Site Tools
Welcome to the State of California

8500-8501 Distribution of Tax Sale Proceeds: General Application

8500. ORDER OF PRIORITY
With the exception of the recording fee, paid to the recorder by the tax collector (Rev. & Tax. §3708), the proceeds of Chapter 7 and Chapter 8 sales are to be deposited in the indicated funds and distributed by the auditor in the following order of priority.

1) "The amount of the cost of advertising the sale ... shall be deposited in the county general fund..." (Rev. & Tax. Code §§3719, 4673).

The balance remaining is deposited in the "delinquent tax sale trust fund" (Rev. & Tax. Code §3719) and distributed from the fund as follows.

2) A fee of $1.50 for all or any portion of each separately valued parcel of tax-defaulted property sold is distributed to the State (Rev. & Tax. Code §4672).

If the balance in the delinquent tax sale trust fund is less than $1.50 prior to distribution of the state fee, the State receives the balance. 

3) A "county sale fee" of $150 for all or any portion of each separately valued parcel of tax-defaulted property sold is distributed to the county general fund (Rev. & Tax. Code §4672.1).

NOTE:  If the proceeds from the sale are not sufficient to cover the county sale fee, the fee is reduced accordingly. The "state fee" must be satisfied in full before any of the proceeds are distributed for the county sale fee (Rev. & Tax. Code §4672).

4) An amount to reimburse the county for its cost of mailing notices to parties of interest is distributed to the county general fund (Rev. & Tax. Code §4672.2).

5) There is a distribution made to any qualifying special assessment districts that precedes distribution of redemption amounts to other entities. This distribution shall be made as a pro rata share to each assessment fund in an amount equal to the proportion the assessment due each fund bears to the total amount of taxes and assessments necessary to redeem the property at the time of sale (Rev. & Tax. Code §4673.1(a)(1)). 

6) "Amounts required to redeem" the property as of the time of sale are satisfied from the sale proceeds after satisfaction of the preceding amounts. The amounts required to redeem include amounts necessary to redeem property from a sale to any taxing agency entitled to share in the proceeds. This includes the redemption fee of $15 distributed pursuant to Revenue and Taxation Code section 4656.5.

7) If the tax-defaulted property is redeemed prior to the proposed sale, but after the county has incurred notice or publication costs pursuant to Revenue and Taxation Code section 3702 in connection with a notice of intended sale, a fee may be collected to reimburse for those costs. 

8) If property is redeemed within 90 days of the proposed sale, a fee of $150 may be collected to reimburse the county for the costs incurred in preparing to conduct the sale (Rev. & Tax. Code §4112(a)(3)). The fee shall become a part of the redemption amount for those properties not sold at the tax sale.

CAUTION: Do not distribute a recording fee, as required by Revenue and Taxation Code section 4112, for recording a Rescission of Notice of Power to Sell Tax-Defaulted Property. A rescission must never be issued and recorded when the property is sold to a purchaser at a tax sale.

NOTE: If the proceeds are insufficient to satisfy the total amount necessary to redeem a property at the time of the sale, the proceeds are distributed on a pro rata basis, as determined by the county auditor, in accordance with Revenue and Taxation Code section 4673.1.

9) Current taxes, assessments, and the applicable penalties and costs that may have accrued up to the time of sale are satisfied from the proceeds of the sale if any remain after satisfaction of the amounts required to redeem. In the case of sales completed between March 1 and July 1, "current taxes and assessments" are limited to the fiscal year in which the sale occurs, after January 1. The purchaser should be billed for the first full fiscal year of ownership, even though he/she did not own the property on the lien date (Rev. & Tax. Code §§3712(a); 4673.1(b)).

NOTE:  For the purposes of this section "current taxes" means taxes that are a lien on property, but which are not included in "amount of defaulted taxes" except that, between a lien date and the time in the same calendar year when property is declared to be tax-defaulted, the taxes becoming a lien on this lien date in such calendar year are not "current taxes". "Current taxes" are paid from the proceeds of sale, if sufficient proceeds remain.

As a general rule, the outstanding "current year" taxes and assessments should be paid from the sale proceeds, if the proceeds are sufficient. This conveys property to the purchaser free and clear of all liens.

NOTE:  After labeling for the purpose of reporting, all fees due the State of California should be sent to:  State Treasurer

P. O. Box 942809
Sacramento, CA 94209-0001
ATTN: Cash Management Division

8501. DEFINITION OF TAXES AND ASSESSMENT FOR PURPOSE OF DISTRIBUTION

1) Taxes include all liens determined by the application of ad valorem tax rates that were, at the time of tax-default, included in the amount necessary to redeem the property (Rev. & Tax. Code §4671).

2) Assessments include all liens other than taxes that were, at the time of tax-default, included in the amount necessary to redeem the property and included in the amount necessary to redeem the property from sale to any taxing agency entitled to share in the proceeds (Rev. & Tax. Code §4671.3).