed to the county housing department that will be recorded if the entity is unable to use the property as intended. It may also include a time limit to complete a project or otherwise dedicate the property to a public purpose.

The tax collector may also require a nonprofit organization to furnish a list of projects it has completed and to demonstrate that it has the financial ability to meet the conditions of the sale.

8342. PROVISION FOR RESALE
This section was deleted on January 1, 2001.

8343. DISTRIBUTION OF PROCEEDS AFTER THE RESALE
This section was deleted on January 1, 2001.

8344. DEDUCTION OF EXPENSES
This section was deleted on January 1, 2001.

8345. NONPROFIT PROVISIONS
Chapter 8 purchase privileges extend to certain private, nonprofit corporations. The organization must be incorporated for the express purpose of (1) acquiring single and multi-family dwellings, for rehabilitation and sale or rent to "low-income" persons or for otherwise serving low-income persons, or (2) acquiring vacant land for dedication to public use or for the construction of low-income housing for sale or rent (Rev. & Tax. Code §3772.5). Such a nonprofit entity may file a written objection with the tax collector and a written application to purchase tax-defaulted property (subject to sale) at any time before the date of the first publication of the notice of the intended sale in accordance with Chapter 7 provisions (Rev. & Tax. Code §3695.5).

The Legislature has required the following safeguards to prevent abuse of the unique privilege extended to the nonprofit entities.

1) The corporation must rehabilitate (put into legally habitable condition) residential property and resell or rent it to low-income persons or otherwise use the property to serve low-income persons, or it must construct a residence and sell or rent the improved property to low-income persons. In the case of unimproved property, the corporation must either dedicate it to public use or build a residence on the land and sell or rent the property to low-income persons or otherwise use the property to serve low-income persons (Rev. & Tax. Code §3791.4).

2) The board of supervisors is empowered to establish conditions of sale to ensure rehabilitation within a reasonable time and maximum benefit to low-income persons, including compliance with the jurisdiction’s consolidated plan or community development plan (Rev. & Tax. Code §3795.5).

8346. NONPROFIT APPLICATION
The burden of proof as to its status and purpose is entirely on the nonprofit corporation seeking to purchase tax-defaulted property. The application should include the following documents:

1) Articles of incorporation approved by the California Secretary of State, clearly stating that the organization is formed for the purpose of rehabilitating or constructing low-income housing or dedicating vacant land to public use. Incorporation as a church, as a general philanthropy, or for other charitable purposes does not qualify.

2) In the case of property to be rehabilitated, a certification from the local building department that the property is "substandard," as defined in Health and Safety Code section 17920 or as defined by the local building code if it is more restrictive than the statewide standard.

8347. NONPROFIT PROGRESS REVIEW
This section was deleted on January 1, 2001.

8348. FAILURE OF NONPROFIT TO COMPLETE AGREEMENT
This section was deleted on January 1, 2001.