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8610-8618 Cancellations and Refunds: Other Invalid Sales

8610. RESCISSION OF TAX SALE BY THE BOARD OF SUPERVISORS
When a tax deed to a purchaser of property is recorded and it has been determined that property sold by the tax collector pursuant to a Chapter 7 or Chapter 8 sale should not have been sold, the sale may be rescinded by the county board of supervisors with the written consent of the county's legal advisor and the purchaser of the property or a successor in interest of the purchaser of the property, except a bona fide purchaser for value (Rev. & Tax. Code §3731(a)).

The sale may not be rescinded if:

1) The property has been transferred or conveyed by the purchaser to a bona fide purchaser for value; and/or

2) The property has become subject to a bona fide encumbrance for value subsequent to the recordation of the tax deed.

When the sale has been rescinded by the board of supervisors, the purchaser or a successor in interest is entitled to a refund after the execution of a rescission of the tax deed to the purchaser or a successor in interest. The refund to the purchaser or a successor in interest should be made in the same manner as a refund of any overpayment of taxes (Rev. & Tax. Code §3731(c)).

The holder of a tax certificate who received all or any part of the amount paid by the purchaser or a successor in interest shall not be obligated to make any refund or repayment of any amount to the purchaser, the delinquent taxpayer, the county, or any other person. The tax collector may use amounts on deposit in the Tax Certificate Redemption Fund to make the refund, but only to the extent that those amounts were paid to the holder of the applicable tax certificate (Rev. & Tax. Code §3731(e)).

NOTE:  Written consent is not necessary when the Tax Deed to the Purchaser is being cancelled because the purchaser gave the tax collector negotiable paper that has been dishonored (Rev. & Tax. Code §2509); see M-8616.

8611. PREPARATION AND EXECUTION OF THE RESCISSION
A sale may be rescinded by the county board of supervisors with the written consent of the county legal advisor and the purchaser of the property or a successor in interest of the purchaser (Rev. & Tax. Code §3731(a)); see M-8610. The tax collector shall prepare a Rescission of Tax Deed to Purchaser of Tax-Defaulted Property (form SCO 8-22).

The rescission is executed and signed by both the tax collector and the purchaser or a successor in interest, with the approval of the board of supervisors. The signatures of the purchaser or a successor in interest and the tax collector are acknowledged by the county clerk, another county official, or a notary public without charge, pursuant to Civil Code section 1181 and Revenue and Taxation Code section 168.5.

If the purchaser or a successor in interest refuses to give written consent to rescind the sale of the property, the tax collector may use an alternative procedure in an effort to settle a potentially controversial case without filing a lawsuit.

If written consent is not obtained, the board of supervisors may rescind the sale under the circumstances specified in Revenue and Taxation Code section 3731, subdivision (a), if both of the following conditions are met:

(1) A hearing is scheduled before the board of supervisors; and

(2) A notification is provided to the purchaser of the property or a successor in interest.

The notice sent to the purchaser of the property or a successor in interest must include the following information:

a. Date, time and place of the hearing;
b. Description of the sold property;
c. Reason(s) for rescinding the sale; and, 
d. A statement that a refund will be issued to the purchaser or a successor in interest for the purchase amount, plus interest (Rev. & Tax. Code §3731(b)(2)(A)).

The notification must be sent to the last known mailing address of the purchaser of the property or a successor in interest, not less than 45 days prior to the date of the hearing by certified mail with return receipt requested (Rev. & Tax. Code §3731(b)(2)(B)).

NOTE:  Subdivision (b) shall apply to sales that are completed on or after January 1, 2010 (Rev. & Tax. Code §3731(f)).

8612. FORM AND CONTENT
The Rescission of Tax Deed to Purchaser of Tax-Defaulted Property (form SCO 8-22) is recommended by the State Controller's Office.

8613. RECORDATION OF THE RESCISSION OF TAX DEED
The tax collector shall record the rescission of the tax deed with the county recorder, without charge (Rev. & Tax. Code §3731(d)).

8614. COPY OF THE RESCISSION TO THE CONTROLLER
This section was deleted on January 1, 1999.

8615. EFFECT OF THE RESCISSION OF TAX DEED
When the rescission is recorded, the tax deed becomes null and void, as though never issued, and all provisions of law relating to tax-defaulted property apply to the property (Rev. & Tax. Code §3731(d)).

8616. CANCELLATION BY THE TAX COLLECTOR
If, for any reason, negotiable paper is not paid on presentment, the tax collector should cancel the deed to the purchaser if it has been issued (Rev. & Tax. Code §2509). The tax collector should also cancel any record of the payment made on the tax sale file. The taxes, assessments, or other charges remain as a lien against the property, as though no sale had been made. Form SCO 8-23, Cancellation of Tax Deed to the Purchaser, should be used (M-8617).

8617. FORM AND CONTENT
The Cancellation of Tax Deed to the Purchaser of Tax-Defaulted Property (form SCO 8-23) is recommended by the State Controller's Office. The cancellation is recorded without fee by the county recorder's office (Gov. Code §27361.3).

8618. COPY OF THE CANCELLATION TO THE CONTROLLER
This section was deleted on January 1, 1999.