REAL ESTATE NEWS
California Senate Bill 624 has gone into effect, allowing local governments to eliminate tax liens under $200 that can damage a person’s credit for as long as 30 years. Although the outstanding debt would still be owed under these rules, it would no longer force a lien against property.
The need for SB 624 arose following an alarming number of cases involving taxpayers who could not purchase or refinance homes because they had liens against them for small dollar amounts that, in some cases, they were unaware of. In most instances, these liens had started out as small amounts under $100 but grown over the course of 10-20 years due to penalties and interest.
How could a taxpayer not know? Tax bills are often mailed to the last known address and may not be received by the taxpayer who has since closed their business or moved. In the case of homeowners, they move from the home they sold, and their escrow company fails to prorate property taxes, thereby resulting in “escape assessments.”
In Los Angeles County, 23,500 liens totaling $20 million were filed in fiscal year 2016-17. Of these, 56% had an assessed base tax of $200 or less. Given this reality, Assessor Prang is working with the Tax Collector and the Board of Supervisors to determine the possibility of enacting this change in how liens are filed for small dollar amounts.
In the meantime, you may wish to check whether you or your client have a tax lien that you are not aware of. You can contact your title company of choice, or in the case of homeowners with an existing mortgage, call the bank that carries the loan. The bank will be able to answer whether there are any other liens on the home.
