California is a tax deed state. Unlike most other states, whose fiscal year reflects the actual year (January through December), California property taxes are assessed for the period from July 1 to June 30. Therefore, instead of a fiscal year 2008, you have a fiscal year 2007-2008 and a fiscal year 2008-2009. A first position lien is applied to all real property on the appraisal date each year by law.
California property taxes are due in two equal installments. The first installment is due on November 1 and is in default on December 10. The second installment is due on February 1 and is in default on April 10. Late payments add a 10% penalty to your property tax bill. Unpaid properties are considered in default if they are not paid in full by June 30 of each year. As of July 1, the title to these parcels is in the name of the state and the interest on any unpaid bills begins to increase at a rate of 1.5% per month (18% per year).
Public and online auctions
Similar to how California manages its tax year, sales of tax deeds are a bit different in California. A parcel tax deed is not offered for sale for at least five years after the property tax bill becomes delinquent. In California, the “redemption period” begins when the property stops paying taxes on July 1 of a given year and ends when the property is offered to investors in a tax deed sale five (or more) years later. In most other states with tax deeds, delinquent properties are put up for sale shortly after the first default, but owners have the opportunity to buy back their property, even if the tax deed has already been sold in a sale. Barring a county error and / or a successful lawsuit by the former property owner, a property in California cannot be redeemed once it is sold at public auction. In other words, there is no extended right of redemption in the state of California.
California tax deed sales use the premium offer method. The minimum bid equals the amount of taxes, interest, penalties, and fees owed on the property. Most counties only hold an auction once a year; however, some counties have more than one per year.
California property owners generally have until the day before the tax sale to trade in their property. If possible, investors planning to participate in a California tax deed sale are encouraged to review the sales list just prior to the sale. This may involve contacting the county tax collector’s office directly or checking the county or third party website.
Bid4assets.com is a third-party website that conducts online auctions for 28 California counties, including Alameda, Fresno, Kern, Santa Cruz, San Francisco, Solano, San Diego, and San Bernardino. Bid4Assets county tax sales listings are generally available three to four weeks prior to the online auction. The Bid4Assets website has all the information you need about each auction, including contact, registration and deposit information.
California Tax Deed Sale Payment Plans
In accordance with California statute, and at their discretion, California county tax collectors may offer a “payment plan” for properties that are sold above a threshold amount. This “threshold” varies by county and can vary from year to year. Generally, in a “payment plan,” the county requires the limit amount and the remaining balance on the tax deed must be paid within 90 days of the sale of the tax deed. Title to the property is not transferred to the buyer of the tax deed until the tax collector receives full payment.
After sale tax deed
Selected bidders receive a tax collector’s deed. Pursuant to California Statute, this deed gives title to the buyer free of all encumbrances of any kind existing prior to the sale, with the exception of links for subsequent taxes and / or special assessments.
When a property has been offered for sale at least once and no acceptable offers have been submitted, the tax collector may re-offer those properties at the next scheduled sale at a minimum offer deemed appropriate. The county Board of Supervisors must approve a reduction in the minimum bid. Currently, there are no OTC sales in California.