AB 2705

AB2705:v97#DOCUMENT

Bill Start

CALIFORNIA LEGISLATURE— 2025–2026 REGULAR SESSION

Assembly Bill

No. 2705

An act to amend Section 4675 of, and to add Section 4675.2 to, the Revenue and Taxation Code, relating to taxation.

LEGISLATIVE COUNSEL'S DIGEST

AB 2705, as amended, Dixon. Property taxation: tax-defaulted property sales: excess proceeds claims.

Under existing property tax law, if unpaid property taxes are declared delinquent and the taxes remain unpaid, the property is declared tax-defaulted and subject to sale, as provided, if not redeemed by the owner within a certain amount of time. Existing property tax law authorizes any party of interest in property that is sold as a tax-defaulted property to file a claim with the county for the excess proceeds, as described.

Existing law requires a person or entity who acts on behalf of, or in place of, any party of interest with respect to filing a claim for any excess proceeds to submit proof with the claim of certain disclosures, including that the party of interest has been advised of their right to file a claim for the excess proceeds on their own behalf directly with the county at no cost. Existing law requires a claim submitted as described above to contain any information and proof deemed necessary by the board of supervisors to establish the claimant’s rights to all or any portion of the excess proceeds.

This bill would subject an agreement between a party of interest and a person or entity who acts on behalf of, or in place of, a party of interest with respect to filing a claim for any excess proceeds to additional conditions, as specified. In that regard, the bill would require the agreement to, among other things, be in writing and to be signed by the party of interest after receipt of specified information. The bill would exempt specified parties of interest from the provision above and would limit the provision above to agreements entered into on or after January 1, 2027.

This bill would authorize the county to allow a claimant to correct any insubstantial deficiency in the documentation submitted with the claim as described above, as specified.

Digest Key

Vote: MAJORITY Appropriation: NO Fiscal Committee: NO Local Program: NO

Bill Text

The people of the State of California do enact as follows:

SECTION 1.

Section 4675 of the Revenue and Taxation Code is amended to read:

4675.

(a) (1) Any party of interest in the property may file with the county a claim for the excess proceeds, in proportion to that person’s interest held with others of equal priority in the property at the time of sale, at any time prior to the expiration of one year following the recordation of the tax collector’s deed to the purchaser.

(2) The claim shall be postmarked on or before the one-year expiration date to be considered timely. The claim shall be deposited in the United States mail in a sealed envelope, properly addressed with the required postage, or deposited for shipment, with an independent delivery service that is an Internal Revenue Service designated delivery service or that has been approved by the tax collector, in a sealed envelope or package, properly addressed with the required fee prepaid. The claim shall be deemed received on the date shown by the post office cancellation mark stamped upon the envelope containing the claim, or on the independent delivery service shipment date shown on the packing slip or air bill attached to the outside of the envelope or package containing the claim. If a claim deposited in the United States mail does not contain an official postmark, the date of filing shall be the date received by the county treasurer-tax collector’s office.

(b) After the property has been sold, a party of interest in the property at the time of the sale may assign their right to claim the excess proceeds only by a dated, written instrument that explicitly states that the right to claim the excess proceeds is being assigned, and only after each party to the proposed assignment has disclosed to each other party to the proposed assignment all facts of which that party is aware relating to the value of the right that is being assigned. Any attempted assignment that does not comply with these requirements shall have no effect. This subdivision applies only with respect to assignments on or after the effective date of this subdivision.

(c) (1) Any person or entity who in any way acts on behalf of, or in place of, any party of interest with respect to filing a claim for any excess proceeds shall submit proof with the claim that the amount and source of excess proceeds proceeds, and all fees, costs, charges, and other compensation to be paid by the party of interest, have been disclosed to the party of interest and that the party of interest has been advised of their right to file a claim for the excess proceeds on their own behalf directly with the county at no cost.

(2) An agreement between a party of interest and a person or entity who acts on behalf of, or in place of, a party of interest with respect to filing a claim for any excess proceeds shall be subject to the provisions of Section 4675.2.

(d) (1) The claims shall contain any information and proof deemed necessary by the board of supervisors to establish the claimant’s rights to all or any portion of the excess proceeds.

(2) If a claim substantially complies with this subdivision, the county may allow the claimant to correct any insubstantial deficiency in the documentation submitted with the claim within five days of the claimant’s receipt of notice of the insubstantial deficiency from the county, or such longer correction period as prescribed by ordinance or resolution of the board of supervisors. This paragraph shall not be construed to limit the authority of a county to permit amendment or correction of claims under other circumstances as set forth by ordinance or resolution of the board of supervisors.

(e) (1) Except as provided in paragraph (2), no sooner than one year following the recordation of the tax collector’s deed to the purchaser, and if the excess proceeds have been claimed by any party of interest as provided herein, the excess proceeds shall be distributed on order of the board of supervisors to the parties of interest who have claimed the excess proceeds in the order of priority set forth in subdivisions (a) and (b). For the purposes of this article, parties of interest and their order of priority are:

(A) First, lienholders of record prior to the recordation of the tax deed to the purchaser in the order of their priority.

(B) Second, any person with title of record to all or any portion of the property prior to the recordation of the tax deed to the purchaser.

(2) (A) Notwithstanding paragraph (1), if the board of supervisors has been petitioned to rescind the tax sale pursuant to Section 3731, any excess proceeds shall not be distributed to the parties of interest as provided by paragraph (1) sooner than one year following the date the board of supervisors determines the tax sale should not be rescinded, and only if the person who petitioned the board of supervisors pursuant to Section 3731 has not commenced a proceeding in court pursuant to Section 3725.

(B) If a proceeding has been commenced in a court pursuant to Section 3725, any excess proceeds shall not be distributed to the parties of interest as provided by paragraph (1) until a final court order is issued.

(f) In the event that a person with title of record is deceased at the time of the distribution of the excess proceeds, the heirs may submit an affidavit pursuant to Chapter 3 (commencing with Section 13100) of Part 1 of Division 8 of the Probate Code, to support their claim for excess proceeds.

(g) Any action or proceeding to review the decision of the board of supervisors, or the county officer to whom the board delegated authority pursuant to Section 4675.1, to accept or deny the claim shall be commenced within 90 days after the date of that decision of the board of supervisors or the county officer.

SEC. 2.

Section 4675.2 is added to the Revenue and Taxation Code, to read:

4675.2.

(a) (1) An Except as provided in subdivision (c), an agreement to locate, deliver, or recover excess proceeds, or assist in the filing of an excess proceeds claim, pursuant to subdivision (c) of Section 4675 is valid only if it meets all of the following conditions:

(A) The agreement is in writing and is signed by the party of interest after receipt of the disclosure described in paragraph (2).

(B) The agreement does not require the party of interest to pay a fee fee, cost, charge, or other compensation prior to approval of the claim and payment of the excess proceeds to the party of interest.

(C) The agreement is signed at least 95 days after the sale of the property.

(C)

(D) The agreed-upon fee or compensation amount to be paid by the party of interest interest, including all fees, costs, charges, and other compensation, is not in excess of 10 20 percent of the amount of excess proceeds awarded to the party of interest.

(2) (A) Any person or entity who enters into an agreement with a party of interest that is subject to this section shall clearly and conspicuously disclose all of the following to the party of interest:

(i) The assessor’s parcel number and situs, if available, of the property the sale of which generated the excess proceeds.

(ii) That the excess proceeds are currently in the county’s delinquent tax sale trust fund.

(iii) The amount of excess proceeds.

(iv) The telephone number and address that the party of interest may use to file the claim for excess proceeds.

(v) That the party of interest has the right to file a claim for the excess proceeds on their own behalf directly with the county at no cost.

(B) The disclosure required by this paragraph shall be printed in at least 12-point type, shall be clearly separate from any other document or writing, and shall be signed by the party of interest. If the transaction is negotiated primarily in a language other than English, the disclosure required by this paragraph shall also be provided in that language.

(b) This section shall not be construed to prevent an owner from asserting, at any time, that an agreement to file a claim for excess proceeds is based upon an excessive or unjust consideration.

(c) (1) This section shall not apply to an agreement with a party of interest that is either of the following:(A) A state or federally chartered bank, thrift, savings association, industrial loan company, or credit union.(B) A bankruptcy estate administered by a court-appointed trustee.

(c)

(2) This section shall apply only to an agreement entered into on or after January 1, 2027.